Transcripts For BLOOMBERG Leaders 20240703

Francine it started 56 years ago with a tie. Today, ralph lauren is one of the worlds most iconic fashion brands, valued at 8 billion with 500 stores around the globe. At the helm, a chief executive who came into the store seven years ago with no fashion experience but a determination to return the brand to luxury, attracting younger, high value customers. When i started the job, i often got the question, is ralph lauren still relevant . Which is a painful question to listen we had to some extent to honestly . We had to some extent lost that to the younger generation. Francine today, i speak to the ceo of ralph lauren about the Company Founder and his plans to take the company back to its roots. Patrice louvet, thank you so much for joining us on bloomberg. Patrice very happy to be here. Francine do you have the most fun job in the world . Patrice it is pretty fun. Probably the thing that attracted me to this opportunity is the opportunity to work with ralph, right . This man is a visionary, incredible entrepreneur who has had amazing success around the world, and the opportunity to work with him, to partner with him, is really special, and i cherish it every day. Francine and you have to get along. He is such a figure he has his name on the door. What is his vision . Patrice what is exciting is when you see where the store started, the tie, you see what it has become. It has all been driven by a consistent driven, purpose. I talk about our purpose is to inspire the dream with a better life of authenticity and time and style and that has been the driving force for the company. Now we are around the world, well beyond ties. We have hospitality, restaurants, coffee shops, the womens business, the home business, but ill still driven by a very consistent vision ambition, and this is a business very much about trends, and ralph says i hate fashion because fashion comes and goes. We talk about style, timelessness. I think that has served the company quite well. Francine what was it like the first time you met him . Patrice there was a moment that was incredibly special. I got a chance to see him at his ranch in telluride. Right after i got the job. Thats probably the most iconic moment for me. Also to give you perspective on that first engagement, we were in his ranch. We are outside. It is chile, 8 00 in the morning next to the cookhouse and we are looking ahead to this Beautiful Mountain view and we are talking about what business are we in because it was really important to be super clear together and have a consistent vision. We landed on we are in the dreams business. A lot of people think of ralph lauren, you are in the fashion business, the apparel business. We disagree with that. Francine is he easy to work with . Patrice he is wonderful to work with. Theres always this vision that the leader of a Fashion Company can be difficult and challenging to work with, but ralph is an incredible partner. Hes both an amazing visionary and a great businessman. I think that has been a key part of his success. We have been super clear on our roles, and although nothing is written on a piece of paper, we are clear on who is responsible for what and where we come together, and i could not be happier with the partnership. Francine there was also a moment where you had to change the company to get away from the Department Stores that lowered ambition of the company. How hard was that . Patrice from a financial standpoint, it is challenging, but going back to the roots of the company, the company was founded as a luxury company. The first time at ralph lauren, as ralph reminded me recently, was 2. 5 the times of a Christian Dior type. The rent had been overextended, so we had to pull back our presence in the u. S. The brand had been overextended. 2, 3 years into the exercise, we are in a much stronger place. Brand perception is much stronger. Value perception is much stronger. Francine right now, when you look at a luxury company, it is very clear that if you are in the ultraluxury space, you can increase prices, you have a lot more of market around the world instead of this moderate luxury. What made you see that back then . I think it is back to what this company stood for historically. This phenomenon has gone on for quite a while where you see this bifurcation of Luxury Brands that have Pricing Power that consumers see the value and therefore you have the ability to increase your average, and others were focused on selling product, not engaging the consumer in the same way. Much more promotional. We felt like we go back to our roots, that is where we wanted to take the company. Francine how do you create those moments where people associate you with wimbledon or some of the shows they watch on tv . Patrice it is a very holistic exercise, so not just one thing. Francine is there one thing you think works better than others . Flagship stores with coffee shops that have a distinct lifestyle that you think people are drawn to more than online . For us, the way we think about it is 30 key cities around the world. We dont really look at markets. We look at key cities. In