Dive Brief:

• Ralph Lauren is stepping down as CEO of his namesake company, the company announced Tuesday, and will remain at the company as executive chairman and chief creative officer.
• Stefan Larsson, president of Gap Inc.'s Old Navy brand, has been named as Lauren's successor. 
• Larsson, who will take on the CEO role and join the retailer's board in November, will report to Lauren. 

Dive Insight:

Ralph Lauren's decision to step down as CEO—which Lauren stressed is not a step towards retirement—was preceded by the company's recent financial struggles. Earnings have been squeezed by the impact of the strong dollar and intense competition in the luxury retail space, with Ralph Lauren's share price falling 44% this year at the time of this writing. Lauren also held the unique role of both running a business and providing the creative inspiration and vision after his "partner" of sorts, former chief operating officer and president Roger Farah, retired a few years ago. 

Stefan Larsson is in some ways a surprising choice to succeed Lauren as the head of his fashion empire, although his past business savvy may have helped him in the decision process. Larsson has a strong history in lower-price, mass market retail, first at H&M and then later at Gap's Old Navy brand. He is credited with revitalizing the Old Navy brand with an operating model that was swift at identifying trends and responding to popular items in stores. The brand has become a regular bright spot in Gap's otherwise dim earning reports.

Larsson told the New York Times that working alongside Lauren, a venerable fashion figure that helped define American fashion, is one of the "biggest reasons" that he is leaving his position at Old Navy. Lauren told WWD that Larsson was a clear choice only after he got to know him, with his first impression being, "My God, why would I want to see someone from that industry?" Lauren said that their similar leadership styles, along with Larsson's"sensitivity of design and of building a business and growing a company," won him over. 

The Times notes that while a recent executive hire from Yves St. Laurent and move to open a private members club in Milan suggest that Ralph Lauren is looking to grow its luxury business, Larsson's hire indicates the company may have other plans.