Ralph Lauren CEO Patrice Louvet On Leading The Dreams Business | The CEO Signal

We had overextended the brand. We were overextended in off-price. We had a department store presence that was very significant in a lot of places where frankly we weren't proud of being there. My filter for the teams were two things. Are we proud of the way we show up? And is it financially attractive? If the answer is no to either, then we should either make the intervention to address the issue or get out.

We left about a billion dollars off the table.

Thank you, Penny. Very happy to see both of you. Great to see you again. And I should admit that we owe some debt to you on this show because you were one of my very first interviews for the CEO Signal newsletter when I joined Salesforce. And in Davos in 2025, you told me on stage that the tie was making a comeback. So I have very purposefully worn a tie on every one of these episodes so far. So thank you. Appreciate that greatly. You're a style icon, Andrew. You've become a style icon.

Yes, for men and for women.

And for women, absolutely.

Ah, thank you.

Thank you.

Yeah.

Yes, it does. This whole notion of full potential is at the heart of what's important to me and the way I also engage with team members, right? I think a goal in life is at the end of your life you should be able to look back and say, 'Okay, I leveraged my potential as best as I could and not left anything on the table.' And it has driven choices that I've made certainly on the professional front where there might have been a degree of risk to taking the opportunity but then to say I don't want to look back and have regrets on not taking advantage of these opportunities.

If you think in terms of legacy I often tell my team members okay so let's say this role is going to last 3-4 years for you. What do you want your legacy to be in this role? And then it forces you to kind of pick up your nose and say let me get out of the day-to-day churn and decide what's really going to make a huge difference and what will I be remembered for. And I think it helps people just recalibrate where they put their energy and their time.

Right. Right.

So Andrew, very aware of the risk because my predecessor had lasted less than a year and a half and before that there was a leadership structure with three individuals that also lasted about a year. So when I ultimately took the job I actually said to my friends 'My goal is to outlast my predecessor.' Which one might say, 'Okay, that was a low bar.' But in terms of longevity, which luckily I've had. The Ralph Lauren opportunity was pretty irresistible. Although things were going well at P&G, and I loved that company, and I felt like I was really part of the P&G family. There are a few things that attracted me to it. First of all, you get a chance to work with an icon like Ralph. Incredible entrepreneur, visionary, obviously leader in his space from a fashion standpoint, part of American culture. So the opportunity to work with someone like that, and there are not many individuals like Ralph on this planet, that was quite tempting. The second part is I'm a brand guy, right? I spent most of my time at Procter & Gamble, grew up through marketing. I love brands, I love building brands, I love reviving brands. Ralph Lauren is an amazing brand. The third area is I felt as I had interviews with different members of the team, with board members. I spent a lot of time with Ralph in his home in Bedford, sneaking away from my Procter & Gamble daily job on Friday afternoons to go to I felt like there was a good fit in terms of values and just what mattered to me. The level of opportunities on this business were immense. We weren't really in digital, we hadn't really tapped into the women's opportunity. We really hadn't done much successfully in China. So I felt like there were a lot of opportunities, and humbly I felt like with my P&G training and experience around the world that there's some value I could bring.

So, initially, none of it was about business. So we spent time Friday afternoons in his Bedford home talking about life, talking about family, talking about values, talking about general ambition and what we want to achieve in life, and just getting a sense for each other as human beings. And Ralph today for me is yes, of course, he's my business partner, but he's first and foremost a great friend. And I believe he would say the same if he were at this table, which is pretty amazing to be in that situation. We actually did not reflect much on strategic choices and business priorities. I think he learned from the prior experience that cultural fit, commonality of values, we discovered we were both Libras and concluded that that was the recipe for success. But a lot of it just focused on humanity. And what mattered to both of us as human beings and what we would bring to the company as a result of that. Given the prior experience did not play out the way he had intended, we took a lot of time to get to know each other. We did not rush this because we all had a lot at stake, right? I don't think he wanted another experience that didn't end well. And I was leaving 29 years at P&G, and things were going pretty well there. So I also wanted to make sure it was right. But we have found just an incredible sense of common vision, common values, common ambition that has served us very, very well over the past 9 years.

