Consumer

Shelly Banjo is a Bloomberg Gadfly columnist covering retail and consumer goods. She previously was a reporter at Quartz and the Wall Street Journal.

Well, that was quick. 

Ralph Lauren Corp. said Thursday that Stefan Larsson, the superstar CEO appointed to revive the struggling lifestyle brand little more than a year ago, would leave the company in May, citing clashes with founder and chairman Ralph Lauren on how to jump-start the business.

Bumpy Ride
Investors have had a rough time at Ralph Lauren Corp. in recent years
Source: Bloomberg

It would be an understatement to say this doesn't bode well for the 50-year-old label. A "Stefan Larsson bump" had reinvigorated the company in the past year, as he moved quickly to fire employees, close stores, and refashion the dated brand into a modern, fast-moving company that better catered to today's shoppers. No longer. 

To be clear, this isn't a case of the new CEO not being able to perform. Under Larsson's leadership, Ralph Lauren developed a smart turnaround plan and executed well against it. 

Stop The Bleeding
Ralph Lauren's sales at established stores have been falling for nearly two years, but signs of a reversal appeared in the latest quarter
Source: Bloomberg

The stock fell more than 11 percent on Thursday partly because investors felt misled by Lauren, the founder, who had persuaded them in June that he was ready to at least partly turn over the reins of his company to Larsson. Investors, and many new executives, came to Ralph Lauren because of Larsson's track record of running successful operations. 

The corporate world is littered with examples of founders who just weren't ready to let go. Starbucks CEO Howard Schultz, for instance, said in December he would step down as CEO for the second time in the company's history. He admitted that, the first time he tried to relinquish control, he wasn't "emotionally prepared" to do so. 

Ralph Lauren CEO Leaves After Clash With Founder

Ralph Lauren's explanation that its founder couldn't see eye-to-eye with his successor raises doubts about whether he will ever step aside and let someone else run the business. That includes not just supply chain and operations, but the emotional side of the business, such as design and style, that truly defines the brand's DNA.

Of course, things turned out well for Starbucks investors when Schultz returned and jolted the coffee chain back to outsize sales gains and profitability. The difference is that Schultz stepped away while the company was going strong, only to see it falter in his absence. 

Bumpy Ride
Investors have had a rough time with Ralph Lauren in recent years
Source: Bloomberg

In contrast, Lauren was proudly at the helm as his company floundered. He oversaw the denigration of his storied brand through rampant discounting, sales at off-price stores such as T.J. Maxx and the over-building of its own stores.

Still, Lauren has always been one of American retail's greatest success stories. And investors may eventually find that Larsson woke Lauren up to the changes required to save his company. I'm just not convinced it's worth sticking around to find out. 

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

  1. Lauren is the company's largest shareholder. He has voting power of 81% of common stock.

To contact the author of this story:
Shelly Banjo in New York at sbanjo@bloomberg.net

To contact the editor responsible for this story:
Mark Gongloff at mgongloff1@bloomberg.net