It doesn’t pay to disagree with the man whose name is on the building.
Ralph Lauren (RL) CEO Stefan Larsson is leaving his job in May because of differences with the namesake founder and board of the troubled American fashion company over how to restore it to its former glory.
Larsson, a retail whiz kid who had made his name in the apparel world by helping turn H&M into an international powerhouse and later reviving Gap Inc’s (GPS) Old Navy, is stepping down in May, by which time he will have been in the job for all of 18 months. The Swede was the first CEO of the company other than Ralph Lauren himself. The company said the departure was mutually agreed upon.
“We both recognize the need to evolve. However, we have found that we have different views on how to evolve the creative and consumer-facing parts of the business,” Lauren said in a statement. Chief Financial Officer Jane Nielsen will lead the company’s turnaround efforts while it searches for a new CEO.
Larsson had been hired in 2015 to refresh the company, whose growth had been slipping and whose luster severely damaged by how promotional and discount driven its business had become.
For years, the company deftly managed to offer everything from lower-end Chaps and Club Monaco to classic, high-end fashion. But over the years, Ralph Lauren lost its focus and became mired in bureaucracy, making it slow to react to changes in fashion.
Last spring, Larsson announced a painful “Way Forward” program to right the company, consisting of slashing costs, reducing the work force, closing stores and improving quality.
Shares were down 11% to $77 on Thursday on concerns about renewed turmoil at the brand. Just three and half years ago they were at $188.
And it was clear Ralph Lauren’s business is still struggling: the company reported a 12% fall in holiday quarter revenue to $1.71 billion, hurt by a slump in wholesale shipments to customers. In 2014, revenue rose 7%, then owed to 2.2% in 2015 before slipping into decline with a 2.8% drop in fiscal 2016, which ended in April.
The iconic company, founded 51 years ago, has been hurt by factors such as declining department store sales (chains such as Macy’s (M) and Nordstrom (JWN) account for about 25% of sales), the emergence of fast-fashion chains like Larsson’s alma mater H&M, the shift to online shopper, and more price sensitivity among consumers. More generally, American consumers have shown much less interest in apparel, so much of which is available from so many retailers. that shoppers see it as a commodity.