A blog about business and economics.

Oct. 6 2015 4:13 PM

McDonald’s All-Day Breakfast Is Finally Here, but the Hash Browns Might Be Missing

Today is the magical day that Slate’s Moneybox team has been waiting for: the nationwide rollout of McDonald’s all-day breakfast. We told you McDonald’s was testing it in March; we got the news in early September that all-day breakfast would soon reach the entire country; and on this sixth day of October two-thousand-and-fifteen we are excited to report that our dream has become reality.

Naturally, to mark the occasion, a Slate colleague and I decided to get McDonald’s breakfast for lunch. Around 1 p.m., well after the traditional 10:30-a.m. end of McDonald’s breakfast hours had passed, we headed down to a McDonald’s outpost on Varick Street in New York’s West Village.


Inside, multiple customers carried brown paper bags with “All-Day Breakfast Menu: The Wait Is Over” emblazoned on them. Yet when we went to order, a cashier informed us that this particular McDonald’s location was not participating in all-day breakfast. (When I contacted McDonald’s to ask how many others weren’t participating, Lisa McComb, a company spokeswoman, responded that she was “not aware of any restaurants that are not offering all day breakfast” and that this was “an anomaly.”)

Not so easily deterred, we turned north to the McDonald’s near West Fourth Street, and this time it was clear we’d come to the right place. The inside of the store was decked out in balloons. Staff members wore shirts that read “Show Breakfast Who’s Boss” on the back. My coworker snapped a few photos while I got on line; one of the few other customers there came over to ask if we were tourists.

A West Village McDonald’s celebrates all-day breakfast with balloons.


At the counter, I ordered a Sausage McMuffin with Egg as well as hash browns, which is when I learned that hash browns weren’t available. That this might be the case was reported Monday by BuzzFeed, which explains that about 10 percent of restaurants will not offer hash browns once they begin serving fries for the day. The reason for this, per a former McDonald’s franchisee, is that hash browns and french fries cook in the same fry vats and some stores don’t have the capacity to accomodate both.

Another McDonald’s breakfast favorite missing from the all-day menu: the savory and syrupy McGriddle. Breakfast sandwich options will also vary by location. While most McDonald’s in the U.S. are offering the Egg McMuffin family past 10:30 a.m., a cluster of states in the Southeast are carrying the biscuit versions instead (dubbed the “Biscuit Belt” by Nation’s Restaurant News).

McDonalds_ADB_Map Menu Breakdown

McDonald’s via Nation’s Restaurant News

As momentous a day as this is for Egg McMuffin fans, it’s a much bigger one for McDonald’s. Over the last year, McDonald’s has seemed at its wits end for what to do about its flagging business. Globally, the company’s same-store sales fell every month from June 2014 to June 2015, when it stopped reporting them altogether. In the U.S. things weren’t much better, with same-store sales falling 11 out of the same 13 months. McDonald’s brought in a Mythbuster. It tried “Pay With Lovin’. ” It hired a new chief executive and began selling an artisan chicken sandwich. None of that worked. With nationwide all-day breakfast, McDonald’s is finally giving consumers something they’ve long wanted and requested. When the next few quarters’ worth of earnings roll around, we’ll know whether it worked.

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Oct. 5 2015 3:09 PM

Chipotle’s Boorito Promotion Used to Be Fun. Now It’s Preachy.

The Halloween “boorito” is a wonderful Chipotle tradition. Each year, Chipotle celebrates Oct. 31 by rewarding customers who show up in costume with ultra-cheap burritos. Back in its early days, the boorito came for free, but you had to dress as a burrito. (An excellent demonstration of how aspirational boorito-getters accomplished this is available on YouTube.) In the years since, the boorito’s price has climbed—most recently to $3—but Chipotle has given consumers free rein on what get-up they wear. Up to $1 million of the proceeds get donated to the Chipotle Cultivate Foundation, Chipotle’s nonprofit to promote sustainable food and farming.

The boorito was fun and festive. The boorito was cheap and charitable. The boorito was an all-around Chipotle win. Alas, this year, Chipotle is ruining it.


