lizzy: it's 9:00 a.m. in london, 4 a.m. in new york. i'm lizzy burden. the white house says president joe biden has been speaking with qatar's emir al-thani about

securing the release of all remaining hostages held by hamas. the two leaders discussed efforts to reach a permanent ceasefire. yemen-based houthi rebels backed by iran have renewed attacks on shipping in the red sea. mse shipping confirmed one of its containers was hit en route to pakistan. the militant attacks in the red sea, and u.s. strikes on targets in iraq, are increasing risks of wider conflict in the middle east. the u.n. named a veteran dutch politician as the senior humanitarian and reconstruction coordinator for gaza, even as israel warned it will no longer automatically issue visas. he will take office on january 8. israel announced its move to end blanket visa approval for you and representatives hours before his appointment yesterday. those are your headlines this morning. indeed, as the tensions in the red sea ramp-up, and the war in

the middle east potentially escalates, the oil markets on edge. european gas futures surged and maersk shares sunk 4% after the shipper announced it is restarting shipping in the area. hapag-lloyd shares down even more, over 5% this morning. we are just over an hour into the start of the cash equity trade in europe, you are looking at the stoxx 600 firmly in the green but volumes are light. all but three sectors in the green this morning. energy leading the gains at 1.2%, but bottom of the basket telecoms down three tenths. the ftse 100 up 0.7%. as we look ahead to the wall street open, futures flat, after the s&p rallied to a near record yesterday on fed cut bets. traders have piled into

treasuries and the 10-year is lower at 3.86%, the two-year yield is at 4.34%. those are your latest in your markets. a quick check on the yen. we have had breaking lines out of the boj this morning. the latest minutes of the boj meeting saying not everybody is in a rush to pivot away from negative interest rates. you are looking at the yen currently weaker nearly 0.2%, trading at 142. that's a look at your top stories this hour. this is bloomberg. ♪ patrice: what is exciting is when you see where this company, the tie.. you see what it has become. it has all been driven by a consistent vision. a consistent purpose. francine: it started 56 years ago with a tie. today, ralph lauren is one of the world's most iconic fashion brands, valued at more than $8

billion, with 500 stores around the globe. at the helm is a chief executive who came into the job seven years ago with no fashion experience, but a determination to return the brand to luxury, attracting younger high-value customers. patrice: when i started this job, i often got the question, "patrice, is ralph lauren still relevant?" right? which is a painful question to listen to, honestly, but we had to some extent lost touch with that younger generation. francine: in this episode of "leaders with lacqua," i speak to patrice louvet, about the company's founder ralph lauren and his plans to take the company back to its roots. ♪ francine: patrice louvet, thank you so much for joining us on bloomberg. patrice: very happy to be here. francine: do you have the best job in the world? patrice: pretty close. francine: because it is fun? what was the most surprising thing about your job since you first started? patrice: there are so many things. probably the thing that actually

attracted me to this opportunity is the opportunity to work with ralph. right? this man is a visionary, incredible entrepreneur, has had amazing success around the world. and the opportunity to work with him and partner with him is really special, and i cherish it every day. francine: you have to get along because he is still such a figure. he has his name on the door. patrice: he does have his name on the door. francine: how much of it is his vision? patrice: it all starts with his vision. what is exciting is when you see where this company started, a tie. you see what it has become. it is all being driven by a consistent vision and consistent purpose. you and i have talked about, our purpose is to inspire the dream of a better life through authenticity and timeless style, and that has been the driving force of the company. now, we are all around the world. we are well beyond ties. as you know, we are in hospitality, restaurants, coffee shops, women's business, homes business. but all still driven by a very consistent business ambition, and this is an industry that is very much about trends. and ralph regularly says i hate fashion because fashion comes and goes. we talk a lot about style, time

lessness and an element of consistency. that has served us quite well the past 50 plus years. francine: what was it like the first time you met him? patrice: there was a moment that was incredibly special. i got a chance to see him in his ranch in colorado in telluride. francine: before you got the job, or after? patrice: right after i got the job. that's probably the most iconic moment for me, and i can also give you perspective on the at first engagement. but we were in his ranch, we were outside, it was chilly, it is 8:00 in the morning next to the cook house, and we are looking ahead and there is this beautiful mountain view. and we are talking about what business are we in. because it was important to be super clear together and have a consistent ambition. we landed on the fact that we are in the dreams business. a lot of people say ralph lauren, you are in the apparel business. you are a fashion company. no, we would disagree with that. francine: is he easy to work with? patrice: he is wonderful to work with. there is always this image that the creative leader in a fashion company can be challenging and complicated.

