Ralph Lauren Taps P&G Executive as CEO -- 3rd Update
May 17 2017 - 12:02PM
Dow Jones News
By Bowdeya Tweh
Ralph Lauren Corp. is betting again on an outsider to run the
company, this time tapping Procter & Gamble Co.'s top beauty
executive to be its next chief.
The company said Wednesday that Patrice Louvet will become
president and chief executive officer on July 17. He is also
joining the company's board and will report to executive chairman
and founder Ralph Lauren.
Mr. Louvet, 52 years old, is the second external pick to lead
the company after Mr. Lauren stepped aside as chief executive in
2015. The designer-founder, whose family remains the company's
largest shareholder, maintained titles as executive chairman and
chief creative officer.
Stefan Larsson, who had been named Mr. Lauren's successor after
spending time at Gap Inc. and Hennes & Mauritz AB, left the
company after less than two years at the helm after clashes with
Mr. Lauren over creative control. Mr. Lauren founded the fashion
label in 1967.
Mr. Louvet is group president of global beauty at P&G, a
division with brands such as Head & Shoulders, Olay and Old
Spice. The company's 12 brands generated about $11.5 billion in
revenue in 2016.
Mr. Louvet, a 28-year P&G veteran, had been among the
executives seen as a potential successor to Chief Executive David
Taylor. Born in St. Cloud, France, Mr. Louvet spent many years
managing beauty and hair-care brands until becoming president of
global shave care, one of P&G's core divisions, in 2011. He
took over P&G's beauty business in 2015 shortly before the
company sold a chunk of the portfolio to Coty Inc. for $11.6
billion.
The sale left Mr. Louvet in charge of a much smaller business
that includes brands such as Olay, Pantene and Old Spice. The
division, which generated about $11.5 billion in revenue in 2016,
has continued to struggle amid sluggish overall sales at P&G.
Olay and other mass-market brands have lagged while SK-II
cosmetics, one of the company's few remaining luxury brands, is one
of its bright spots.
P&G said Wednesday it will name a new head of its beauty
division at a later date.
Unlike Mr. Larsson, Mr. Louvet doesn't have a fashion apparel
background, which means he is less likely to clash with Mr. Lauren
over design issues. But Citi analyst Kate McShane questioned
whether he is "the right fit to manage significant secular shifts
in the apparel/retail environment."
Mr. Louvet previously showed up on lists of possible CEO
contenders for other companies, said a recruiter who wasn't
involved in the search. The executive was willing to leave P&G
partly because his preference to live in the New York area where
his children attend a French language school, this recruiter
said.
As a signing bonus, Mr. Louvet will receive $3.4 million in cash
plus a one-time equity award worth about $9.2 million in restricted
stock and performance based shares. He will also receive an annual
equity award with a target value of $7.5 million. Mr. Louvet will
receive a base salary of $1.25 million and an annual bonus with a
target of $3.75 million, according to a company filing.
"He's an enormously skilled business leader with a deep passion
for the consumer and a sophisticated understanding of building
global brands," Mr. Lauren said in a statement.
The new CEO announcement comes one day before Ralph Lauren is
slated to report its fourth quarter and full-year financial
results. Analysts expect the company to report a quarterly decline
in adjusted earnings and a 17% fall in revenue, according to
Thomson Reuters.
Mr. Louvet will take the reins at Ralph Lauren one year after
the announcement of a restructuring plan aimed at cutting costs by
closing underperforming stores, reducing staff to help streamline
the organization and increasing its speed in bringing products to
market.
Earlier this year, the company said the plan has resulted in
about $400 million of restructuring charges and $150 million of
inventory write-downs and severance payments to Mr. Larsson.
Shares of Ralph Lauren declined 1.4% to $72.92 in afternoon
trading.
Sharon Terlep and Joann S. Lublin contributed to this
article
Write to Bowdeya Tweh at Bowdeya.Tweh@wsj.com
(END) Dow Jones Newswires
May 17, 2017 12:47 ET (16:47 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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