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.

So a few elements here. First of all, one of the greatest advice I got from one of my mentors at Procter & Gamble is the power of focus. The risk when you're a lifestyle brand is you can do anything.

I remember having a conversation with Ralph a couple years ago. We got water on the table and I said to him, you know, we could probably launch a Ralph Lauren water and if we had a team that understood the industry, I think we'd do pretty well. It was a joke. He said to me, you know, Patrice, we actually really looked at that project. So as an illustration of what's possible, and I think that's part of why we got in trouble as a company, which is we spread ourselves too thin. So we are clear on the key growth vectors today. There's still so much runway on the existing growth vectors. So, you know, we look at the market size, total addressable market $400 billion. Growing low to mid single digits. We're $8 billion. So we're less than a two share. Significant opportunities to expand within the current footprint. So, very disciplined on which cities, which product categories, which consumer groups. Now, this being said, what's exciting if you're a long-term investor in Ralph Lauren beyond this market size is given we are in the lifestyle business, you can see where else we could play. We could play much more actively in the home business where we're small today and doing a lot of work on just getting the foundations, right? Because Ralph Lauren proposition is so unique and so credible in that space. We could play in the hospitality business much more actively. There are a lot of conversations around, oh, we could see a Ralph Lauren hotel and a hotel chain. True, I can envision that at some point in the future of this company. We started to dabble in private residences and furnishing private residences. So, we just finished a project in Crete, eight luxury residences all furnished in Ralph Lauren, working on a project in Dubai right now. So, there's no lack of opportunity. If anything for us the challenge is focus and just focus on what matters most and I often say to the teams it's not because we can do it that we should do it.

Yeah, and resisting the external pressures from the markets to go faster and grow faster and grow because that's what got this company in trouble over time is the boiled frog phenomenon of, well, we'll just do a little bit more off price, a promotion. It'll be fine. But as it accumulates, the cumulative effect is very damaging.

Yes.

I often get that question, Penny. So, it took us a while to get China right. This is the company's third stab at the Chinese market. Initially the company worked 30 years ago with a license partner and there wasn't much oversight and we ended up on parking lots under a tent. Not great for the brand. Then the company felt we should replicate the European luxury model, build these Taj Mahal stores on Main Street, which works financially if you're selling $4,000 handbags. It doesn't work that well if your average unit retail is closer to four or $500. I think we've got the right approach now. We're focused on six key cities, Shenzhen, Chengdu, Hong Kong, Taipei, Beijing, and Shanghai. We're building these consumer-centric ecosystems with the right digital presence, the right store presence, the right hospitality. I was just in Chengdu two weeks ago which is probably the best example of the Ralph Lauren world coming to life. We have a restaurant, we have a coffee shop, we have a Polo store, we have a Double RL store, we have a kids store. And then weaving the values of the brand into culture. So it is a bit counterintuitive at this point in time that a quintessential American brand would resonate so well with the Chinese consumer, particularly the younger generation. But I think what the consumers are gravitating to there as in other parts of the world because we're seeing this everywhere is the core values that Ralph Lauren has established and stands for of optimism, aspiration, authenticity, family, which one could define as quintessential historical American values. That's what people are looking for today. And well beyond just products. It's like what do you stand for? What do you represent? And we're finding that as the teams bring that to life effectively locally with both global programs and local programs, consumers are quite attracted by that.

Yes, I think it is a differentiator. I think American luxury is about accessible luxury. And I don't mean that from a pricing standpoint. I mean that from a philosophy standpoint.

So, luxury is often, I think, simplistically defined as it's a $4,000 handbag. And so if you sell a $4,000 handbag or $20,000 watches, you're luxury; if you sell other items at lower prices, you're not. And we and other brands in our space in the US are about inviting people into the brand. So, you know, I'll give you our price range. We recently sold a $320,000 watch.

Fortunately, we didn't sell a lot of those, but at least sold that week.

