What a difference a year makes.
With solid first-quarter earnings posted just two days earlier, the mood was decidedly light and upbeat at Thursday’s Ralph Lauren Corp. annual meeting, following a year of transition under new chief executive officer Patrice Louvet.
Ralph Lauren, founder, executive chairman and chief creative officer, opened the meeting at 9:28 a.m. Wearing a khaki suit, Lauren welcomed shareholders, noting at the outset, “I see a lot of friends here.”
He also joked about Louvet’s tenure at the company, noting that it was “one year, and how many weeks?” Louvet, who was named president and ceo a year ago, said, “two weeks.” Lauren teased, “So you have another week left,” with Louvet noting he was about to go on vacation. At that point, Lauren told the attendees, “You can see he’s a wise guy,” which drew chuckles from the audience. Louvet added, “I promise I’ll be back after my vacation.”
That exchange set the tone for the meeting, which was held at 10 on the Park at Time Warner Center. It was a nod to a number of changes the company has gone through over the past few years, as well as an indication of the work that’s still on the company’s agenda after vacation’s over.
The chairman told shareholders, “This starts the next 50 years. I’m proud that we’re here.…I feel that we are on the rise.”
Louvet spoke about the extensive meetings, planning and reflections the senior team completed on the reason for the company’s existence and what needs to be focused on to ensure long-term growth. He spoke about performance, and how it’s defined by “clarity of purpose,” which led to the company’s mission statement about why it does what it does: “To inspire the dream of a better life through authenticity and timeless style.”
Louvet also noted the hallmarks of what is known within the company’s hallways as “The RL Way”: “Love what you do; be passionate; work hard; work together; take risks; stay real; never compromise, aspire to the best.”
As for sustainable success for long-term growth, Louvet informed shareholders that the team is focused on “value creation, building it one year at a time.” That value creation will be composed of a balance between growth and productivity, the ceo explained.
He told attendees that the core of the company’s consumers are Gen Xers, although the brands are well-positioned with Millennials. And with Gen Z gaining purchasing power, Louvet said the company needs to “make sure they come into this family as well.” It’s been doing that through a greater marketing spend on social and digital media.
Also in attendance were new board members Angela Ahrendts and Linda Kozlowski, who have experience in digital and the global markets.
As for overseas, Louvet said the focus is mainland China, although there’s also work being done on growing its Latin American and Middle Eastern presence. The ceo hinted that those areas could be a focus for the five years after the current five-year plan, dubbed the Next Great Chapter, is completed.
While much of the points of discussion were already revealed to analysts at the company’s Investor Day presentation — adding an incremental $1 billion to sales by 2023, adding an incremental $300 million to profits and giving back $2.5 billion on a cumulative basis to shareholders — last month, they were new to shareholders who were in attendance.
Louvet also took a moment to thank the company’s employees for their efforts, noting that while his presentation points might be perceived as “just words on paper, it all comes to life with the people on the teams” around the world.
One shareholder, who said he’s a stockholder because he likes the clothes, noted how there are fewer places globally to shop, and asked about the closing of stores because “I want to buy more clothes.”
Lauren said, “There’s plenty of room to build more stores.” But he also noted the decision to pull back and for now put a greater emphasis on investing in the online channel.
Louvet added that many of the stores — about 10 to 12 this year — being opened have a smaller footprint that’s both “more dynamic and more profitable.” He also emphasized, “We’re not replicating what we did 20 years ago. That’s not what today’s customer is looking for.”
The easy banter between Lauren and Louvet was evident again before the meeting closed following a shareholder question on whether the company would seek to “buy” the Lord & Taylor store location on Fifth Avenue, which is set to be vacated early next year and be repurposed by the building’s new owners.
Louvet asked Lauren: “We already have a flagship [on Madison Avenue]. Do you want another flagship?” Lauren quipped back, “Whatever you say,” which drew another round of chuckles from attendees. Louvet told the shareholder the company will keep its focus on the flagships it already has.