Before he arrived in 2017, Ralph Lauren “expanded in places where we probably shouldn’t have, which drove higher levels of promotional activity,” Louvet told me. “It was like the boiled frog phenomenon. I’m sure it was well-intended. Each year, we thought it was just marginal. But after a few years, you realize it’s not going to end well.”
Since then, he said, “we’ve had our eyes wide open on tough choices.” Joining Ralph Lauren after almost three decades at P&G, the native Frenchman took a page from his old employer’s turnaround book. To escape from the price race to the bottom, the company “took a one-year, painful hit” to reset consumer expectations. Then, during COVID, Louvet reset the distribution strategy, and closed two thirds of its wholesale presence.
Meanwhile, Fortune's Christiaan Hetzner reports on the recent challenges at Porsche. Hetzner writes that the Porsche CEO, Oliver Blume, has announced a second major round of cost reductions at the luxury automaker. Hetzner concludes that the company is "drifting deeper and deeper into its biggest crisis in decades." Blume apparently attributes the troubles to a slowdown in EV demand, a tough price war in China, and the high new tariffs imposed by President Trump. While these factors clearly have affected Porsche's business, I wonder if the troubles point to a deeper strategic challenge. Over the past two decades, Porsche has expanded beyond being the producer of its iconic super premium sports cars. Porsche sells sedans and SUVs around the world. Has that growth begun to impact the brand, and can the company continue to command the high willingness to pay that it generated in the past? Will Porsche require the type of brand reset executed by Ralph Lauren?
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