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Ralph Lauren Trouble Starts at the Top

The fashion industry is in trouble. With major retailers struggling overall with sales, many big name brands are also having a hard time moving product. And this is an industry that’s fickle at the best of times. Trends change, styles come in and out, and if a brand can’t ride those waves, they can go from “hot” to out of business in the blink of an eye.  

This is the “normal” state of affairs in the industry, but when a brand has other issues, the shake-ups can be even more permanent. Consider what’s happening at Ralph Lauren. The brand that gave us perennial on again, off again brands like Polo, is going through a difficult time from the top down.

Stefan Larsson, who has been Ralph Lauren CEO for less than two years, is already out. The company is blaming conflicts between Larsson and the company’s founder and namesake, Lauren, who remains board chairman. Even with the definitive decision to push Larsson out, Wall Street remained nervous, leading stock to drop roughly 12 percent. This is in spite of the fact that Ralph Lauren actually beat its projected earnings this past quarter and said 2017 is looking even brighter.

These kinds of rosy projections just don’t hold much water in a marketplace in a major state of flux. There’s a titanic shift happening in the fashion industry, mainly driven by the shakeup in retail markets. More people are buying online, which means fewer impulse buys and falling sales overall. Stores like Macy’s and Dillard’s which have been stalwart sales centers for Ralph Lauren products for decades are struggling to keep their doors open. Some locations are failing to do so.

Fewer retail sales fronts mean all brands – including Ralph Lauren – will need to rethink how they will connect with customers and keep them buying.

Some feel losing Larsson is a bad move for Lauren. The now former CEO came to the company with a stellar resume from Old Navy, the one area of Gap brand that consistently managed to do well, even as other stores under the Gap umbrella struggled. Being able to continue to sell well and exceed expectations while all around you are hurting is a skill Ralph Lauren could really use right now. But that’s not to be. Lauren issued a statement praising Larsson but admitting their creative differences were insurmountable.

“We have found that we have different views on how to evolve the creative and consumer-facing parts of the business…”

Some would say that Lauren would be wise to listen to the guy who was able to make something work when so many others were failing. But that’s not to be. It will be interesting to see where Larsson goes next, to watch if he’s able to make lighting strike twice and whether or not Ralph Lauren will come to regret succumbing to creative differences in a very unforgiving marketplace.

William Doonan is a tax law and legal expert.

This post first appeared on William Doonan | Tax Law Attorney, please read the originial post: here

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Ralph Lauren Trouble Starts at the Top


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