“This Halloween from 5 p.m. to close, spook us by adding something unnecessary to your costume and score a $3 burrito,” reads the text on Chipotle’s webpage announcing the promotion. Why “something unnecessary”? Because the 2015 boorito event has a mission, and that mission is to campaign against “spooky (and unncessary) additives in typical fast food.” Featured on the list, directly under “spooky and unnecessary,” are soy lecithin (an emulsifier) and propylene glycol (a humectant). These additives have long, scary-sounding chemical names, but they’re also recognized by the U.S. Food and Drug Administration as quite safe.

“We’ve never said these additives and preservatives aren’t safe,” Chipotle spokesman Chris Arnold responds in an email when I suggest that the boorito branding might be a bit misleading. “They simply aren’t necessary. Just because you can add something to food doesn’t mean that you need to.” He notes that Chipotle is one among many food companies eliminating or cutting back on additives and preservatives. Others making the shift: Panera, Nestle, Hershey, Kraft—even Taco Bell.

These are fair points, particularly the last. As fast-casual chains like Chipotle have overtaken fast-food competitors, consumers have broadly shifted their expectations for quick-service orders. Natural is in; processed is out. At the same time, the “we’ve never said they aren’t safe” line feels a little thin for a company that is prominently painting additives as “unneces-scary” and has even created a jokingly dystopic video to drive home this point. Sure, they’re not outright calling additives unsafe and bad. But glance at the branding for all of five seconds and you’ll have few doubts where additives stand on Chipotle’s “food with integrity” ranking. Chipotle has rationalized its decision to drop GMOs from food in the same way, describing its decision to capitalize on pseudoscientific consumer fears as taking a “cautious approach.”

The bigger sin of Chipotle’s “unneces-scary” campaign though—in addition to several terrible puns—is that it is fundamentally antithetical to the spirit of the boorito. The boorito may have supported nonprofit work on healthy and sustainable food, but for the customers who frequented Chipotle on Halloween, it was never about that. The boorito was a silly pit-stop you made with friends during a night of drinking and partying. It was about getting a burrito you could get any other day, but that seemed so much more awesome because it cost less than half as much. It was about a company embracing Halloween in all its glee and revelry without asking for anything in return, other than that you join in on the fun.

The simple promise of all that is what made the boorito great. The added moral weight of an anti-additives campaign is what will ruin it. Maybe Chipotle should take its own advice, and leave what’s unnecessary behind.

Oct. 5 2015 9:11 AM

American Apparel Filed for Bankruptcy. That Could Be Just What the Company Needs.

American Apparel, whose shares last week closed at a paltry $0.11, filed for Chapter 11 bankruptcy protection early Monday. The move was a long time coming for the once-trendy retail chain, which has not turned a profit since 2009, is hemorrhaging sales, is facing worker allegations of intimidation, and, most importantly, is still struggling to keep its founder and jilted former CEO Dov Charney in check after firing him more than a year ago “for cause.”

Per the deal struck in the bankruptcy filing, American Apparel will shrink its debt to $120 million from $311 million by swapping bonds for equity, as well as gain some extra financing from its bondholders. The practical implications of that are threefold. First, American Apparel will be able to keep its Los Angeles manufacturing operations and 130 U.S. stores open, and has not yet announced any layoffs. Second, the company’s creditors, such as hedge fund Standard General, will gain full control of the retailer. Third, the stakes of American Apparel’s current shareholders—including Charney, who retained an $8.2 million investment as of Friday—will be eliminated.


Since losing his post as CEO last June, Charney had made every effort to regain control of his company, or at least heckle its new leadership. In March, Charney gathered hundreds of current and former workers at a secret meeting in L.A., where he implored them to reinstate him as chief executive. Shortly after that, two workers filed complaints about American Apparel with the National Labor Relations Board. In early June, the company took out a restraining order against Charney, which barred him from “directly or indirectly seeking the removal of any member of the Company’s board of directors, including by instigating, encouraging, acting in concert with, or assisting any third party seeking to do so.” A few weeks later, Charney filed a lawsuit accusing American Apparel and Standard General of conspiring to push him out, and demanding $100 million in damages.

