NEW YORK — Roger Farah didn’t wait long to make his next move. After stepping down as vice chairman at Ralph Lauren Corp. in May, Farah planned to take the summer off and think about new opportunities in the fall. On Wednesday, he made good on that promise — the second full day of fall.
Farah, 61, has been named co-chief executive officer of Tory Burch, the privately held sportswear and accessories company, a new post. He was also appointed to the company’s board and took an equity stake in the business. He will report to Tory Burch, who is chairman and co-ceo.
He and Burch will also establish an executive directors office, or EDO, a management group comprised of four executives: Burch, Farah, Brigitte Kleine, president, and Robert Isen, board member, president of business development and chief legal officer. Kleine was also named to the company’s board.
Since its founding in 2004, Burch’s company has been on a fast track, surpassing $1 billion in retail sales this summer, according to industry sources. The company has 2,500 employees, more than 3,000 points of distribution and a presence in more than 50 countries.
During his 14-year tenure at Lauren, Farah is credited with helping to transform the group formerly known as Polo Ralph Lauren into a global powerhouse, and for putting platforms and structures in place for long-term operational efficiency. Sales went from $1 billion to $7.5 billion and the market capitalization went from $1 billion and got as high as $18 billion. It was $15 billion when he left.
Farah’s decision to exit Lauren put his name immediately at the top of every headhunter’s list in the industry.
In an interview Wednesday at company headquarters, Burch told WWD she wasn’t looking for a co-ceo but always admired Farah from afar. When she heard he was leaving Lauren, she called him to have breakfast and get to know him, and one thing led to another. No headhunter was involved.
“I really connected with Tory and we had a shared vision and sense of the future that was very consistent,” said Farah, who will join the company Monday.
Farah said his immediate priority will be to get to know the Burch staff and assess what their needs are. “I’d like to get to know the people first. Tory has an extraordinary team of people, starting with Robert and Brigitte, who I’ve gotten to know a little bit through this process. They’ve been wildly successful. I really want to get to know the team and their strategies and figure out where I can help,” said Farah.
Burch believes Farah’s experience will be a major asset. “Roger has so many strengths, which I’m sure we will all benefit from. I’m very proud to show him an extraordinary team of people who have really helped me build this company over the years,” the designer said.
According to Farah, fashion companies succeed when complementary skills work together as a team. “With Tory as clearly the vision, what’s gone on here for the past 10 years is really unheard of — the success, the brand’s clarity and the way Tory resonates with the customers. Robert and Brigitte have been a major part of the build, and they’re really set up nicely for the future,” added Farah. “She [Kleine] is the president of the company and has enormous responsibilities. We’re hoping the EDO allows us to make all the major decisions together,” said Farah.
Despite reports over the years that the company is considering an eventual initial public offering, Burch said that wasn’t on the table and wasn’t why she brought Farah on board.
“No, I think we enjoy being a private company. I think having someone like Roger come on board really helps us to do things that we see we want to do and really have control,” said Burch.
What attracted Farah to the company was first, “Tory,” he said. He said he liked her sensibility and aesthetic, and the way she treats people, her sense of family and the culture she’s built. “It’s really something I wanted to be a part of,” he said.
After spending “an interesting summer” having conversations with many companies, Farah knew he had certain requirements if he took a new position. He did not want to move from the New York area, he did not want to run a public company and he wanted to be excited about what he was doing and work with quality people. “Not often do you get to check off all the boxes,” he said.
“Being private is very attractive to me. I did not want to be in a public company,” he said. “I think this company has the ability to look long-term in how they build the brand globally and how they make decisions. They’re extraordinarily well-financed and have tremendous cash flows that allow reinvestments and good ideas. As a private company, really rallying around Tory’s vision, there’s a lot we can accomplish.”
Accessories (handbags and footwear) account for 80 percent of Burch’s business, and 20 percent is apparel. “What’s exciting is all three categories are performing incredibly well,” said Burch. She said her women’s fragrance, which is licensed to the Estée Lauder Cos. Inc., was launched a year ago and also is doing well.
As for how they will divide responsibilities, Farah said he will focus on the business, operations and more corporate functions, and Burch will focus on the creative, brand building and design.
