Few fashion brands have been as enduring over the past five generations as Ralph Lauren. Now even Gen Alpha and Metaverse avatars are wearing RL. But it all hasn’t been perfect in RL paradise. This iconic brand, like so many others in these fickle it’s-in, it’s-out, and it’s-in again times, has had its share of highs and lows along the way. The recent news of Ralph Lauren returning to New York Fashion Week after a four-year absence reflects the brand’s ebb and flow.

There are unique factors that have, through the years, given Ralph Lauren an advantage that trendier fast fashion brands lack. Call it “style stability.”

Dressing Celebrities

One of the keys to RL’s six-decade endurance is an uncanny sense of when to slow and when to go. Ralph Lauren has had sports partnerships for years, not the least of which is outfitting the U.S. Olympic and Paralympic teams, the PGA, the U.S. Ryder Cup team, the on court ball boys and officials at the U.S Open, and the on court officials at Wimbledon. The UK championship has also been a quasi-international “green carpet” fashion event. This year saw many luminaries sporting RL attire, including “Wicked” actress Ariana Grande in Ralph Lauren Collection, Emma Corrin from “The Crown” suited up (literally) in Ralph Lauren, and “Downton Abbey” actress Lily James in Polo Ralph Lauren. Also, Tom Hiddleston, who is best known for his role in the “Avengers” and the Marvel “Thor” franchises, along with his wife Zawe, were both RL attired.

Dressing beautiful people in tastefully elegant RL attire is a tradition, but signs point to new brand mojo. Take G2 Esports, one of the leading global esports and entertainment brands, which has upped its game with Ralph Lauren. It introduced a “first-of-its-kind” luxury clothing line for the hotly competitive gaming industry.

While RL has been the “exclusive fashion outfitter” for the G2 team since 2021, they recently collaborated to create a capsule collection that includes a wide range of unisex, casual clothing including T-shirts, polo shirts, hoodies, tracksuits, and caps. Each piece features the newly designed G2xRalph Lauren crest– an aspirational royal moniker.

Both G2’s athletes and content creators wore the collection at the LEC Summer Playoffs in Berlin where G2’s League of Legends team competed. The event, ironically, coincided with the Wimbledon finals, making it crystal clear that the brand management team is keyed into next gen consumers as the new cohort of loyal and dependable customers.

The Man Is the Brand

As we all now know, Ralph Lauren was born Ralph Lifshitz in 1939 in the Bronx, New York, to Ashkenazi Jewish immigrants from Belarus. In his teens, he changed his last name to the more elegant-sounding Lauren. That move alone signaled an intuitive sense of branding that few people, let alone teenagers in the mid-1950s would possess. He recently told Vogue “I am the product; if you like my style, you will like my clothes.”

The article goes on to note that “It has never been, about fashion, Lauren has always been more interested in lifestyle.” This has undoubtedly added to the sum of his success over the years. And through those years Ralph Lauren has stretched that “lifestyle” reference beyond its fashion limits.

Brand Elasticity

Popular brands often experiment with brand elasticity and RL has pushed those limits further than most. Case in point: In 1995 Ralph Lauren introduced a lifestyle-oriented line of paint (made by PPG) that had about one-third the number of colors of an average paint line and was priced about two to three times higher than comparable paints on the market. RL’s timing was perfect. The product introduction slipstreamed the 1994 launch of HG-TV which heralded a major DIY home improvement craze.

Not surprisingly, paint-industry insiders thought the idea of a fashion icon selling paint was heresy and that the market would reject the notion out of hand. What they failed to understand was that Ralph Lauren was not selling paint. RL was selling color, with on-brand names like Whitewash, Island Brights, Vintage Masters, Thoroughbred, and Urban Lofts. RL’s evocative lifestyle imagery that the palettes were derived from became the delivery system to experience a taste of the RL fantasy at home.

Every RL licensing deal is created to inspire the customer’s sense of belonging to the high-value RL brand and lifestyle, which has been carefully and expertly crafted, curated and managed over the years. As a side note, not surprisingly, five years later Martha Stewart followed suit with her own bespoke paint line.

