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Why Ralph Lauren Will Again Be A Leading Brand

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There has been a lot of talk about Ralph Lauren. Some are asking if the brand has failed to keep pace with the changing times. Stores have been worried. Some space has been unproductive leading to cuts in allocated selling space. I think a lot has happened in the last few months to boost the company’s outlook. Here I list some of the reasons why I think this iconic brand will continue to be a mainstay of American fashion. I believe the brand will see renewed growth under its new leadership.

  1. New management. Last September Stefan Larsson (41) was appointed CEO of the company. He has the credentials for the task ahead. Previously he worked at H & M, and then moved on to the leadership team at Gap’s Old Navy division. At Old Navy he is credited with reviving the brand and turning around the business. Ralph Lauren (76), who had been CEO, stepped aside to continue as Executive Chairman and Chief Creative Officer to insure design of the brand.
  2. Too Many Brands. The new management has identified that there are too many brands, which have diluted the company image. Management will eliminate several brands sharpening its focus on the Ralph Lauren, Polo, and Lauren labels. The Blue Label will be retained for the high priced designer line
  3. Too Many Stores. Management has indicated that it will close about 50 high end stores and reduce inventory in department stores. Much of the inventory was subject to heavy discounting. This effort should boost operating margins. I sense that management is deemphasizing department stores in favor of their own outlets.
  4. Too Many Styles. Management has indicated that it will reduce the number of styles it produces and focus on wanted items such as blazers, military jackets, motor cycle jackets etc. The Polo shirt in as many as twenty-eight colors, will still be a basic staple.
  5. More Accessories. Management said it will focus on more accessories including handbags and small leather goods. This should improve the margins.
  6. Too Much Management. Mr. Larsson has indicated that in the restructuring he will make it a leaner company eliminating layers of management. For instance, the office of the chairman has been eliminated and the duties have been absorbed.
  7. Reduction of Associates. In the process about 8% of the staff will lose their jobs in order to have a more efficient organization. About 1,000 people will be affected by this necessary move.

We will again see athletes wear the Ralph Lauren designs during the 2016 Olympics in Rio, Brazil this August. Mr. Lauren designed garments for the last two Olympics (London and Beijing) as well. That is exciting since the brand is unique and very much associated with the United States. Appearing at the Olympics reinforces the brand name to a wide audience.

Management expects this year to register disappointing sales and earnings since the restructuring is going to take time. Ralph Lauren may become a smaller company in the future while becoming more powerful in its designs and its fashion influence. Stefan Larsson is the right man at the right time to rekindle the company’s momentum.