Paula Schneider, American Apparel’s new CEO, had repeatedly attempted to downplay Charney’s attacks. “I can’t concern myself with Dov’s agenda,” she told the New York Times in early April. Even so, Charney had been at best a nuisance, and at worst an active problem for a retailer already piled with debt and fighting to stay afloat in a competitive fashion market. “Every day, we would make choices on what we were going to buy, even though we needed more for everyone. Every day, I have to pick between what I’m buying for retail or wholesale, or giving e-commerce enough money to develop a mobile app,” Schneider told the Times. “Not having the nuisance lawsuits, not having this massive debt, these are all extremely important things for the company to thrive.”

Translation: Yes, we filed for bankruptcy. But we also maybe, finally found a way to shake off Charney. And that’s one thing American Apparel definitely wants.

Oct. 2 2015 9:57 AM

The Economy Did Not Add Very Many Jobs in September

Friday's jobs report is a bit unpleasant. Employers added just 142,000 workers to their payrolls in September, and unemployment remained flat at 5.1 percent. After holding steady for three straight months, the labor force participation rate dropped down to a new 38-year low. Hourly wages actually fell slightly over the month. The government also revised down its estimates for job growth in July and August. Econ Twitter spent the morning collectively grimacing at the numbers, the sentiment captured in this all-caps tweet from Neil Irwin of the the New York Times

There really isn't much of one. But it's also a little early to draw any hard conclusions about whether the job market is actually down-shifting to slower growth. A few thoughts:


1) Recent labor market data has been pretty worrisome. For the first half of the year, the U.S. averaged 213,000 new jobs per month. In July, it added a healthy 223,000. But these past two months, the country has averaged just 139,000. That sounds ominous—like a potential sign the global troubles we've watched radiate from China and other emerging markets might be starting to touch not just stocks, but the real economy here in the U.S. That said, the job market has suffered through similar cold snaps before warming up again, and it's always possible we're looking at a blip. Also, remember, September's figures are going to be revised.


2) Still, this seems to validate the Federal Reserve's decision not to raise interest rates last month. It's really, really hard to tell exactly what's going on with the economy at this moment, and if nothing else, Friday's report is evidence that we can't assume the labor market will just keep barreling along. With inflation going nowhere and job creation in limbo, it's really, really hard to find a strong justification for central bank tightening at this precise moment.

3) Even if the slowdown is just temporary, the labor market is way behind its pace from last year. As of September 2014, the economy was adding an average of 238,000 new jobs per month. The average for 2015 so far is 198,000, closer to what we saw in 2013.

So, this is the kind of jobs report that should make you feel ill at ease. It's just hard to say anything more concrete than that.

Oct. 1 2015 6:30 PM

Amazon Will Stop Selling Google and Apple Streaming Devices at the End of the Month

Once upon a time, people were worried about Amazon and censorship. As part of its prolonged and public war with big-five publisher Hachette, Amazon had made certain books from the publishing house difficult or impossible to obtain. Hundreds of authors joined together in protest while Amazon maintained that their concerns were overblown. That was in the spring and summer of 2014, but eventually fall rolled around and the two reached a truce. And a year later, which is a very long time on the Internet, the feud and those censorship concerns were all but forgotten.

Until today, that is! On Thursday, Amazon brings us denizens of the Internet a terrific reminder of why, for all that we love its service, we also might worry about its dominance in the online shopping world. From Bloomberg: Inc. is flexing its e-commerce muscles to gain an edge on competitors in the video-streaming market by ending the sale of devices from Google Inc. and Apple Inc. that aren’t easily compatible with Amazon’s video service.

Amazon apparently broke this news to its marketplace sellers in an email, informing them that it will cease allowing new listings for Apple TV and Google Chromecast and remove existing posts for those items as of Oct. 29. But why?