Keeping the Brand Relevant

Ralph Lauren had its heyday in the 90s, with steady business throughout the 2000s, but things took a dramatic turn in mid-2010. In 2016, a new CEO, Stefan Larsson, attempted to revitalize the RL brand, but was out the door a year later, replaced by  Patrice Louvet, the current CEO.

By 2017 RL was facing a problem that was becoming endemic in the industry. Like Nike, and so many other iconic brands, department store discounting was undermining the brand’s caché. Macy’s in particular, one of RL’s largest wholesale accounts was becoming known for its constant promotions and clearance sales. RL made the tough but wise decision not to ride Macy’s race to the bottom and bailed.

Nonessential Pause

The brand was on a comeback when the pandemic hit, forcing severe cost-cutting including closing stores and trimming its North American office space by 30 percent. In February 2021, Retail Dive noted that “North American comparable sales at Ralph Lauren’s brick-and-mortar stores were down 30 percent. A 9 percent spike in digital sales helped offset some, but not all, of that decline.”

In the same article, GlobalData’s Neil Saunders noted that RL’s North American digital sales were showing a “lamentable rate of growth relative to the market” but that there was “some evidence” that they were succeeding at bringing younger shoppers into the brand’s fold.

Around the same time, Telsey Advisories remarked that optimization of the RL brand portfolio and a leaner cost structure had improved their position in a post-pandemic retail environment.

By Q2 of 2021, CEO Patrice Louvet said that the trend has changed for the brand. Ralph Lauren’s strong recovery in the quarter, with revenue up 182 percent to $1.4 billion from the previous quarter, was driven by growth in North America, where revenue was up more than 300 percent from the previous year, outstripping any other region.

New Dimensions

In 2021, analysts at Morgan Stanley predicted metaverse sales for luxury brands could exceed $50 billion by 2030. That could lift revenue by more than 10 percent, and industry earnings before interest and tax by 25 percent. This was evidenced by the fact that in social gaming, one in five Roblox gamers change their avatars daily.

By early 2022 RL was all in on mining the metaverse and making money doing it. Witness their 2022 introduction of a limited collection for Roblox and Zepeto avatar customers, to dressing emojis and becoming the quintessential preppy fashion brand in the digital marketplace.

Pushing Pricing Elasticity

On July 18^th, 2023 Bloomberg reported that Ralph Lauren plans to keep lifting the average price of its products, a sign the U.S. apparel company is doubling down on the caché of its brands and to sell higher-priced items such as home goods. And in a recent interview with Bloomberg TV RL’s CEO Patrice Louvet said “I don’t think there’s a limit as long as we do a good job on elevating the product, elevating the storytelling, elevating the environment.”

Ralph Lauren says it has raised the average price of its products by around 80 percent since 2018, while its gross margin has also increased versus pre-pandemic. And while RL’s gross margins in the recent quarter were 62 percent they still trail Capri Holdings and Coach parent Tapestry. Yet there are industry banking experts that believe RL’s gross margin headwinds are subsiding as commodity and freight pricing ease in coming quarters.

Style Stability: Advantage RL

Through the years here are unique factors that have given Ralph Lauren an advantage that trendier fast fashion brands lack. Call it “style stability.” Fast fashion lives and dies on big hits and its warp-speed minting of the newest of the new. The sequel to all this styling on steroids is purging goods that are “so yesterday” still overflowing in backroom boxes. This leads to a severe margin migraine for the fast fashion ecosystem.

Not so, RL. Because so many of Lauren’s styles are staples, the company can pack up unsold high-end basics and re-introduce them the following year. Ralph Lauren also has a long history of carrying a lot of cash on their balance sheet. Often it has more cash than it has long-term debt. In fact, as of the fiscal fourth quarter of 2023, the company had a little over $1.5 billion in cash and just $1.1 billion in long-term debt.

