CEO changes at Ralph Lauren and Gap affect respective stocks

By

Obi Anyanwu

Published
Oct 2, 2015

At 4:30 pm on Tuesday, Ralph Lauren announced what the fashion industry knew at some point was inevitable, but wasn’t exactly ready for. He announced that he would step down as CEO of his namesake company. Stefan Larsson, the global president of Old Navy at Gap Inc., was named as Lauren’s successor effective in November, and almost immediately the Ralph Lauren and Gap stocks were affected.
 

After the announcement, on Wednesday Ralph Lauren stocks jumped 12.2% to $118.16, the biggest gain in 9 years according to Bloomberg, and the Gap Inc. stock dropped 6.3%.
 
“This is disappointing news for Gap,” stated a research note from Stifel analysts to MarketWatch, "as Larsson’s successful leadership at Old Navy has helped the division grow rapidly, increasing sales over $1 billion in the last three years.”

Old Navy has been the strongest performer for Gap Inc. most recently pulling in sales of $1.67 billion for the company in the second quarter of this year. Larsson, who has served for Old Navy since 2012, is credited for increasing the Old Navy business. He will officially part ways with the company on October 2.
 
Old Navy is not in hot water just yet, however. Jill Stanton, Old Navy’s global product chief who has been with the company since 2012, was named Larsson’s successor in the interim. According to CNN, she is deserving of just as much credit as Larsson for the success of the Old Navy business.
 
On Ralph Lauren’s side of things, shareholders seem very pleased with the decision to appoint new blood to such a coveted position. Larsson has more experience with affordable brands, having served at H&M before Old Navy, but time will tell if his business savvy will translate to luxury.