“Over the last three years, Prime Video has become an important part of Prime,” Amazon said. “It’s important that the streaming media players we sell interact well with Prime Video in order to avoid customer confusion.”

Yes, Amazon would much prefer that people looking to stream video and shopping on Amazon buy only devices that easily support streaming Amazon content. “Roku, XBOX, PlayStation and Fire TV”—all of which work well with Prime Video—“are excellent choices,” an Amazon representative advises. Of course, there’s the minor catch that not everyone who shops online is an Amazon Prime customer with a vested interest in easy access to Amazon’s streaming content. Fewer than 20 percent, in fact. But where those consumers might see an inconvenience, Amazon has surely identified a conversion opportunity—prevent them from purchasing Apple TVs and Google Chromecasts, and maybe more will switch their loyalties to Prime.

It will be interesting to see whether Amazon’s move with regard to streaming content raises any antitrust flags. Generally speaking, a company has breached antitrust laws when it has a monopoly and uses that monopoly to stifle competition. Amazon blocking sales of Apple and Google streaming devices would certainly suggest competition stifling, but is Amazon’s chunk of the market great enough to make that illegal? What even is the market here? Is it the market for stuff that gets sold online? Or the market for sales of streaming devices in particular? These are some of the questions that regulators will have to weigh. In the meantime, order your Apple TV on Amazon while you still can.

Oct. 1 2015 1:41 PM

Why Republican Economic Ideas Matter This Election—and Democratic Ideas Don’t

As we venture deeper into election season, here's a guiding principle for thinking about the contest that I feel everybody should keep in mind: For the most part, Hillary Clinton's and Bernie Sanders' economic ideas don't matter very much. The Republican candidates' economic ideas, however, are vitally important.

I say this because, at the moment, the Democratic primary seems to have largely turned into a contest about policy vision. Bernie Sanders has thrilled his party's left by campaigning as the one true progressive, while Hillary Clinton has tried to position herself as just the slightest bit more grounded. He stumps for a $15 minimum wage; she says $12 might be more prudent. He wants to make our public colleges tuition-free; she just wants to make sure students can attend them debt-free. He talks about breaking up banks and taxing Wall Street trading; she thinks we should hike capital gains taxes a bit and try to make investors think more about the long term. And on and on.


These issues are all worth discussing, both because they give the candidates something with which to excite voters and because debates about them today could potentially shape the Democratic agenda years down the line. But in terms of real world consequences, Sanders' and Clinton's often sweeping proposals (and yes, even Clinton's are sweeping) are basically irrelevant for the foreseeable future. That’s because there is almost zero chance that, come January of 2017, Congress will be willing to pass any them.

A brief look at the electoral math makes that much clear. At the moment, Republicans control both chambers on Capitol Hill. To take back the Senate, Democrats would need to pick up a minimum of four seats—which, while conceivable, would involve a little luck. To reclaim the House, however, they will have to flip 30 seats, which no American political party has managed to do during a presidential election since Ronald Reagan led the Republican charge in 1980. Nothing currently suggests the Democrats will replicate that kind of magic. Unless an unexpected liberal wave materializes, a President Clinton or Sanders will be stuck grinding through the same legislative gridlock that the Obama administration has coped with for going on five years now. Given that midterms usually reward the opposition party, the best progressives can realistically hope for is that the elections of 2020 finally bring Democrats back into total control over Washington—but even then, Republicans may be able to gum things up through the filibuster.

Some of the policy differences between Sanders and Clinton still matter a great deal. A Democratic president will still control foreign affairs and trade negotiations. (Sanders might be the first significant Democratic contender in recent memory who actually means it when he says he wants to reverse NAFTA, though it's not clear he can do much about it without Congress' consent.) They'll also be able to exercise lots of power through regulatory action, especially on issues like the environment and climate change. Each candidate would manage these levers in his or her own way. But as of now, neither is really making their pitch to voters based on how they'd govern in the face of a completely antagonistic legislature.