The Ralph Lauren Corporation today is worth more than $7.4 billion and is embarking on major international growth, including India, where it currently has four stores and China, which now represents around 6 percent of revenue. And while its 83-year-old founder stepped down as CEO in 2015, he remains executive chairman and chief creative officer. Ralph continues presiding over all the lines, the over 1,200 stores, concessions, restaurants, and every other brand extension. He is the brand in any culture. Suffice it to say, his immigrant parents would be enormously proud.

Ralph Lauren

As the most financially successful American designer, Ralph Lauren is also the quintessential aspirational lifestyle designer. He designed an American dream that was living the idea of the life of wealthy WASPs (White Anglo- Saxon Protestants– in case you’ve been living under a rock). Ralph dug deeply into their style and brilliantly translated and updated the way they dressed. He created a brand message that captivated large numbers of customers. Ralph’s success proves his instincts were right. He wasn’t the only one who admired that WASPy tasteful lifestyle.

The WASP Meme

Lauren’s great sense of color brought life to the staid, sometimes drab clothes of the subculture he emulated. He brought the dated preppy look into current fashion while keeping its traditional relevance. Ralph’s ability to sell his dream lifestyle was as important as his ability to create it. His portrayal of the models in his ads dramatized a lifestyle as much as highlighting the merchandise. Ralph came up with a new marketing concept. Instead of running single page ads in magazines and important newspapers, he ran portfolios of multiple pages several times a year. This way he could project the full story of the Ralph Lauren brand. It was a very expensive concept, but it made him the biggest advertiser in all of the important fashion-media outlets. That didn’t hurt, because fashion magazines are well known for providing lots of editorial coverage for their big advertisers. Ralph and his photographer, Bruce Weber, meshed beautifully together. It well may be the most successful designer/photographer team during the 70s and 80s.

“What I do is about living. It was never about buying a shirt or a dress — but rather being part of a dream,” Ralph Lauren. “I want not just to dress people, but to address them. It’s not about me it’s about we,” Donna Karan.

Even though he was marginally over five feet tall, he loved being his own model. He could be seen in his cowboy clothes on horseback as well as in his preppy blazers with jeans. No other designer came close to his ability to create a lifestyle that provided a complete wardrobe for a customer who bought into his memes. His products went beyond clothes to create immersion in his vision of living well. His line included a full range of home products, from furniture and accessories to sheets and blankets.

The Immersion Vision

One had only to walk into a Ralph store, or look at a Ralph advertising portfolio to be immersed in an idealized world of privileged, Old Money. In 1983, Ralph pulled it all together when he obtained a long-term lease on the Rhinelander mansion on Madison Avenue and 72^nd Street. The French renaissance revival edifice was built in 1898 by Gertrude Rhinelander Waldo who never moved in. She decided to live across the street in a much more modest home. In 1976, it was declared a New York City Landmark, and it was to become Lauren’s New York flagship store.

Ralph spent three years designing the mansion’s interior into a spectacular experiential shopping environment of the Ralph Lauren vision. He personally designed and oversaw all wall coverings, flooring, fixtures, and the placement of portraits. It had the feeling of an aristocratic, old English home. The sales help was chosen for their WASPy looks and style. They were trained to almost undersell. No aggressive sales techniques with associates attacking customers were allowed.

Directly across Madison Avenue was another Ralph store with a line of sophisticated casual wear and athletic styles. It was lively with hip music, the direct opposite of its across-the-street relative. Eventually, it was redesigned, to sell Ralph’s women’s lines and home products and the Rhinelander Mansion became strictly a men’s store.

Ralph lives his dreams. Nowhere does he indulge these aspirations more than in the five homes he owns, including a Manhattan apartment, a mansion in Bedford, New York, a Montauk beach house on Long Island, a tropical retreat in Jamaica, and a major ranch in Telluride, Colorado. He said he was, “concerned I don’t have a suit that will go with my Bedford mansion.” Always an automobile buff, he also amassed a collection of rare cars estimated to be worth $300 million. “Some people buy art, I collect cars,” he said.