there has obviously been stories around that, but ralph is an incredible partner. he is both an amazing visionary and a great business man. i think that has been a key part of his success. we have been super clear on our respective roles. and although nothing is written on a piece of paper, we are clear on who is responsible for what, and where we come together, and i could not be happier with the partnership. francine: there was also a moment where you had to change the company to get away from the department stores. that lowered the ambition for the company. how hard was that? patrice: from a financial standpoint, it is challenging, but if you go back to the roots of this company, this company was founded as a luxury company. actually the first tie that ralph launched reminded me recently was only 2.5 times the price of a christian dior tie. no one would disagree that christian dior is an incredible luxury company. we indeed had to pull back our presence in the u.s. because the brand had been overextended. we reduced about two thirds of

our wholesale doors. but as i look now, we are two or three years into the exercise, we are in a much stronger place. our brand perception is much stronger. our value perception is much stronger. francine: the elevation journey, or this ultra luxury at the time was not necessarily a given. now, when you look at the luxury company, it is clear that if you are in the ultraluxury space, you can increase prices, you have a lot more of a market around the world instead of this moderate luxury. what made you see that back then? patrice: i think it is back to what this company stood for historically. already at the time, this phenomenon has been going on for a while, that you see this bifurcation of luxury brands that have pricing power, that consumers see the value, and therefore you have the ability to increase your average unit retail. and others where it is just focused on selling products. not engaging the consumer in the same way. much more promotional. we felt like, so we go back to our roots. that's where we wanted to take the company.

francine: how do you create that fortune? how do you create those moments where people associate you with wimbledon or some of the shows that they watch on tv that again elevates luxury? patrice: it is a very holistic exercise. so it is not just one thing. francine: is there one thing you think works better than others? is it the flagship stores that have coffee shops and have a very distinct lifestyle that you think people are drawn to more than online? patrice: for us, the way we think about it, francine, is 30 key cities around the world. we actually don't really look at markets, we look at key cities. in each key city we want to have a balanced ecosystem. start with a flagship store that really is going to project the image. our approach in china, for example, is very much driven by the city focus. establish a strong flagship, and then build the ecosystem around it. but i don't know that i can point to just one intervention. i think the transformation of our marketing and storytelling has also been quite effective, particularly at recruiting a

younger consumer. that was one of our priorities when i started. francine: which is the hardest, right? patrice: which is the hardest, because they are fickle. francine: they change. patrice: exactly. and then there is obviously a lot of opportunities. i remember when i started this job, i often got the question, patrice, is ralph lauren still relevant? which is a painful question to listen to honestly. but we had, to some extent, lost touch with that younger generation. this company is 56 years old, and we expect to be here another 56 years from now, so critical to kind of rejuvenate our customer base. and we pivoted our marketing to be where that younger consumer is. gaming, the types of sports activation that resonates with them, styling the product differently. what's very interesting is our white polo shirt, which is one of our icons. you have 80-year-old men wearing it, 40-year-old women wearing it. 16-year-old kids wearing it, same product. but we style it differently. francine: i wonder whether is

there a secret sauce that you are the right lifestyle brand for the right moment? because people don't go to haute couture events anymore unless they have a more relaxed approach even when they come to the office. patrice: yeah, hopefully more than just this moment, because we want to be here for another 50 years. but i do think what ralph and the teams have been able to create over time is indeed that lifestyle proposition. we are not handbag experts or auto wear experts or sneaker experts. we offer a lifestyle and we offer this range of product. and indeed as we have seen , people still working from home partly, going back to the office, going back to social events, we have this ability to serve you with a more feature driven type of proposition. francine: are we going to the office in hoodies now? as work from home and changed us forever? patrice: maybe it depends which industry you are in. at ralph lauren, i have not seen many people in hoodies, but ralph does come in once in a double rl polo hoodie but he