The flip side of all this is that, while a Democratic president will likely have to make deals with at least one Republican chamber in Congress, any electoral environment friendly enough to conservatives to hand Jeb Bush or Marco Rubio or Donald Trump the presidency will probably also guarantee GOP control of Capitol Hill. If that's the case, the party will be in a powerful position to enact many of the radical tax and spending cuts that it has been pushing throughout the Obama era.

Jonathan Chait made many of these same points back in June when he argued that the central policy issue of this entire election should be the Ryan budget, which both Jeb Bush and Marco Rubio have supported. But, somewhat surprisingly, Chait actually undersold the stakes. The key thing to remember is that Republicans can implement large chunks of their agenda with just 51 votes, thanks to the budget reconciliation process. This is the parliamentary maneuver that essentially prevents the minority from filibustering budget-related bills. You may recall that Democrats used it to make the final push on Obamacare after Ted Kennedy passed away. Likewise, the Bush administration relied on it to pass its massive tax cuts without mustering 60 votes.

Because its use is restricted to budget matters, Republicans probably could not enact their entire agenda through reconciliation—it would be hard, for instance, for the GOP to fully repeal and replace Obamacare using it. But they could certainly wield reconciliation to make massive cuts to safety-net programs like Medicare and Medicaid, as envisioned by Congress' most recent budget resolution, while passing large tax reductions of the sorts Bush, Trump, and Rubio have all advocated. If a Republican is elected president and feels compelled to eliminate $500 billion in health spending for the poor while slashing top tax rates for the wealthy, a Democratic congressional minority may well be helpless to stop it.

This is why the policy proclamations that the GOP's contenders are making now actually matter a great deal. In any world where one of them occupies the Oval Office, they will likely have the power to reshape American government in fundamental ways. Thus, the fact that Bush and Rubio probably have a more austere vision than Trump is somewhat relevant to the future of this country. In contrast, Sanders and Clinton are basically running for the privilege of defending the surprisingly fragile progress Democrats have made building the welfare state. Their thoughts on how to enhance it further aren't of much consequence.

Oct. 1 2015 12:52 PM

Dunkin’ Donuts Says It’s Closing 100 U.S. Stores

While the breakfast sandwich is as hot as ever, Dunkin’ Donuts is looking at a tepid next several months. The company said Thursday at an investor presentation in New York that it plans to close 100 stores in the United States—representing approximately 0.1 percent of its sales nationwide—over the next 15 months. Dunkin’ also expects to report a traffic decline of 0.7 percent for the third quarter, and lackluster same-store sales growth of just 1.1 percent (analysts had forecast growth of 2.6 percent). Shares tanked more than 10 percent in morning trading.

For the remainder of 2015, Dunkin’ says it’s looking for same-store sales growth of 1 to 3 percent in the U.S. It’s anticipating the same at Baskin-Robbins. What’s hampering the fast-food breakfast chain? In its investor presentation, Dunkin’ points to the avian flu outbreak, which has caused the price of eggs to soar, as well as more macro concerns like currency volatility, interest rate uncertainty, and potential movement in the minimum wage. Dunkin’ also mentions the weather, because, really, what list of corporate worries is complete without that?


But if the end of 2015 is looking rather flat, the company has outlined some concrete strategies to keep America running on Dunkin’ into 2016. These include “differentiating thru product innovation” (“donut innovation,” “breakfast sandwiches”), “building our coffee culture” (“protect hot coffee,” “build our iced coffee lead”), and “leveraging technology to improve the brand experience.” Presumably, Dunkin’ will also continue to focus on expanding its sales outside of traditional breakfast hours. Currently, a bit more than 60 percent of the chain’s sales occur between 4 a.m. and 11 a.m., another 30-ish percent between noon and 6 p.m., and less than 10 percent from 7 p.m. to close. Dunkin’, as well as several of its competitors, have made enticing the lunch and evening crowd a priority.