All the World’s a Stage

Ralph said many times he wanted to be an actor or a director. He certainly had an elevated ability to transform himself into different subcultures which he could then translate into fashions. It was not only fashion, though, where he used his acting abilities. I remember an incident when Women’s Wear Daily was hosting a conference for many of the retail CEOs at a hotel in Carefree, Arizona. Ralph was going to speak. He arrived dressed up as a cowboy. You would have thought he had his horse tied up out back. He asked, “Where am I going to be speaking?” I pointed to an open-air stage that had a podium in the center. He said, “No, I don’t want to use a podium, take it away. I want to do it the way Frank does it.” I thought for a minute, then said, “Frank Sinatra?” “Yes,” he replied. “You know, the way he walks back and forth on the stage when he’s singing. I want to do it Frank’s way. You know people mistake me for Frank all the time. I was walking down a street in Paris last week and someone came up to me and asked me if I was Frank Sinatra.” Ralph had the unique ability to transform himself into those images he emulated.

World Building

The New England WASP aesthetic Ralph was so into was the antithesis of how he grew up. He was born and lived in the Bronx for eighteen years. His mother wanted him to become a rabbi, carrying on the tradition of her family. She said instead of all his financial success she wished he had accumulated religious wealth instead. His father was a house painter and a decorative artist. Ralph was born Ralph Lifshitz, changing his name to Lauren when he was eighteen years old.

When he was in his late teens, a friend brought him to a polo match. Ralph never looked back. He was overwhelmed. The whole scene: the players on horseback swinging their mallets, the stands full of sophisticated fans, and the entire ambiance was a transformative experience. It provided Ralph with a logo and a name for many of his fashion lines. Just as importantly, for an extremely visually creative person, his dreams could be real.

By Design

While not the kind of designer who could sketch or develop a prototype, he knew down to the most minute detail what he wanted. Once the shirt or jacket was made based on his concept and specifics, he fussed with it, changing buttons, the width of the shirt collar, the cut of the trousers, and so on. He was an absolute perfectionist. He could not stop tinkering, to the point of sometimes making products late for deliveries.

In his third year in business, he started showing a women’s line. While it never came close to matching his revenues in men’s, it did provide him with a bigger stage to continue to build his image. Women’s fashions got much more media coverage than men’s did.

It was his basics—polo shirts in multiple colors, khaki trousers, and fragrances—that initially paid the bills. Ralph put his creative energies into his high-end luxury collections and creating accessories for the brand. It was his significantly lower-priced, broadly marketed products that made him worth an estimated five to six billion dollars, making him the richest of the American designers. The high-end fashions that he showed in his collections provided a marketing umbrella that screamed luxury, but rarely showed a profit. Ralph’s company was basically a copy of his luxury line. A Polo shirt in cotton instead of cashmere looked just fine.

Amassing Wealth

In 1997, Ralph took the company public. It opened at $27 a share and he became an instant billionaire. Prior to going public, he did what he wanted and spent the company’s money on his pet products and marketing ideas. And spend he did. It is estimated he spent between $25 and $30 million on the Rhinelander mansion. Whatever he was interested in, money was no object. It worked. He built a strong international brand with his quality products and creative marketing efforts.

Once Ralph Lauren Inc. was a public company, he had to show consistent growth each quarter as well as new product ideas for future growth. He had to bring in new financial executives and, eventually, a CEO. Ralph, however, retained the title of chairman and chief creative officer. Now some 80 percent of Ralph Lauren retail revenues come from his various groups of outlet, off-price stores.

Donna Karan

A Donna Karan woman could change from a simple blazer to a sequined top, maybe even in a restroom, and go from serious office attire to a glamorous evening look. The Donna Karan woman did not want to be a fashion victim or a Barbie doll. She wanted to have a special presence, a Lauren Bacall, throw-them-some-attitude look. I can compete with anyone man or woman. Don’t mess with me.