You don't need to sell too many. And you can get a pack of tennis socks for 12 bucks. And then everything in between. We don't have, you know, lines in front of our stores with guards that kind of keep you out and we want people to come in. Ralph is this amazing retail concept of welcome to my home. And that, you hopefully you see that through our stores. It's not welcome to my store. It's not please come and buy something. It's welcome to my home. Come and live an experience. And then if you want to buy something, of course, we'd like you to do that.

Yes, across a number of different fronts. Brand portfolio. So, we had a philosophy historically of, you know, if there's a new consumer group or new concept, let's launch a new brand. And so you had brand expansion, what you might call brand proliferation. So one of the things that my predecessor had started, but that we completed, is just relooking at the entire brand portfolio and there are some brands we eliminated. We licensed Chaps. You may remember Chaps from the good old days. A brand called Denim & Supply had been created. Great concept. Distraction.

Club Monaco, which Ralph had purchased with the team 25 years ago, we realized it didn't fit in the portfolio. We weren't getting the traction we needed. We eliminated that. So that's one. The second is obviously the conversations we had earlier on distribution footprint. Right? And being very choiceful on where we show up. And then being very deliberate on product categories. So we were very excited about the footwear category. It is a tough category. The margins are not very good. It takes a lot of space in stores to sell. So yes, it completes the look and there are a lot of advocates for where we got to drive footwear, that's really important. I said, 'No, we're not going to do footwear.' We might do it later. The good news is we're in business for the next 50 years. We have plenty of time to get to these opportunities. We're not going to do it now. We're going to focus on sweaters, we're going to focus on dresses, we're going to focus on outerwear and those kind of businesses.

So, the biggest surprise for me was the number of stakeholders that one needs to deal with. Because not only do you need to run the business, but you're interfacing now with the board, you're interfacing with investors, you're interfacing with the media, you're interfacing with government authorities around the world. And knowing how to allocate your time accordingly, getting clear on what your stakeholder map is, has for me been one of the greatest challenges in transitioning into this role.

Yeah, yeah, I do map it out.

Conceptually, it's a map. It is a list. I see it as a circle, actually, of okay, who are the different stakeholder groups that I need to engage with. What is the unique value that I need to bring in these forums, and how do I allocate my time effectively in line with the broader goals of the company?

I had to start with what's the emotion we want to trigger here? And you can't measure that.

I had to start with, okay, what's the dream? What's the story? Now, I don't think you get rid of the data, but I think the data then follows. And we talk a lot about magic and logic and getting the balance right, but it has to be driven by the magic. The heart of these companies are the designers. Just like I think the heart of FMCG companies should be the R&D group, right? We're driving the innovation. And getting clear on that, that's where it starts, is the designers' vision, and being comfortable not having data to assess it and trusting. And also, which is hard to do in a company that's perfection where perfectionism is kind of throughout all the touch points, accepted that some things are not going to work and that's okay. We'll pivot. We'll learn and we'll pivot.

It has, meaningfully. Probably the greatest change has been one, this comes from a Greek philosopher, we have two ears and one mouth and there's a reason for that. So, really taking the time to listen to understand. Second, and this is actually from a challenging experience I had in Japan with Procter & Gamble, the importance of taking the time to paint the vision to explain to people where we're headed, what are we trying to achieve. I think too often, particularly in crisis, you kind of want to roll up your sleeves and just get on with it. But if you don't kind of define what success looks like broadly to the organization in a way that's inspiring, that they want to be part of it, then you're not going to get 100% of their effort and their buy-in.