So, we are now clear on our purpose. And our purpose is to inspire the dream of a better life through authenticity and timeless style. Our purpose was implicit, but it was never expressed. That's been the grounding element for everything that's happened over the past 9 years. The second thing that's changed pretty significantly is injecting the consumer in the conversation. And for someone who's worked at Procter & Gamble for almost 30 years, it sounds so obvious. And I actually often apologize to the team like, 'I'm sorry, this is very obvious, but who's the consumer we're trying to appeal to? What makes them tick? What do they buy?' This industry historically has not been consumer-centric. This industry has been driven by a designer's vision. And then, you know, either consumers flock to it or they don't. And if they don't, that's because they don't get it. And if they do, it's they get it. And I think magic happens in this business when you need the vision of the designer. It's not just the consumer understanding that gets you success, unlike FMCG. And you couple that with consumer understanding, consumer segmentation, and that's when magic happens. And interestingly, when you see how the industry has evolved, you're actually seeing a lot more people from the consumer goods industry leading luxury companies because I think we've all come to the realization that if you're going to scale these businesses around the world, clear and exciting vision of a designer is necessary, but not sufficient.

So, what is wonderful with our designers at Ralph Lauren is they're business people, also. And Ralph sets the tone for that. He's an incredible visionary designer, but he's a businessman. He wants to win. It's not just about doing beautiful things that will look wonderful on a runway. He wants to make sure it sells, and he often reminds everybody, he says, 'I am a consumer.' So it's very different than the kind of the traditional perception that one might have of a designer that's just focused on doing beautiful things that they envision, but not as interested in how the consumer is going to respond.

There's probably three things I would call out. First of all, the brand is elevated. It's back to how Ralph launched it. He launched his company as a luxury company with a tie two and a half times the price of a Christian Dior tie, so luxury. We've progressively repositioned the brand towards that desirable luxury perception. We're bringing a lot of younger consumers in. So having a lot of success with Gen Z, which we're very excited about because we had lost touch with that generation 10 years ago. The second piece is we have a good balance between our men's and women's business, and our women's business, which has historically been, I would say, massive untapped potential is really coming to life now across all brands in the portfolio. And then the third area is we are very focused on winning in top 30 cities around the world. So not everywhere, right? China is six key cities, and then building consumer ecosystems with the right store presence, the right digital presence, the right hospitality presence, and the right department store presence to win in those markets. Those are the three engines that are driving the performance right now.

Right. So big transition for me because I come from a very rational indeed data-driven structured world for almost 30 years. So that gets a little ingrained in how you operate. The shift is really driven by conversations Ralph and I had on what business are we in? And I remember vividly a conversation I had in July which was a few days after I started. I went to Telluride to his ranch in Colorado and we were outside next to the cookhouse looking at the beautiful scenery and the mountains in the distance which are still on Ralph's property. And I asked him I said, 'What business are we in?' Which I think in business is a question that people don't ask often enough. And therefore you don't play too narrow or too broad. And the conclusion of the conversation was we're in the dreams business. We make people dream. We tell stories. We invite people into worlds. Ralph is a movie director. He's like Scorsese or Spielberg. He creates these environments, creates these stories and I like to think the consumer is the actor and the product is the prop. And so we invite you into these different movies and you know, the movie industry has I think seven archetypes. The love story, the rags to riches story and we also have archetypes. You can be a cowboy in Colorado or you can be a business woman in Wall Street. But that's the business we're in and what he has created over time is a lifestyle brand that enables us to do that. So the product is almost just a secondary element to what we do. Now, if you're in the dreams business then it defines your playground very differently. You can get into hospitality in a way that's credible and we now have, as you know, five restaurants that are all doing quite well. You can get into Home. I actually think if Ralph started the company all over again, my advice to him was don't start with a tie, start with Home. Because Home margins are better. No. Not yet. [laughter] But certainly in terms of encapsulating the philosophy of the company and these environments and these worlds that we create, Home does that more directly than a tie would. So it's actually pretty spectacular that with that concept he was able to be successful starting with the tie. So how did I make the pivot? I learned. I think I have the benefit throughout my life personal life and also my career to have lived in very many different cultures, to have been exposed to many different business situations from turnarounds to acquisitions to, you know, steady strong businesses you need to keep going. And so, my wife might disagree with this, but I think I have some degree of flexibility in the way I operate and some degree of agility. And I got really inspired by this whole dream concept.