Seven Easy Pieces

Donna Karan was passionate about a new way to design clothes for the busy, professional New York woman of the 1980s. She believed New York was the cultural, artistic, and most creative city in the country. And she also believed what professional and busy New York women wanted would resonate across the United States. Basically, Donna was designing for herself with her eponymous New York label. She understood the busy New York woman needed a select, interchangeable wardrobe with a high degree of flexibility with fashions that could be worn during the day and with minimum changes, be transformed into a look for the night.

Her seven easy pieces were a bodysuit, skirt, sequined top, sequined skirt, pants, blazer, and a coat thrown in. That is what Donna needed for her own busy life, and as it turned out, a lot of professional women across the country wanted it too. Donna provided women, especially professional women, with an alternative to wearing Armani-styled suits for business. Her clothes, while feminine, also projected a professional vibe.

Barbra Streisand, after falling in love with Donna’s cashmere sweater on the cover of Harper’s Bazaar, came to see her and wanted to buy it. Donna wouldn’t sell it to her because the sweater was found to be very flammable and she had taken it off the market. Barbra offered to make out a non-indemnity clause right there and then if she could buy the sweater. Donna refused again. Barbra left, and a week later she turned up with the sweater from another source. Donna was impressed with her tenacity and it was the beginning of her closest female relationship. They became lifelong friends. Barbra said she was amazed Donna was able to accomplish so much, because her middle name was chaos.

Spiritual Iconoclast

Donna clearly marched to the beat of her own drummer. In her personal life she readily accepted new ideas, embracing spiritual practices and energetic healing. She used her celebrity as a designer to promote these beliefs. Donna established Urban Zen as a foundation that included her new Urban Zen fashion brand. The profits are dedicated to various charities concentrating on mind, body, and spirit in healthcare. The foundation promotes the practices of yoga, Reiki, essential oil therapy, and alternative care. She has worked closely with Beth Israel Medical Center in New York and nursing schools throughout the country to help them understand the Urban Zen programs. Donna donated $850,000 to Beth Israel because it was the most advanced alternative medicine-thinking hospital in New York. She oversaw the renovation of a floor in the hospital’s cancer center. She introduced the concept that yoga, meditation, and aromatherapy can enhance the outcomes of chemotherapy and radiation.

Donna also dabbled in experimentation. Donna and another of her good friends, Demi Moore, traveled to Austria to visit a healing center that included daily enemas/colonics and treatments with leeches that were applied to toxic or stress points. Donna said, “The leeches would sit on my body for half an hour until they were so blown up with blood they practically fell off.”

She consulted her psychic regularly. One instance was when her plane suffered electrical problems. It couldn’t take off, but the problem was expected to be a quick fix. She called her psychic and asked him if she should wait for it to be fixed. He told her no, that the number of the plane was a bad number. “Don’t fly on it,” he warned her. She didn’t. Nothing happened to the plane.

Kal Ruttenstein, former fashion director of Bloomingdale’s, told me that after he had just been released from the hospital after a serious illness, Donna paid him a visit. She told him about a special tree in Central Park that he needed to hug to improve his health. There was a period when she was said to require her design team to work barefoot so they could feel the earth’s vibrations.

One of the officers of her company invited her to a meeting with two potential licensing customers. Halfway through the meeting, she began “speaking in tongues.” Fortunately, the Donna Karan executive said, they were foreigners, and their English wasn’t great, so they didn’t pick up on it!

An Empire Strikes Back

After attending Parson’s School of Design, Donna went to work at Anne Klein in the late 1960s. Japanese entrepreneur Tomio Taki joined the Anne Klein Company and provided Donna with the structure and support she needed to grow and flourish as a designer. He was a significant investor in the already successful Anne Klein Company where Donna was associate designer. After Anne Klein died in 1974, Taki invested in the brand. His partners and executives in the company wanted to replace Donna with an outside, big-name designer. Taki was adamant that Donna should be given the job. He bought out his partners and placed Donna in charge of design. Donna was only twenty-five years old and seven months pregnant.