So, Japan was a good learning testing ground for leadership. So, ultimately I went there and the first six months were a complete failure. Probably the greatest failure of my career. So, I came in as general manager of hair care for Japan and Korea. The business is challenged so P&G is market leader in just about every market around the world except in Japan or Korea where we're number five. Not even number two, number five. And my mandate all the way from AG was go fix it. And, you know, rather sooner than later. So, I come in all guns blazing. I'm a new general manager. I want to prove that they made the right decision promoting me. And I understand the category pretty well because I'd worked in hair care for many, many years. So, I do a quick diagnosis of what I think the issues are. And I start changing everything. I change the team. I change the brand portfolio from regional brands to global brands. I change how we show up in stores. I change the pace of the innovation program. And then six months in, I feel really good. I'm like, we're moving here. There's progress, you know, this is good, this thing's going to turn. Six months in, a young Japanese woman on my team, Yone, she's in charge of consumer research. She comes to see me. I so remember, I'm a foreign male leader in Japan. All right? This is, women don't speak up, unfortunately, much in professional context at that time. This is 20 years ago. And certainly not to a gaijin, the kind of the foreigner that's just come in. And she says to me, 'Patrice, this isn't working. We don't think you're the right leader for us. This is just not working. We don't know where you want to go. Everything's changing. It's confusing.' So, gut punch, right? Gut punch. And then in parallel, personal life in the beginning in Japan is tough.

Right? Navigation system is in Japanese. So, we lived in Kobe. You can go to Osaka, but you're not sure if you're going to be able to come back.

You go buy products. I remember my wife buying what she thought was milk for our small kids at the time. Brings back the supposedly milk carton, serves the supposedly milk, and both kids throw up. I'm like, okay, clearly that wasn't milk. So, on the personal side it's challenging to get used to that culture. We pause and we say, 'All right, well, maybe this isn't the right place for us. Maybe we should just leave.' But, I am many [snorts] things but not a quitter and neither is my wife and we said, 'No, we're going to make this work.' But I was pretty clear I had to pivot because failure is not a great feeling.

I had to pivot. So, I learned so much in this experience that served me so well and I don't think I would be in this job had I not had this Japanese painful experience. So, what were the changes? One, listen. Slow down. Listen. You're not here for 3 months, ideally. You're here for 2 years, 3 years. You have time. Two, paint the vision. This is particularly true for Asian cultures, but I think true everywhere. Where are we headed? What are we trying to achieve? Three, sequence the changes. So, don't dilute the North Star in terms of what your ambition is. I think keep the bar high, but realize you don't need to do it all in 3 months. And I coach this a lot now having lived it personally. You're here for 3 years. So, what are you going to do this quarter? What are you going to do next quarter? What are you going to do the quarter after that? Over time you will get to the North Star. And the combination of these changes completely turned the situation around. When I left, P&G was number two on its way to number one. And we didn't want to leave Japan.

Mhm.

So, that's an exciting future, actually. And I think we'll help reinforce the unique strengths that this company has. So, let's start with what's not changing. Consumers are going to want an experience. They're going to want to feel an emotion. To be able to walk into a store and deal with a sales associate that takes the time to hear you and understand you. And there are categories where it will be much simpler to shop it online. Right? Particularly replenishment categories where you actually don't want to have, you're not interested in the shopping experience to replace your underwear. And we will lean into that as well. We have started to experiment with an AI-driven platform called Ask Ralph where basically you can have a styling advisor in your pocket. And that's true both for consumers and actually for our sales associates. Where you can pull it out and Ralph is right there in the palm of your hand to help you navigate an event you need to go to, a question you have on styling. So, I think the combination of leaning into digital commerce and a gentle AI, which we will do and want to play a leadership role there, and also leveraging the uniqueness of the world that we provide and the experiences that we can offer.

So, it probably depends on what your objective is in the purchasing pattern. If you're replenishing a basic white t-shirt, I don't know how much human judgment is necessary.

But if there's a special event you're going to and it's the wedding of your daughter, then you're going to want to make sure you leverage the logic of the tool and the magic of human judgment. And I think ultimately that's the formula for success in our industry is getting the balance right, irrespective of the platforms, between this magic and the logic.

Thank you very much.

Thank you, Penny. Thank you, Andrew.