makes it look beautiful as you can imagine. francine: up next, patrice louvet on raising prices, ambitions in asia, and why sustainability is key. patrice: you can't expect to be timeless if we run out of resources. so, for me, sustainability is not a side activity. it's not a reaction to external pressure. it is core to who we are, what we stand for, and to a strong extent, it is about future-proofing our business. ♪ francine: ralph lauren has raised the average price of its products by around 80% since 2018, as it aims to elevate its brand and become a lifestyle luxury company, something the chief executive is passionate about.

i continue the conversation with patrice louvet. ♪ francine: when you look at pricing, you have also been able to really elevate the brand by increasing prices. is there a limit to how much you can increase prices by before it hurts demand? patrice: our average unit retail indeed is up about close to 80% since we started on this journey. short answer is i do not think there is a limit as long as we do a good job on elevating the product, elevating the storytelling, elevating the environment, making sure the consumer sees the value, and they have so far. our value perceptions actually are the highest they have been since we've been tracking it, but the onus is on us to make sure we are able to provide this consistent elevation. as the consumer sees it. and that will support the continued growth of average unit retail. francine: talk to me about china. china has huge potential, but it is actually still quite a small market for you. patrice: it is still small for us. huge short, mid, and long-term potential for us. it is about 6% of the company

today. that's double what it was three or four years ago, but still in absolute, quite small, when you look at the penetration of the chinese business for some of the best luxury players in the industry that are 20%, 30%, or 40%. so i am excited about the opportunities and the runway. what is really energizing for us in china is how the brand is connecting with that younger consumer. and that more elevated consumer. we sell, oddly enough, it is the result of the elevation work our the teams have done. our most elevated products we sell best in china. we have the best gender balance. as i believe you know, most of our business historically has been more men. in china, it is a good balance of men and women, and it is a relatively young consumer. late 20's, early 30's, so it is a good example for us for the rest of the world. we are being very deliberate in our approach in china. not we can grow faster, but we want to do it in a quality way, so we are building the brand so

that serves us well five years from now. 10 years from now. but i'm excited generally about asia and china. francine: are you worried that you dilute the brand if you become too big in china too quickly? patrice: yes. i think the notion of desirability is critical for this industry. and there is an element of exclusivity that is important to support it. that is why we pulled back in the u.s. where we felt we had over distributed. to some extent, ubiquity can be a challenge in the luxury space. not to some extent, it is a challenge in the luxury space, and you want to stay unique and special. that is why we are building markets in china even as we look ahead to markets like india. which are promising for the future. being very deliberate on planting the right foundation so we can build from there with the right image perception. francine: the world is changing. we talk about ai all the time. we talk about sustainability, and the need for fashion companies to do more. how much time do you spend thinking about sustainability? patrice: a lot, and i will tell you why. if i go back to our conversation on purpose earlier. it is part of the dream of a

better life through timelessness and authentic style. timelessness and sustainability go together. right? you can't expect to be timeless if we run out of resources, so for me, sustainability is not a side activity. it is not a reaction to external pressure. it's core to who we are and what we stand for, and to a very strong extent, it is about future-proofing our business. you need to focus on sustainability to recruit. more and more, that younger consumer we're talking about, they want to work for companies that care about this planet. that do more than just generate revenue and profit. you need sustainability to attract consumers. more and more, including that younger consumer, they care deeply about what are you doing differently? are you making a difference? investors, particularly in europe, more and more place value on what you are doing in sustainability. many of our partners have expectations on sustainability. francine: what does that look like for a luxury lifestyle company? patrice: ah, so for us, it is multi-dimensional.