Asked if Burch reminds him of the early days of Ralph Lauren (where she began her career), he said if one looks at most major successes in the industry, they were forged on being private. “Ralph was private for 30 years. Look at Hermès, Chanel and any of the great brands. Their DNA and their design aesthetic and strategies were all formed on being private businesses. It was only later that some of them became public companies. I think Tory’s really at the beginning,” he said.
He added that in today’s market conditions, Burch’s business is growing at “such a compounded rate. There’s plenty for us to do.”
At present, 75 percent of Burch’s business is done domestically, and 25 percent overseas. The bulk of her distribution is direct-to-consumer. Burch has 136 freestanding stores, consisting of 66 domestic and Canadian stores and 70 international boutiques, including travel retail. The company operates seven global e-commerce sites in the U.S., and six international sites including Germany-Austria, France, Italy, the U.K., the European Union and Japan. E-commerce accounts for 20 percent of the business.
“The future will be in the global outreach of customers, whether that’s online or brick-and-mortar. What’s very exciting is the stores are very profitable. It’s a model that works,” said Farah. Asia, Europe and the Middle East represent growth opportunities for the brand. Burch opened a flagship in Shanghai this summer, and has distribution plans for Malaysia and Indonesia. A Milan flagship will open in December, and flagships will be unveiled in Manhattan’s SoHo neighborhood (Mercer Street) and in Paris next year.
As far as product extensions, the company’s new watch business, licensed to Fossil, will launch at retail Oct. 1. On Tuesday, the watches became available for presale online. Swiss-made, they retail from $425 to about $795. The company will launch Tory Sport, which has been in development for several years, at retail in fall 2015.
“I’m really excited about sport. It has a different logo. It will have its own freestanding store in the Flatiron District most likely. It will have its own e-commerce site,” she said.
In addition, she has a book coming out in October called “Tory Burch: In Color,” which will be published by Abrams. It’s about the aesthetic of color and people, places and things that inspire them. Men’s accessories have been shelved for now.
Digital is another growth prospect. “We just relaunched part of our Web site, and we are going to be expanding internationally in a bigger way. We’ll be in China eventually. We’re approaching it carefully,” said Burch.
In assessing how big the company can become, Burch replied, “For me, it’s not about the size and it never has been. We’ve had this tremendous growth, and that’s exciting, but it’s been very strategic and thoughtful. Roger shares that vision. We don’t want to be everywhere. We want to pick our partners well, and our adjacencies well and our locations,” she said.
“There’s a beat and a rhythm to when to add partnerships and new geographic territories,” added Farah. “You can have a point of view of about where you want to be in 10 years. Part of that is sequencing it, and making sure you’re not ahead of the organization’s capabilities. You want to make certain when you do it, you do it right. I think Tory’s got a real instinct for not just who, but when and how. You can rush from category and category and partnerships and geographies, but if you don’t execute it right and build it properly, you really find yourself in a difficult position. I think she has 10 years of proving she knows how to do it. It gets more complicated the bigger you get. Some of it is education and school and some of it is just instinct,” said Farah.
He noted that the company is so successful now and the cash flows are sufficient to support its deals. “That’s one of the great realities, and it defeats the purpose of needing to go public,” he said. “It’s not about how big we can grow and what our profitability can be. There’s real heart, and it’s tangible in the way it comes out through the [Tory Burch] Foundation. Tory not only believes in it, and the company believes in it, and quite frankly, I’m looking forward to getting educated in it and seeing what I can do to help.”
The foundation raises money for women’s empowerment and goes toward access to low-cost capital, entrepreneurial education and mentorship.
So how does their former boss, Ralph Lauren, feel about the two of them working together?
“He was very supportive. I talked to him, and Tory has talked to him. He was excited for both of us,” said Farah. He didn’t have a non-compete agreement because he said the board knew how hard he worked for 14 years and that was appropriate. “I really had no plans to go back to work,” he said.
“When I spoke to Ralph, he was so complimentary about Roger,” added Burch. “I worked at Ralph Lauren for close to eight years. A lot of what I learned was there, it was important that he [Ralph] was feeling OK about it.”
Farah joined Lauren in April 2000 as president and chief operating officer until November 2013, when he became executive vice chairman. Before joining the company, he was chairman and ceo of Venator Group Inc. from 1994 to 2000. He has also held senior executive positions at Federated Merchandising Services, where he was chairman and ceo, and at R.H. Macy & Co., where he was president and chief operating officer.