Despite being into the final months of her pregnancy, Donna dove right in. Together with her former classmate and friend, Louis Dell’Olio, they not only continued the Anne Klein brand but provided new products to substantially grow the business. Taki was wrestling with the idea of building a new bridge line for the company, which would be the first bridge line in the United States. “It was a huge expensive challenge,” he told me. “The rewards seem to trump the risks. First, we had to increase the prices on the designer line so the bridge line would be recognized as a less-expensive yet still high-quality product.” The new bridge line, called Anne Klein II, was an instant success.

After launching Anne Klein II, Taki said, “I knew our arrangement with Donna would be short-lived if I didn’t do something. I could lose her to someone else willing to take the necessary risks.” Donna wanted to start a small collection under her own name within the Anne Klein Company. Taki thought a second line in Anne Klein would cause confusion, so, they started talking about a separate company. Donna was nervous about a new company, as she had never made a name for herself since she worked under the protection of an established brand.

Taki said, “I knew Donna had a lot of untapped potential. One Friday afternoon I called her into my office. I fired her. I also directed her to report on Monday morning to the conference room on the fourth floor of 205 West 39^th Street.” The new company did not have a name, a collection concept, or staff. Taki and Donna started looking through magazines to get a feeling for ads they liked. One ad, done by Peter Arnell, who had own advertising and public relations firm, caught their eye.

They named the first collection Donna Karan New York. Arnell came through with flying colors with a distinctive logo and look for the new company. The next big challenge for Arnell was to develop a look for a more causal, diffusion brand. Again, he came through, even coming up with the name DKNY. The Donna Karan New York and DKNY brands flourished for a good twelve years. Donna joined the very top level pantheon of American designers.

Close Encounters

Donna fell madly in love with Stephan Weiss while she was married to Mark Karan. Weiss was also married. They each divorced and married each other. She began to bring Weiss, who was an artist, more and more into the business side of the company and began to rely more on him and less on Taki. After the company went public in 1997, Donna, who controlled the company as CEO, made her husband Steven Weiss a full partner in running the business. Sadly, Stephan battled cancer for seven years and died at age sixty-two. Going public, in many ways negated the steady creative management that had built Donna Karan International into one of the most important fashion brands. In fact, Donna came to hate being a public company because she had to report to a board of directors. She could no longer spend money on projects that she wanted without first getting approval. In 2001, Donna Karan International Inc. was sold to LVMH for $450 million. Donna continued to design the line. In 2016, LVMH sold the company to G-III FOR $650 million. Karan left the company in 2015.

Zen State

She remains hyperactive in Urban Zen. Her Urban Zen fashion line is sold in three wholly owned boutiques and select department stores. She vigorously promotes her spirituality and healing practices. In his last days, Stephan told her repeatedly, “Take care of the nurses.” Donna is doing that and more. She was not glamorous, like Halston or Calvin, and recognized most New York working women were not size-two, model types. Her clothes gave women a significant confidence, “I am somebody. Look!”

“Fashion fades, style is eternal.” This bit of philosophical observation was the final jaw-dropping statement in a 2021 article in The Urban Journal, which opined on Ralph Lauren’s leadership hiccups around 2015. It questioned the brand’s relevance and ability to evolve with the lifestyles of millennial and Gen Z consumers, along with their seamless connection to technology and the internet. The closing statement of that article is all one needs to understand that describes the brand’s ultimate longevity as eternal.

And this was re-echoed by Ralph Lauren’s Chief Product Officer, Halide Alagoz, in their recent investment day meeting, saying, “Timeless style transcends trend. It never goes out of fashion season after season.

The Eternal Flame

Is it my opinion? Short answer: Yes. However, I want to provide my own reasoning. That said, I felt compelled to open with Urban’s final statement, which is absolutely a universal full stop summation of the brand’s resilience and strength. Indeed, “style is eternal.” And Ralph created his own branded lifestyle over half a century ago; it was his dream of a Gatsby-like world that could only be envisioned by photographic images of Gatsby-like settings and models living inside the dream –a dream that like-minded customers want to be part of.

So, Ralph is not a designer of apparel or other products. He is a creator of dreams that reflect a style of living that is uniquely his own vision. And all his products, from pants to paint, and everything else that fits into his unique worldview, as immortalized in his ads and imagery, become indelible and eternal.