right now, we are putting a lot of emphasis on circularity. i actually think if we are able to shift the business model and in fashion from linear to circular, that is probably one of the biggest changes we can make that has the greatest impact. obviously, that is a total ecosystem you have to impact. but to give you examples, it is innovating how we design. so we have just launched the first cradle to cradle certified cashmere sweater. it is innovating in materials. it is innovating with the processors. there is a company called reverso in italy that helps us with recycling cashmere. and then it is leveraging industry scale, because i think in sustainability, we can't go it alone. francine: do you sell differently to the chinese than you do to the american consumers in terms of lifestyle? or is it still a similar lifestyle? patrice: i think the fundamentals of our lifestyles and the different movies that we showcase, different stories that we tell, are pretty consistent. if anything, just in the way the consumers kind of dress and engage with fashion brands on

average, this is a generalization, but on average , the chinese consumer, just like the japanese or korean consumer, tends to be more elevated and sophisticated in the types of styles that they put together. so that informs part of our body and our product. francine: more innovative? it is not necessarily more edgy, it is more luxurious. patrice: it is more luxurious. yeah, it is actually more elevated and luxurious. francine: what is amazing is also there seems to be a trend, and you may be one of the first ones to get chief executives from parts of the industry that weren't luxury and fashion, that were actually in consumer products. is there a parallel? do consumer products chief executives do better than luxury? patrice: oh, that's a big statement. i am not going to answer that question directly. this trend started in beauty. if you rewind the tapes, beauty is where you started to see the cbg consumer professionals come in first. and now we are seeing that in the fashion world. i think, at the end of the day,

success in this industry is getting the balance right between magic and logic. obviously, the fashion industry , the creative leaders have the magic. there is an option to bring a higher level of logic without diluting the magic. and i think what people from the consumer goods industry bring are greater focus on the consumer, understanding the consumer. where you get success is designer vision, customer needs come together, and that is where things get explosive. greater understanding of the consumer, more data, more experience leveraging data and decision making. again, there is an element of intuition that needs to be protected, but that can be supplemented by data. francine: what is the ideal algorithm to where to put a store? patrice: it is confidential, i can't tell you. [laughter] francine: you would have to kill me. patrice: i would not do that. but we do look a number of metrics, whether that is obviously, consumer profile,

whether that is competitive environment, or the types of products being sold in the area. the last thing i would point to is operational discipline. these are complex businesses where we develop a lot of sku's every year. complex supply chains. and i think what you learn in the consumer goods industry is how to run pretty rigorous and disciplined supply chains. and just general operations. a lot of these luxury companies now are $5, $10, $15, $20 billion. the level of complexity requires great expertise. francine: how do you choose celebrities and influencers? again, you said we used to rely on magazines. everything has changed now. are consumers more influenced by influencers and celebrities? than they used to be. patrice: i think influencers have always been part of the business, whether it is the fashion industry or other spaces. francine: but it was more controlled. is that the difference? compared to 10 years ago. patrice: you are right. it was less spokespeople, and now you have a much broader palette.

for us, what is critical is authenticity. the concept of i'm going to write you a big check, francine, today, and he will talk about us. and tomorrow you will show up on a competitive brand because you got another big check. we are not interested in that. we want people who have an authentic relationship. francine: up next, patrice louvet on risk taking, gambling with the metaverse, and the next 50 years. patrice: the only failure is a failure of learning. even if we have tried it and it bombed, as long as we capture the learnings and apply them elsewhere, it was a success. ♪

francine: more than half of ralph lauren's customers are women, yet they represent less than a third of sales. it's an area of the business the chief executive sees as an opportunity, as he bets on growth in women's merchandise. i continue the conversation with patrice louvet. ♪ francine: what is next for ralph lauren? are you going to focus on sleepwear? or are there other parts that you think you can grow a lot more? patrice: what is amazing with this brand and what ralph has created is we can enter a lot of spaces with automatic credibility. we are one of the hottest restaurants in new york with the polo bar. we are looking for an opportunity for us to open one here in london. but that is a part of our ecosystem, it is not a core priority for us. next phases for us are winning with women. as i mentioned earlier, our business has historically been driven by men. today, 56% of our customers are actually women, on our website and in our stores. they represent less than 30% of our business. so that is a massive opportunity

