The announcement was made as the company reported its third-quarter results. Before the market open, the company posted adjusted earnings of $1.86 per share, topping analysts' estimates of $1.64 per share. Revenue fell 12% to $1.71 billion but was slightly higher than analysts' projections of $1.70 billion. The company anticipates $400 million in restructuring charges plus an additional $150 million in inventory charges, to be realized by the end of fiscal 2017.
"Stefan and I share a love and respect for the DNA of this great brand, and we both recognize the need to evolve," Lauren said. "However, we have found that we have different views on how to evolve the creative and consumer-facing parts of the business. After many conversations with one another, and our Board of Directors, we have agreed to part ways. I am grateful for what Stefan has contributed during his time with us, setting us in the right direction with the Way Forward Plan."
Chief Financial Officer Jane Nielsen will lead the execution of the Way Forward Plan, laid out last June until a new CEO is found. The Way Forward Plan includes altered management, closing stores, and cutting jobs. Larsson will get $10 million in cash severance and health benefits over the next two years, Bloomberg reported. Larrsson's history includes working at H&M for nearly fifteen years, eventually becoming head of global sales. He was also responsible for turning Old Navy into the Gap Inc. (GPS) - Get Report cash cow before he joined Ralph Lauren in November 2015.
Ralph Lauren, which mostly recently styled Melania Trump for her husband's inauguration, was the preppy brand for all things business and happy hour in the '80s and '90s before heavy discounting in department stores and and a deluge of brands watered down the name. As a third-party product, RL would get swept up in storewide discounts in Macy's (M) - Get Report , Lord and Taylor and the like, and seeing the brand as a higher-end staple in (TJX) - Get Report stores Marshalls and TJ Maxx certainly has not helped RL's cachet.
Ralph Lauren corporate previously had a reputation for having too many hands on deck, and the sheer number of levels within the brand was staggering. RL recently cut Black Label, making the second highest tier, Purple Label, the height of the company's luxury offerings. Aesthetic changes have also been apparent in the iconic Ralph Lauren mansion on the Upper East Side of New York. The floor where the higher end suits were displayed among dark wood and a club feel is now sleek and modern, with metallic accents and black and white minimalist art. This is clearly meant to tempt a younger audience who has few qualms about purchasing a three thousand dollar suit because they plan on wearing it for years. While the business and formal wear equated to a few months' worth of New York city rent, the offerings appealed, in particular, to European tourists with a favorable exchange rate burning a hole in their wool and cashmere blend pockets.
Another Millenial geared venture is the recently revamped Polo brand, meant to interest the younger crowd in a retail environment where fast fashion reigns supreme. It's a mixture of the now-shuttered Rugby RL with fun, preppy elements and a heritage feel. It also boasts a lower price point than the company's other luxury tiers. Club Monaco, also part of the Ralph Lauren portfolio, is a departure from the brand's look and feel but has become a mid-tier casual mainstay for trendy urban professionals who love their lattes and leather paneling.
While Larsson's swift departure is shocking, the brand's grip on its audience and consolidation of brands is moving in the right direction. Even if the old-boy club look really should have remained on the Purple Label floor.