The Loss of a Left-Brain Sensibility

In 2015 I saw the beginning of a “perfect storm” heading towards the brand. My headline asked, “Does Ralph Lauren See the Perfect Storm?” The three storm fronts colliding to become the killer perfect storm started with the departure of its then-CEO Roger Farah. I believe he was arguably, the best strategist, operating and business executive that Mr. Lauren ever had, and his departure was one of the major catalysts for the decline in Lauren’s sales and profits at the time. In my opinion, Farah was Lauren’s left brain.

The second storm front was the full-on effects of the internet, new technologies and globalization. These disruptions were being uber-powered by the third storm, which was the largest and most powerful emerging consumer culture since the boomer generation: the millennials and Gen Zs.

Regarding the loss of Farah as the brand’s left brain, Lauren believed he found Farah’s ideal replacement. He made the incredibly surprising decision to hire 40-year-old Stefan Larsson, then President of Old Navy. Apparently, Lauren believed that Larsson’s successful 15-year run as head of global sales for H&M, followed by his three-year stint as head of Old Navy (making it Gap Inc.’s sole growth engine), would fill the role of Farah’s left-brain expertise. It didn’t happen.

In less than two years, Ralph Lauren experienced a 5.4 percent decline in sales in the first quarter of the 2016 fiscal year, coupled with a 60 percent drop in net income. Earnings before interest, tax, depreciation, and amortization fell from 20 percent of revenues in its 2013 fiscal year to an estimated 15.5 percent in 2016.

Upon announcing Larsson’s departure, Ralph Lauren said, “Stefan and I share a love and respect for the DNA of this great brand, and we both recognize the need to evolve, however, we have found that we have different views on how to evolve the creative and consumer-facing parts of the business.” So, Ralph’s judgment errored in favor of another right brain, which the Ralph Lauren brand did not need.

A New Left-Brain Partner and a Fortress

Patrice Louvet took the helm in July 2017, bringing with him, the badly needed strengths of left brain thinking. Inheriting Larsson’s dilutive missteps, Louvet needed to stabilize the short-term challenges and begin to enact a longer-term strategic plan. He has been successful in playing this plan out over the past four years (even powering through the unprecedented and unexpected pandemic). He coined the long-term strategy as The Fortress Foundation. Louvet and team have now reviewed its successes over the past four years and how they will be accelerated going forward. Unity Marketing posted the following strategic accomplishments.

Younger, Higher-Value Customers

Since 2018, the company has brought in 20 million new higher-value and younger direct-to-consumer customers. That includes a 38 percent increase in full-price DTC customers since 2019 alone, and they are active with one in four having shopped RL in the past year.

Brand aspiration is on the upswing with 74 percent of consumers now considering RL a luxury brand, and it’s the top pick in brand consideration among next-generation consumers over a set including Calvin Klein, Tommy Hilfiger, Lacoste, Burberry, and Gucci. Consumers are drawn to the timeless quality of the brand, as compared with the others.

RL has an advantage with the next-generation customers it’s cultivated – one in three U.S. consumers grew up wearing Ralph Lauren. This extends their projected lifetime value if they stay with the brand. And it can succeed if it continues to deliver greater value for money, which grew 7 points since 2020.

Repositioned Retail

RL has completely restructured its retail network over the past four years. Most significantly, it has pulled out of two-thirds of its low-value North American wholesale accounts and cut exposure in off-price retail by 50 percent to return that channel to being a “true vehicle for liquidation,” said Bob Ranftl, regional CEO North America.

That move, along with its acquisition of more high spenders, has resulted in a 64 percent increase in average-order size. Also noted is that multi-channel customers spend four times more.

It’s added 450 full-price stores and concessions globally since 2018 which includes a variety of formats, including flagship stores and smaller footprint stores under 10,000 square-feet. It now reports that direct-to-consumer business accounts for 63 percent of revenue. Plans are to open 250 new stores over the next three years, including 200 in Asia, 40 to 50 in Europe and 15 to 20 in North America.

