Ralph Lauren CEO Patrice Louvet on Winning with Preppy Agility
Patrice Louvet is successfully walking a very fine line at Ralph Lauren Corp. — sticking to the brand’s classic preppy roots, but using a more modern and agile retail approach.
“The teams have put a lot of emphasis on making sure we are clear on who we are, but nimble,” said Louvet, who is president and chief executive officer, in an interview with WWD. “Nimble from a supply chain standpoint, of course, but also nimble from a product offering standpoint, nimble in the way we engage with consumers in stores and a world [with] recurring crises, where volatility is the new normal. I think that serves us well.”
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That was apparent on Thursday as shares of the company rose 16.8 percent to $171.85, giving the company a market capitalization of $11.1 billion, after strong fiscal third-quarter gains.
Net income increased 27.8 percent to $276.6 million from $216.5 million a year earlier.
Adjusted earnings per share of $4.17 came in well ahead of the $3.57 analysts projected, according to FactSet.
Revenues for the three months ended Dec. 30 rose 5.6 percent to $1.9 billion from $1.8 billion. Global direct-to-consumer comparable sales grew 9 percent with across the board strength.
While revenues in North America were flat at $933 million (including a 15 percent decline in wholesale sales), the European business grew by 11 percent to $522 million and Asia expanded by 16 percent to $446 million.
Ike Boruchow, a Wells Fargo analyst, said in a research note: “Ralph Lauren keeps on executing, credit is due. With the macro pressures building, Ralph Lauren continues to outperform — managing weaker wholesale with improvement in their own DTC channel and [average unit retail pricing] structure. Today’s beat appears to be a real catalyst — with multiples making their way up to peak levels not seen in five to 10 years.”
Louvet said the company went into the holiday season with lots of “energy.”
“We had the fashion show, we had the cover of Time magazine with Taylor Swift, who chose to wear us,” he said. “We had the partnership with Naiomi Glasses, who’s a Navajo designer coming from a Native American community that’s been a source of inspiration for us for many, many years. And now she’s co-designed the line with Ralph and Ralph’s team. We had the U.S. Open. So a lot of good brand energy and that really translated in the holiday quarter.”
Ralph Lauren has been elevating its positioning for years and, in the third quarter, pushed its average unit retail prices up 9 percent in its DTC network, on top of a 10 percent increase a year earlier.
Those prices haven’t kept shoppers away as the company added 1.7 million new customers in its DTC operations, which accounted for 69 percent of the overall business in the quarter.
Many of the new shoppers coming into the brand are younger — and find their way to Ralph Lauren in new ways.
“We want to be consistent over time, but we want to be fresh,” Louvet said. “The balancing act I think for us is: Stay true to who we are. And that’s why this company has been around for 57 years. There are a lot of fashion companies that come and go, [we] stay true to who we are.
“So maybe for the younger Gen Z, or Gen A now, it’s not your traditional fashion show, it’s the gaming partnership with Fortnite or Roblox and being nimble and agile in the way you execute,” he said.
Ralph Lauren’s approach to nimbleness includes having a product offering and geographic presence that’s broad enough for the company to be able to lean in when an area gets hot.
Take home, a bustling category that Ralph Lauren is building in.
In December, the company cut a long-term strategic deal with Haworth Lifestyle Design to expand the production of Ralph Lauren’s Italian-made furniture.
More could be on the way.
“If you think about the positioning and the philosophy of this company, I think Ralph should have started with home because Ralph is a movie director,” Louvet said. “Ralph creates these incredible sets and then products are the props within these sets. And so what is home if not the actual movie sets. We see this as a significant growth opportunity, long-term for the company. And we’re doing a lot of work to make sure we have the right capabilities in place.”
Historically, he said the brand has focused on bedding and bath, but also wants to push its already extensive collections in furnishing as well as in gifting.
“We are looking at special projects where we can actually furnish an entire new property development,” Louvet said.
Does that mean a Ralph Lauren hotel is in the offing?
“Could be, but we have nothing to announce,” Louvet said. “Conceptually, it would make a lot of sense to have a Ralph Lauren hotel because we have such a distinct set of points of views. Given the diversity of the portfolio, you could be in a Double RL environment, you could be in a Polo preppy environment, you could be in a collection or Purple Label, an uber-luxurious environment. So there’s a lot to work with.”
As Ralph Lauren, executive chairman and chief creative officer, said in the companies’ earnings report: “Our vision inspires people to live the life of their dreams.”
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