each key city, we want to have a balanced ecosystem. Start with a Flagship Store thats going to project the image. Our approach in china, for example, is very much driven by the city focus, establish a strong flagship, and build ecosystem around it, and i dont know that i can point to just one interaction. I think the transformation in our marketing and storytelling has also been quite effective, particularly creating a younger consumer. That was one of our priorities when i started. Francine which is one of the hardest. Patrice visits one of the hardest because they are fickle. Francine and they change. Patrice when i started, i often got the question, is ralph lauren still relevant . Which is a painful question to listen to, but we had to some extent lost that to the younger generation. The company is 56 years old and we expect to be here another 56 years from now. It was critical to rejuvenate that younger base and we pivoted our marketing to be where that younger consumer is. Gaming. The type of sports activation that resonates with them. Styling the product differently. One of our icons, you have 80yearold man wearing it, 40yearold women wearing it, 16yearold kids wearing it. We style it differently. Francine is your secret sauce that you are the right lifestyle brand for the right moment . People dont go to haute couture events anymore or they have a more relaxed approach when they come to the office. Patrice for this moment, we want to be here another 50 years, but i do think what ralph and the teams have been able to be able to create over time is that lifestyle proposition. We are not outerwear experts or sneaker experts. We offer lifestyle and this range of product. As we have seen people still working from home, partly going back to the office, going back to social events, we have the ability to serve you. Feature position. Francine are we going to the office in hoodies now . Has work from home changed us . Patrice maybe it depends which industry you are in. Ralph does come in every so often in a double rl hoodie omar apollo hoodie, but he makes it look element elegant. Up next on raising prices, asia and the environment. Patrice you cannot expect to be timeless if we run out of resources. For me, it is not a reaction to external pressure. It is corp. To who we are and what we stand for, and to a very strong extent, it is about futureproofing our business. Explore endless design possibilities. To find your personal style. Endless hardie® siding colors. Textures and styles. Its possible. With james hardie™. Francine ralph lauren has raised the average price of his product by around 18 since 2018 as it aims to elevate its brand and become a lifestyle company, something the chief executive is passionate about. I continue the conversation with Patrice Louvet. When you look at pricing, you have also been able to really elevate the brand by increasing prices. Is there a limit to how much you can increase prices before it hurts demand . Patrice it is up close to 80 since we started on this journey. Short answer is i dont think there is a limit as long as we do a good job of elevating the product, the storytelling, the environment, making sure the customer sees the value, and they have so far. Our value perceptions are at the highest since we have been tracking, but the onus is on us to provide this consistent elevation, that the consumer sees it, and it supports this elevation in retail. Francine talk to me about china. It has huge potential but is essentially still quite a small market for you. Patrice huge short, midterm, and longterm market for us. It is double what it was four years ago, but still quite small when you look at the penetration of the Chinese Business for some of the best players in the luxury industry that are putting percent, 30 , 40 . Im excited about the opportunities. What is really energizing for us with china is how the brand is connecting with the younger consumer and more elevated consumer. Our most elevated products we sell best in china. We have the best gender balance. As i believe you know, most of our business historically has been more men. In china, it is a balance, more men and women. It is good for us for the rest of the world. We are being very deliberate in our approach with the rest of china. We are building a quality brand so that serves us well five years from now, 10 years from now. Im excited about more generally asia than china. Francine are you worried that you dilute the brand . Patrice yes, i think the notion of desirability is critical for this industry. Lucidity is important. Thats why we pulled back in the u. S. Where we felt like we were over distributed. To some extent, ubiquity can be a challenge in the luxury space. Not to some extent, it is a challenge in the luxury space. Thats what we are building in markets like china or india, which are promised for the future, being very deliberate planting the right foundations so we can build from there with the right image perception. Francine the world is changing. We talked about ai, sustainability, and the need for Fashion Companies to do more. How much time do you spend thinking about