Can a Swedish-born fast fashion impresario revive the fortunes of a faltering American clothing and accessories empire known for its upscale dreams of country clubs and Western chic? Ralph Lauren, 75, the self-made billionaire who’s run his eponymous company for nearly 50 years, surprised the fashion world yesterday when he announced that he will relinquish the CEO’s job in favor of Stefan Larsson, 41, a veteran of Gap’s downscale Old Navy brand and discount clothing purveyor H&M.
When Lauren first heard Larsson’s name from a Lauren board member, the New York Times reports, he said, “Why would I be looking for that? We’re building a great luxury company.” The two met for a private dinner in New York, and Lauren was still thinking, “Why am I here?” According to the Times, the feeling was mutual. “I was hesitating,” Larsson said. “Why was he interested in speaking to me?” But the two had great chemistry and Lauren warmed immediately to the idea. Said Lauren, “He’s unique as a man, a man who’s capable of building businesses and growing companies, but at the same time he’s sensitive to people’s feelings,”
That combination of sensitivity and smarts has brought great success to Larsson through his career, first at Stockholm-based discount fashion retailer H&M where he worked for 15 years, and then for the last three years, at what was a foundering brand before he got there, Old Navy, owned by San Francisco-based Gap. At Old Navy, Larsson pushed to change the strategy from what he called “clothes-by-the-pound” to a more aspirational, fashion- conscious approach.
In a May interview with the Times, Larsson compared his search for new, appealing Old Navy merchandise to Apple’s constant releases of improved gadgets. “If you keep competing with generic products, and a higher and higher discount, you’re going to lose,” he said. That explains Old Navy’s dive into performance fabrics and other sportswear like yoga pants. Another example: pixie pants, which are casual but slim-fitting and cut to hang just below the ankle. The brand also introduced commercials starring popular comediennes Amy Poehler and Julia Louis-Dreyfus, which went viral.
At Old Navy, Larsson directed the international expansion of the brand, beginning with Japan. According to GQ, at Old Navy his hires included an accessories and bag designer from
Old Navy posted strong growth figures for the three years Larsson was global president, with a total of $1 billion in sales, making it the strongest brand in the Gap stable, where Gap and Banana Republic are still faltering.
At H&M, Larsson helped expand the chain into an international giant, with more than 2,300 stores and $17 billion in revenue, according to Women’s Wear Daily. He also introduced mass-market partnerships with Comme Des Garçons, Versace and Karl Lagerfeld.
Both Lauren and Larsson come from humble beginnings, Larsson from a small town in Sweden and Lauren from a working class neighborhood in the Bronx, where he was born Ralph Lifshitz to Russian Jewish immigrant parents. Lauren didn’t go to college. He worked part-time in the garment industry as a teenager and then started a business making ties in the Empire State Building. He got his first break when Neiman Marcus ordered 1,200. Larsson, by contrast, has a master of science in business administration he earned jointly from the Hanken School of Economics in Finland and Jönköping International Business School in Sweden.
Leading up to the Larsson appointment, Ralph Lauren’s fortunes were in a slump. Revenues are down 5.3% year over year and its stock price has tumbled 37% in the same period. Today it’s up 14% on the Larsson news.
Lauren, who will be 76 next month, is not leaving his company. He will continue as executive chairman and chief creative officer and Larsson will report directly to him.
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