29 September 2015

Ralph Lauren Rides His Polo Pony Into the Sunset

Stefan Larsson, a former H&M executive and president of Old Navy, Gap brand, is taking over the helm at Ralph Lauren.   Mr. Larsson is credited with reviving Old Navy, one of the a bright spot in Gap’s portfolio. (I will purposely fail to mention that the last CEO of Gap, who didn't fare nearly as well, was a kid from my hometown.)
The change is a purposeful attempt by Ralph Lauren to get its financial house in order. Recent earnings beat analyst estimates, but revenue dipped more than 5 percent, causing a precipitous drop in share price.
According to the New York Times, Mr. Lauren said that he intended to remain active at the company he founded in new roles as executive chairman and chief creative officer. 
What does active mean? Mr. Larsson apparently will report to Mr. Lauren. However, Lauren described it as a partnership“But I don’t feel like I’m stepping back now,” Mr. Lauren said.
If not stepping back, what is this change all about?  If Lauren is not going to give Larsson full authority to do what is necessary to remedy the financial performance, why promote him to CEO? And the new CEO is reporting to the former one?  Does that mean change is at hand, or more of the same? 

It appears that the two executives come at this business from vastly different perspectives and experience. Unlike Lauren, Larsson made his mark in the low cost fashion world.  Will his cost conscious views conflict with those of Ralph?

13 September 2015

If You Can Stand the Heat, Stay in the Kitchen

Several months ago we published our blog about Hamdi Ulukaya being pushed out of the CEO role of Chobani. Apparently we were a bit premature.  Hamdi is still in charge and now his private equity investor TPG is happy with his current performance. But is there a problem still lurking?

Hamdi was recently quoted by Business Week when asked about the prior press relating to his imminent departure: "Nobody could think of Chobani without me and me with Chobani."  Uh oh! This convergence of the person with company he founded may ultimately be the downfall of both.

As we have pointed out many times, founders and the companies they found often approach a singularity of identity. Certainly for a charismatic founder like Ulukaya, this is a natural result of his outsized personality. But the fact that the two are inseparable is not a reason for either to celebrate, at least if capitalistic results are the goal of Chobani's investors (which is no doubt the case for TPG). Both would be well advised to begin re-separating into two distinct personalities - no matter how long Hamdi's tenure may last.  Too many great companies have had to rebound from the inevitable surgical removal of the founder from his company. And, too many founders have found themselves with a large void in their lives.

While Chobani is apparently now seeking a COO (rather than replacing the CEO), Ulukaya's presence and stature will make this a difficult job to fill. In fact, I wouldn't be the least bit surprised if the board and its private equity investors, only succumbed to keeping its founder around to now seek a buyer for the company rather than trying to navigate what will surely be a fragile founder transition.

05 September 2015

A Nick for a Nick

Nick Robertson
The Guardian reported that Asos, the British on-line retail company founded as: "As Seen on the Screen", has replaced Nick Robertson, its founder who stepped down, with its COO Nick Beighton, who appears to have been groomed for this role since early last year.  Robertson recently sold a significant part of his holding (worth approx $30million US) in January of this year, although still retains almost 10% of the capitalization.

According to the article, a person familiar with the company praised Robertson for the move, noting that he realized he didn't have the skills to run the business at this time.  The company was founded in 2000.  Beighton joined in 2009 as its finance director.

We praise the company for establishing a long runway for its transition founder and for Nick Robertson for being a self-aware founder and  understanding his evolving role in the success of the company.  Now we will need to wait and see how the company fares under this new leadership,