Other tidbits from the investor presentation: Dunkin’ plans to begin testing delivery in Dallas in the fourth quarter. It also has big improvements planned for its mobile app. The company is launching a test of mobile ordering in Portland, Maine, this November and plans to roll it out nationally in 2016. Dunkin’ competitor Starbucks has had stunning success with its own mobile app. Earlier this year, Starbucks reported that 16 percent of total transactions were coming in through mobile. Just last week, it expanded its mobile order-ahead program to all of the U.S.

Besides being up against Starbucks in mobile, Dunkin’ is also taking on McDonald’s, which debuts all-day breakfast nationwide Oct. 6, plus fast-food breakfast competitors like Taco Bell. Any more competition, and Dunkin’ may find itself leveraging all that technology to build a hot coffee moat.

Sept. 30 2015 3:49 PM

Jack Dorsey Is Twitter’s Next CEO, Re/Code Reports

Re/Code is reporting that Twitter will name co-founder Jack Dorsey as its permanent chief executive, perhaps as soon as Thursday. Dorsey, who has served as Twitter’s interim chief for the past three months, will also remain CEO of Square, the mobile-payments startup that he co-founded in 2009.

If that’s true, Twitter might finally get the decisive leader it needs to make the sort of bold changes investors have been clamoring for. On the other hand, Dorsey comes with armfuls of baggage, including a stormy history at the company and a second full-time job that will divide his attentions.


The Re/Code report cites only anonymous “sources,” which sometimes implies that the information is sketchy. But it carries a Kara Swisher byline, and no one in Silicon Valley has better anonymous sources than she does. Besides, the choice of Dorsey would surprise no one.

Dorsey co-founded Twitter in 2007 and was named its first CEO before being ousted the following year by co-founder Ev Williams over concerns over his focus and leadership skills. He went on to co-found Square, and as CEO he built it into a major success. The company was valued at $6 billion in its most recent funding round and is expected to go public later this year.

Meanwhile, Twitter became a global phenomenon and went public in 2013. Dorsey took on a more active role as executive chairman in 2011, when Dick Costolo replaced Williams as CEO. But user growth stalled under Costolo’s amiable leadership, and he stepped down in July under investor pressure.

Dorsey was a logical choice for interim CEO and was widely seen as a front-runner for the permanent job. There's a school of thought that founders sometimes bring the internal legitimacy needed to alter a company's course, by virtue of having conceived it. But Twitter’s board was reportedly divided, with some insisting that the company needed a chief who could devote his full attention to the company. Dorsey has also been painted as ruthless and mercurial in Nick Bilton’s book Hatching Twitter: A True Story of Money, Power, Friendship, and Betrayal.

As the search dragged on, however, it was becoming an embarrassment. Twitter suffered a rash of high-profile departures both before and after Costolo’s departure, its stock has been battered, and the company was perceived to be reeling. Perhaps the board decided it couldn’t afford to be quite so picky. Or, given Twitter’s tumultuous history and Dorsey’s reputation, perhaps there was a power struggle and the Dorsey faction prevailed.

Either way, Twitter users should brace themselves for some changes—and not just to its famous 140-character limit.

Previously in Slate:

Sept. 30 2015 1:06 PM

The Maker of Jack Daniel’s Might Be Selling Off Southern Comfort

Southern Comfort, the sticky sweet liquor more fondly known as SoCo, may be in need of a new home. Brown-Forman Corp., the Louisville, Kentucky–based company whose holdings include Jack Daniel’s and Woodford Reserve, is reportedly exploring the sale of SoCo. Per Reuters, Brown-Forman has hired Goldman Sachs to look into selling off SoCo, Chambord, and possibly other brands that collectively “could be valued in the hundreds of millions of dollars,” according to a source.

Why does the maker of Jack Daniel’s want to part ways with Southern Comfort? To “focus on its core whisky business,” sources tell Reuters. When Brown-Forman released first-quarter results in late August, the company pointed to its whiskey portfolio as a key driver of sales. Paul Varga, Brown-Forman’s president and chief executive officer, pointed out on a call with investors that sales of Jack Daniel’s Tennessee Whiskey in the United States that quarter topped 5 million cases for the first time. “This is a very high level of consumer acceptance achieved by very few brands,” Varga said. “Add to this the fact that Jack Daniel’s is priced at the super premium price level—well above the price of most brands that have achieved the 5 million case level—and the recent milestone is even more rare and impressive.”