Yes. A lot actually, Andrew. Probably the biggest one is this need for data. I mean, I honestly felt I told the teams this when I started. I felt like I was put into a cockpit of an Airbus or a Boeing and someone had put cardboard on all the cockpit windows so that I couldn't see a thing. And I said, 'How am I going to run this company with no real data on how we're performing, where the opportunities are?' But one, you build that capability over time. So we did not have a consumer data understanding function. We now we've invested millions of dollars to build that. We have that. And then two, you learn to get more comfortable with the balance of magic and logic. And to lean more into the magic. I actually think if I was going to go back to Procter & Gamble, I would bring back some of that magic, emotion, dreaming that is so prevalent and so important in this industry.

So, the toughest calls start with people. Right? Just to get clear on who should be part of the journey moving forward. And whose time has come and they might have been amazing contributors all the way up to now, but they're not going to be the contributors that we need them to be. Either because they don't feel like the pivot is something they want to be part of or they just don't have the skill set. So the people choices, that's obvious. I'm sure a lot of people sitting in this chair would have said exactly the same thing. And then it's kind of doing the reality check of, okay, if we're in the dreams business, then how do we show up to consumers around the world and do we show up like we're in the dreams business? Are we inspiring? Or are we just running commercial operations? And there are a lot of locations that have been built over time through financial pressure, I'm sure, where we had overextended the brand. We were overextended in off-price. We had a department store presence that was very significant. In a lot of places where frankly we weren't proud of being there. And so my filter for the teams were two things. Are we proud of the way we show up? And is it financially attractive? If the answer is no to either, then we should either make the intervention to address the issue or get out.

We left about a billion dollars off the table.

I actually was pretty confident that was the right thing to do. Now, I had done something similar when I ran the fragrance business at Procter & Gamble. I'd seen the benefit of that in terms of brand desirability, but it's a big number. It's a big number and it impacts every element of the P&L. So you have to bring the board in. Ralph had no issue with it because Ralph did not actually like the footprint that the brand had at the time. So he turned out to be an incredible partner and ally on that. And in hindsight, I wish we'd done more. So we're doing that now.

Still we're close this year we're closing 100 doors in the US. And we're talking still with our department store partners to say there's more to come. Because it's foolish to think that we can create the desirability that we're looking to create if we look good in our Chicago store, but in other locations, the image of the brand is different because the consumer needs to have a consistent holistic experience for the brand. So I think we're going to continuously call the bottom and there's always a bottom. So I suspect 10 years from now we'll still be shedding the bottom and continuing to elevate the positioning.

Yeah, my leadership team first and foremost. But, you know, the situation I got to one we were in crisis. Right? Business was not performing. So continuing to do what we were doing, that was going to be the definition of insanity. I think there was good realization that we needed to pivot. Two, people were not proud of the way the brand showed up. Right? And these people, they work at Ralph Lauren. They want to feel good about the way the products are showing up, the way the brand is showing up. So there was support from that standpoint. So the challenge was more around financials and how to manage the financial implications in the near term. And then challenges with our department store partners. Because we play a very important role for a number of our department store partners where Ralph Lauren is a brand that brings in traffic that they benefit from on the rest of their portfolio. And so we did have some tussle and we still do today. There's some friction around we think we need to shut down these 50 doors. We can't do that. Well, we're going to do it because we need to build the brand and that's key to our strategy.

That's right.

Yeah, that took a while. It was frustrating. I'll be honest with you, Andrew.

Ah. Well, by the time I realized that I had exceeded my predecessor's time, so I had achieved my initial goal. It was frustrating because, you know, we felt like we were making the right choices. We were starting to show progress, but I understand as an investor, you want to see a track record of achievements. And it took, I think, the stock reaction took longer than we would have liked. But ultimately, if you kind of average it out over the time period, I think we're happy with the way investors have responded. What I'm very grateful for, to both Ralph and the board, is at no point was there any conversation on, hey, how are we going to move the stock price?

None. Ralph is not interested in the stock price.

Relatively. And same for the board. They're like, let's, we have a strategy, let's execute the strategy, how can we help you bring the strategy to life? And if anything, when there were negative stock reactions on a quarter, I'd get a call from board members just, 'Patrice, don't worry.' Right? Don't worry, we're playing the long game, you're on the right strategy as a team, just keep doing what you're doing. I'm very grateful for that because that does not happen in a lot of companies.