sustainability . Patrice a lot and i will tell you why. I will go back to our conversation earlier. Timelessness is the key. You cannot expect to be timeless if you run out of resources. Sustainability is not a reaction to external pressure. It is core to who we are and what we stand for, and to a very strong extent, it is about futureproofing our business. More and more, that younger consumer we talked about, they want to work for companies that care about this planet, that do more than generate revenue and profit. You need sustainability to attract consumers. More and more, the younger consumer cares deeply about what you are doing differently. Are you making a difference . Investors, particularly in europe more and more, place value on if you are being sustainable. Many of our partners value sustainability. Francine what does that look for in a Luxury Lifestyle Company . Patrice for us, it is multidimensional. Right now, putting a lot of emphasis on circularity. If we are able to shift the Business Model in fashion from circular to linear, thats probably one of the biggest changes we can make. Obviously, thats a total ecosystem, but to give you some example, it is innovating how we design. We Just Launched the first cradle to cradle certified cash mission. Cashmere sweater. It is innovating in materials. Theres a company that helps us with recycling cashmere. In sustainability, we cannot go it alone. Leveraging industry scale. Francine do you sell differently to the chinese then to the American Consumers in terms of lifestyle, or is it still a similar lifestyle . Patrice i think the fundamentals of our lifestyle or in the different movies we showcase and different stories we tell are pretty consistent. If anything, just in the way consumers dress and engage with fashion brands. This is a generalization, but on average, the Chinese Consumer just like the japanese consumer tends to be more elevated and sophisticated in the types of styles they put together, so that informs part of our value and our product. Francine more innovative . It is not necessarily more edgy. Patrice it is more luxurious. It is actually more elevated and more luxurious. Francine there seems to be a trend and you may be one of the first ones, to get chief executives from parts of industry that were not luxury and fashion that were actually Consumer Products. Is there a parallel . Do Consumer Products chief executives do better than luxury . Patrice im not going to answer that question directly. The trend started in beauty, actually. Beauty is where you started to see the professional coming first, and now we are starting to see that in the fashion world. I think at the end of the day, success in this industry is getting the ballot balance right between magic and logic. The fashion industry, Creative Leaders have the magic. Theres an opportunity to bring a higher level of logic without diluting the magic, and i think what people from consumer goods industry bring art creative focus on the consumer, understanding the consumer. Where you get success is designer vision, customer needs come together, and thats where needs get exposed. Great understanding of consumer, more data, more experience, leveraging data in decisionmaking. Theres an element of intuition that needs to be protected, but that can be supplemented by data. Francine whats the ideal algorithm . Patrice it is confidential, i cannot tell you. Francine you have to kill me. Patrice no, i would not do that, but we look at a number of metrics, consumer profile, competitive environment, the type of product being sold in the area, and the last thing i would point to is operational discipline. These are complex businesses where we developed a lot of skus every year. I think what you learned in the consumer goods industry is how to run pretty vigorous and disciplined supply chains and just general operations, and a lot of these electric companies are 5, 10, 15, 20 billion. The level of complexity requires great expertise. Francine how do you choose celebrity influencers . You said youd used to rely on magazines. Our are consumers more influenced by influencers and celebrities . Patrice yes. Francine is it more controlled to compared to 10 years ago . Patrice it was less people, and now you have a much broader palette. What is critical to us is authenticity. The concept of if im going to write you a big check today and you are going to talk about us and tomorrow, you show up on a competitive brand because you got another big check, we are not interested in that. Francine up next, Patrice Louvet with risktaking, gambling with the metaverse, and the next few years. The only failure is the failure to learn. As long as we capture the learnings and apply them, it was a success. Thanks to avalara, we can calculate sales tax automatically. Avalarahhhhhh what if tax rates change . Ahhhhhh filing sales tax returns . Ahhhhhh business license guidance . Ahhhhhh crossborder sales . Ahhhhhh item classification . Ahhhhhh does it connect with acc. . Ahhhhhh ahhhhhh ahhhhhh francine more than half of Ralph Laurens customers are women. Yet, they represent yet less than a third of sales. It