Asia is going to be a big focus of retail expansion in the next three years across both stores and its digital ecosystem. Its China strategy will be clustered in six major cities: Beijing, Shanghai, Chengdu, Shenzhen, Hong Kong, and Taipei.

Its North American outlet stores are getting a special treatment too. In many places, these are customers’ local RL store, and the aim is to allow these value-oriented customers to also engage with the luxury of Ralph Lauren. “We’re elevating that physical environment. We’re elevating the product presentation, the assortment, the service model. When the consumer walks into that store, we want them to feel inspired,” Ranftl explained.

Robust Digital Ecosystem

“We believe connected retail is the future, “ declared Janet Sherlock, chief digital and technology officer. “This is a major unlock for us because it gives us the flexibility to engage with our customers where they are, especially next-gens. It’s where they’re getting their inspiration or choosing to transact,” as she described the digital ecosystem than undergirds the company’s operations.

Sherlock reported that digital has over-delivered on its promises from last investor’s day. It’s added over $1 billion in revenue (20 percent CAGR), against promised $500 million. Digital penetration has doubled, and operating margins increased by 850 basis points.

All told, digital sales now generate 26 percent of company revenues, including RL’s owned and operated site, partnerships with digital pure plays, like Asos, Farfetch and Mr. Porter and its wholesale.com offering.

Through 2025, it expects digital to reach one-third of company revenues on low-to-mid-teens CAGR. It will leverage digital for international expansion, build out its home business, expand social commerce and its app and grow into the metaverse with digital goods and NFTs.And with its deep reserves of customer data, it will use AI to anticipate needs, customize local product assortments and personalize clienteling.

With the aim of connected retail to “create experiences that transverse physical, digital and virtual worlds,” Sherlock sees the potential for new revenue streams as the metaverse becomes a reality.

Classic, Timeless Luxury

RL’s return to core classics will be a key driver to extend customers’ lifetime value. Consumers are looking for products as investments with value that accrues over time, Alagöz said. Currently, 70 percent of revenues derive from its classic core product offerings along with seasonal color iterations of those classics. At the same time, it’s bringing that timeless, classic approach into new categories like outerwear, which now generates nearly 10 percent of revenues.

Home has also gotten the classic treatment, which grew 50 percent over last year and extends beyond linens and bedding into furniture, dining, rugs, lighting, decorative accents, and giftware.

Its women’s business is targeted for special attention as the RL brand is underpenetrated in her closet. Women currently make up the majority of customers (56 percent), buying across many different categories, while women’s apparel accounts for less than 30 percent of the RL business. The company sees handbags and accessories as an important lead into the women’s fashion market, fitting its timeless creed. And it can dress her for every occasion from weekend to weekday, sporty to casual, even special occasions. Its women’s business is expected to deliver low double-digit growth through 2025, with the Polo for women brand leading the charge. “The consumers can leverage the breadth of our product with our sweet spot right at the epicenter of elevated casual,” Alagöz affirmed.

The Numbers

Jane Nielsen, COO and CFO, presented the detailed projected numbers: 8 percent constant currency increase for fiscal 2023, followed by mid-to-high single-digit CAGR through 2025. In addition, the company is aiming to raise operating margins north of 15 percent thanks to saving $400 million in cost-of-goods and operating expenses. Marketing spend as a percentage of revenues will be reduced by 7 percent as well.

A Final Note from The Robin Report

You will have noticed that there was no mention of repositioning the “dream,” Ralph’s creation of an aspirational style of life. It was as if Ralph’s right brain was talking to Louvet’s left brain, at the end of the presentation when he said to Louvet, “I’m impressed by the team and by you. You’ve done an amazing job and you put this company in the right place.”

Style can be eternal; it’s the stuff that dreams are made of. And it is fundamentally a right-brain concept. I believe Patrice Louvet is an essential counterbalance to Lauren’s dreamscape business model with the skill to manage the strategic guard rails to eternal growth.