for us. and i think as we get to understand her better, develop the right products for her, present the products in a way that resonates with her, which may not be the same way as for men, that is a big opportunity for us. handbags is an area, as part of kind of completing the style for women. and we are looking into home. i actually think if you reflect on ralph's approach to the space, he creates these environments, creates this world. you can really picture how that translates into home. so that is an area for growth for us. longer-term, but i am actually pretty excited about the perspectives there. francine: the metaverse. are you excited about the metaverse? i mean, i was but then we talked about ai and everyone forgot about the metaverse. patrice: the media has moved on, but the consumer has not. we are investing in the metaverse. it follows the principle i talked about earlier, which is we want to be where our consumer is. that's where the younger population is. that is where they want to engage with brands like us. we want to play a leadership role there, and i'm excited about what we are doing. we have a partnership with

"fortnite." francine: how does that work? a partnership with "fortnite?" you dress the players? patrice: if you play on fortnite, you can actually dress your player in the ralph lauren skin. and we have actually done some really cool boots we developed that you can dress your player with. we have done a physical version of them as well. francine: was that quite a gamble gamble? patrice: yeah. francine: it is brave, so it paid off. it could have backfired. patrice: true, but here is where i go back to the roots of this company. ralph started with a tie. we could be here 56 years later being the market leader globally of ties. part of the dna of this company is trying things, innovating, expanding, experimenting. so we are just staying true to that. and, you know, i always talk about the fact that the only failure is a failure of learning. so even if we have tried that and it bombed, as long as we capture the learnings and apply them elsewhere, it was a success. francine: what are you like as a leader? a risk taker?

patrice: i think people, if you ask them throughout my career how they would describe me, they would say servant leader. i really believe in the fact that my job is to set the team up for success and create the conditions for people to leverage their full potential. if i do that, well, i will be fine. i think people would say "listener." there is this great quote from a greek philosopher that's "we have two ears and one mouth," and there is a reason for that. people have said i am "a learner," and constantly learning, and ralph is an incredible inspiration, because based on where he is at this stage in life, he is constantly learning, and i use that as an inspiration. i am a measured risk taker i would say. i am not a swing for the fence risk taker. but i believe in innovating, experimenting, and trying new things. and i think that you feel that energy inside the company today. i love that spirit of trying

things and again learning. francine: what is a good day in the louvet world? how do you measure success? patrice: a good day for me -- where i get the greatest energy and excitement is time in our stores with our team. francine: do you change things around? patrice: no, i try to hold myself back from doing that. it is very tempting but i try to avoid doing that. no, i listen to the stories that our teams tell me, both in terms of how they are engaging with customers. what we could better in terms of the brand and product, and also how they are building culture within their stores. francine: and you are committed to the u.k.? patrice: very committed to the u.k. second biggest market for the company. historical market for us and great source of inspiration for ralph, so this market is important to us. francine: worst day at the office? have you had a bad day? patrice: i haven't had a lot. obviously, when the numbers are not coming through the way that you would like them to, that never feels very good, but welcome to life in the business world. when we are not able to get the balance right between the magic and the logic. and then the groups are not

communicating well, that obviously can be frustrating. the fashion industry, one of the lovely things about it, is it is very emotional. one of the challenging things about it is it is very emotional. so, it is managing people's emotions. francine: were you surprised that even in this cost of living crisis, luxury does so well? patrice: listen, i think people need to dream. right? when the environment is more challenging, people still need to dream. they need someone who will give them hope and bring optimism, and i think that is what the best luxury companies do well. francine: where will you be in five years? patrice: we are on an exciting journey right now as a firm, both in terms of expansion geographically. we will be stronger in asia. we will have established a good presence in india. we will be better distributed across europe. we will be more present in the west of the u.s., because that actually is a big white space for us. i think you will see our women's business to be more successful and larger than what it is today. and what i hope is that i am

still at the helm working closely with ralph to bring dreams to life for all of our consumers around the world. francine: patrice, thank you for joining us. patrice: thank you very much, francine. ♪

>> 4:30 in new york, here are the top stories this hour. the white house as president biden has speak -- spoken with