Ralph Lauren shares soar as founder steps aside

October 01 00:02 2015

Shares of Ralph Lauren (RL) soared in Wednesday morning trading, the day after the fashion industry icon announced he was giving up the CEO title at the company that bears his name. The New York City-based company’s stock was up 12.93% at $117.50 in morning trading. Though welcome for shareholders, the intra-day gain was still far short of the $183.10-a-share close on Jan. 2, the high for 2015.

Investors appeared to signal approval of Tuesday’s announcement  that Stefan Larsson, most recently the global president of Gap’sOld Navy division, will succeed Lauren, 75,  as CEO in November. The news marks the biggest change in the fashion firm’s top management since Lauren founded it 48 years ago. Larsson will report to Lauren, who will have a seat on the board of directors and, the company said in a release, “will continue to actively drive the company’s vision and strategy as Executive Chairman and Chief Creative Officer.”

In a new research report, Morgan Stanley analyst Joe Sole wrote that “Mr. Larsson is highly regarded and his skill set likely meshes with those of other top RL leaders,” financial media outlet Benziga reported. The changing of the guard “removes an overhang by adding clarity around succession planning,” the research report added.

The change comes as Ralph Lauren, which had revenue of $7.5 billion in the latest fiscal year March 28, has expanded its luxury business while beefing up its online presence, the Associated Press reported. In the past two years, the company has added three new brands — Polo for Women, Polo Sport and Denim and Supply. As global president of Old Navy for three years, Larsson, has remade the business to be a bright spot in Gap’s portfolio, the AP said. Prior to his tenure at Old Navy, Larsson was part of an executive team at Swedish cheap chic fashion chain H&M for 15 years that increased annual revenue from $3 billion to $17 billion. During that time, H&M’s operations grew to 44 countries from 12.