is an area the chief executive sees as an opportunity as he bets on growth in womens fashion. What is next for ralph lauren . Are you going to focus on sleepwear . Are there other parts you think you can grow a lot more . Patrice what is amazing about what ralph has created is we can enter a lot of spaces with automatic credibility. We are looking for an opportunity to open one here in london, but that is not a core priority for us. Next spaces for us are winning with women. Our business historically has been driven by men. Today, 56 of our customers are actually women on our website and stores. They represent less than 30 of our business, so that is a massive opportunity for us. As we get to understand her better, develop great products for her, present the products in a way that resonates for her, which may not be the same way as for men, that is a big opportunity for us, and that is an area that is part of completing this, and we are looking at the home. If you reflect on ralphs approach to the space, he creates these environments and this world, you can really picture how it translates into home, so that is an area of growth for us. Longerterm, i am pretty excited about things. Francine the metaverse. Are you excited about the metaverse . I feel like now we talk about ais, so about ai, so everyone forgot about the metaverse. It is more to do with our consumers. That is where the younger population is, where they want to engage with brands like us. We want to play a leadership role. We have a partnership with fortnite francine how does that work . Patrice you can play on fortnite, you can dress your player in the ralph lauren skin. We have actually done a physical version as well. Francine was that quite a gamble . It is brave so it paid off. It could have backfired. True. Heres where i go back to the roots of the company. Ralph started with a tie. We could be here 56 years later being the Market Global leader of ties. Part of being a leader is trying things, innovating, expanding, experimenting, so we stay true to that. I always talk about the fact that the only failure is a failure of learning. Even if we try anything and a bond, as long as we capture the learnings and apply them elsewhere, it was a success. Francine what are you like as leader . A risktaker . Patrice if you ask people throughout my career how they would describe me, they say i think they would say servant leader. I really believe my job is to set the team up for success and create the potential for learning. If i do that, i will be fine. I think people will say listener. Theres a great quote from a greek philosopher thats like, we have two ears and one mouth. Theres a reason for that. I emphasize learning. Ralph is an incredible inspiration because where he is places an emphasis on learning and i use that as inspiration. I am a measured risk taker, i would say. I am not a swing for the fence risk taker, but i believe in innovating and trying new things, and you feel the energy inside the company today. I love that spirit of trying things, and again, learning. Francine what is a good day in the louvet world . How do you measure success . Patrice a good day for me is time in the stores. Francine what do you do . Do you change things around . Patrice to do that is very tempting, but i try to avoid doing that. I just listen to the stories of your teams tell me, both in terms of how they are engaging customers, what we can do better in terms of the brand and product and also how they are building culture within their stores. Francine and you are committed to the u. K. . Patrice very committed to the u. K. Historic market for us and great inspiration for ralph. Francine worst day in the office . Patrice i have not had a lot. When the numbers are coming are not coming in the way you would like them to, thats unpleasant, but welcome to the business world. When we are not able to get the balance right between the magic and the logic and the groups are not communicating well, that obviously can be frustrating. One of the lovely things about it is it is very emotional. One of the challenging things about it is it is very emotional. Francine were you surprised that even in this costofliving crisis luxury does so well . Patrice i think people need to dream. When the environment is more challenging, people still need to dream. They need someone who is going to give them hope and bring optimism, and i think that is what the best Luxury Companies do well. Francine where will you be in the next five years . Patrice we are on an incredible journey in terms of growth and expense geographically. We will be stronger in asia. We will establish good presence in india. We will be better distributed across europe. We will be more present in the west of the u. S. Because that is a big, white space for us. We want to be more successful and larger than today and what i hope as im still at the helm working closely with ralph. To bring dreams to life to consumers all around the world. Francine thank you very much patrice thank you ve, francine. Health happens now. Start your dnapowered Health Journey today with personalized insights from 23andme