Other recent highlights for Brown-Forman have included Jack Daniel’s Tennessee Fire, which added almost three percentage points to underlying sales growth in Q1, and Jack Daniel’s Tennessee Honey, which increased underlying sales by 18 percent. Southern Comfort’s performance during the same period, by contrast, was lackluster; underlying net sales fell 4 percent across the brand. “There is just a large number of new entrants in flavored whiskey,” Varga said back in August. “So that’s something we’ve been adjusting to a bit.” The world “doesn’t just sit around idle and look at how Brown-Forman is performing,” he added. “And so we feel competitive pressures from companies that are simply striving to do better out in the marketplace.”

Translation: Jack Daniel’s is still doing well because the world has figured out it would like to drink whiskey that tastes like the actual thing. Jack Daniel’s flavored whiskeys are doing well because they’re new and exciting and attached to the core Jack Daniel’s brand, as opposed to the tired Southern Comfort label. From that vantage point, it makes sense that Brown-Forman would want to let SoCo go; if flavored Jack Daniel’s options keep taking off, they can essentially replace SoCo’s role in Brown-Forman’s portfolio. And if people’s tastes keep moving to whiskey that tastes even slightly better, losing SoCo probably is for the best.

Sept. 29 2015 6:35 PM

The Guy Who Turned Around Old Navy Is Taking Over for Ralph Lauren

A tectonic shift is underway Tuesday evening in America’s fashion landscape: Ralph Lauren is stepping down as chief executive of his eponymous company, and Stefan Larsson, president of Old Navy, is taking over.

With the management transition, Ralph Lauren is likely hoping to turn around its flagging financial performance, but also to broaden its appeal beyond the wealthy male shoppers who have traditionally sustained its brand. This past February, Ralph Lauren found itself facing a reckoning of sorts when it reported quarterly earnings. Traffic to stores had fallen sharply and the company had been forced to lower its sales forecast for the remainder of the fiscal year. The results sent Ralph Lauren’s stock tumbling to its biggest-ever single-day loss.


When it comes to accomplishing that turnaround, Larsson may be uniquely qualified. Since joining Gap Inc. in 2012 as president of Old Navy, Larsson has led the downmarket chain to a stunning revival. Where Gap, the corporation’s flagship label, is shuttering stores and fellow brand Banana Republic is posting monthly sales that are cool to tepid at best, Old Navy is thriving. Larsson, a champion of the “democratization of fashion,” has channeled his efforts into making Old Navy a store that’s both stylish and affordable. To see the payoff of that vision, look no further than the past several months or so of Old Navy’s comparable sales:

Ralph Lauren the designer is not abandoning his brand outright. Lauren tells the New York Times that he plans on staying involved at the company in the newly created roles of executive chairman and chief creative officer, and that though Larsson will report up to him, the relationship is intended to be a “partnership”:

“When they start designing things I can’t understand, I’ll quit,” Mr. Lauren said, sitting with Mr. Larsson at his side at his offices on Madison Avenue, adorned with the rustic paraphernalia—a tin toy robot, cowboy boots—that Ralph Lauren’s stores have come to be known for.
“But I don’t feel like I’m stepping back now,” Mr. Lauren said.

It will be interesting to see how the two mesh. Their retail philosophies are nothing if not distinct. Larsson, as previously stated, is a guru of mass marketing, and a leading proponent of the notion that high style does not have to come at a high price. Lauren, on the other hand, built his fashion empire on the promise of luxury—sharp tailoring, fine sportswear, clothes to wear on your 400-acre horse farm. If Larsson’s sole mandate is to revive revenue and foot traffic, then bringing some of that aesthetic to a wider swath of consumers might do the trick. But if Ralph Lauren isn’t ready to dilute its brand with an appeal to the masses, it will likely prove a tougher act.