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How the CEO of Ralph Lauren got the company through the ‘boiled frog phenomenon’ of going too wide, too cheap

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Most 20-something trendsetters don’t own a sailboat, a tasteful cottage on Nantucket, or even a pony-emblazoned Polo shirt. But under CEO Patrice Louvet, Ralph Lauren is still enticing young people into its orbit. To familiarize the TikTok generation with the Ralph Lauren lifestyle, the company now operates 35 “Ralph’s Coffee” store-in-stores. “It’s an amazing platform to get in touch with younger consumers,” Louvet said. “For 20-year-old women […] it’s the first engagement with the brand.”

Now margins are rising and sales are at a nine-year high—two signs that the company’s multi-year “brand elevation” campaign has worked, Louvet told me in Paris recently. But it equally arms the company better for future global price and supply chain disruptions to come, he said. How did Louvet pull it off?

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. The company, which now has a manufacturing supply chain stretching from Vietnam to Peru, is in a decent position to weather trade unrest. “If tariffs stay where they are, we have the ability to offset,” Louvet told me. “We can do efficiency work with our partners. But we can also continue our pullback on promotional activity, and perform selective price increases.”

But the big “a-ha!” for Louvet is finally getting back to what founder Ralph Lauren figured out so many decades ago—and what sets the company apart from other clothing retailers. “There are more parallels with companies like Disney,” Louvet observed. “We’re not in the apparel business,” he said, “We’re in the dreams business.”

Contact CEO Daily via Diane Brady at diane.brady@fortune.com

Top news

Trump denies Bessent persuaded him to keep Powell

President Trump denied a WSJ report that said Treasury Secretary Scott Bessent helped him understand that removing U.S. Federal Reserve Chair Jerome Powell before the end of his term at the central bank would cause more problems than it would solve. “Nobody had to explain that to me. I know better than anybody what’s good for the Market, and what’s good for the U.S.A. If it weren’t for me, the Market wouldn’t be at Record Highs right now, it probably would have CRASHED! So, get your information CORRECT. People don’t explain to me, I explain to them!,” Trump said on social media. (Reality check: The market did in fact crash in April following Trump’s tariff announcements.)

Tariffs will cost Americans $2,800 per household

The Yale Budget Lab estimated how much extra U.S. consumers will pay once Trump’s import taxes are in place. It’s the highest tariff rate since 1910. Commerce Secretary Howard Lutnick said on Sunday that most countries’ exports will get a rate of 10% or more.

The FBI might have information about Trump and Epstein

Maria Farmer complained to the FBI about Jeffrey Epstein in 1996 and named Donald Trump in that process. The agency brought no charges based on her testimony. Trump has not been accused of wrongdoing in connection with Epstein. Nonetheless, the NYT reports, it is possible that Trump’s name is sitting in the FBI’s investigative files.

The White House is souring on Netanyahu

The Israeli leader’s aggressive war against Gaza and Syria is now “out of control,” White House sources told Axios. “Bibi acted like a madman. He bombs everything all the time,” one source said. It’s not clear how much patience Trump has left for him.

Sen. Warren on tariffs

In an exclusive interview, Senator Elizabeth Warren told Fortune that “the impact of six months of Donald Trump will be felt for two generations.” White House spokesman Kush Desai told Fortune in a response that “No one has suffered more from America’s lopsided ‘free’ trade arrangements and foreign countries’ unfair trade practices than the working class Americans who Elizabeth Warren has always pretended to be a champion for.’”

Astronomer CEO resigns

The Astronomer CEO who went viral for an intimate moment with his Chief People Officer has resigned, according to the company. The private data infrastructure and operations company wrote that, “While awareness of our company may have changed overnight, our product and our work for our customers have not.” 

AI generates false diagnosis for U.K. patient

A patient in London was mistakenly invited to a diabetic screening after an AI-generated medical record falsely claimed he had diabetes and suspected heart disease. The summaries, created by Anima Health’s AI tool Annie, also included fabricated details like a fake hospital address. NHS officials have described the incident as a one-off human error, but the organization is already facing scrutiny over how AI tools are used and regulated.

Young people have a new, annoying way to answer the phone

They don’t say anything. Not even “hello.” That’s because they’re inured to junk and robocalls and are screening the call for meaningful interaction with people they know.

The markets

S&P 500 futures were up 0.27% this morning. The index closed flat at 6,296.79 on Friday. China’s SSE Composite was up 0.72%. The STOXX Europe 600 was flat in early trading. The Nikkei 225 was down 0.21%. Bitcoin was up 1.44%, at more than $119K.

From the analysts

JPMorgan on OpenAI: “Frontier model innovation an increasingly fragile moat. We view the inability of a single provider to have a sustained competitive edge as a signal model commoditization is a likely outcome (OpenAI’s once flagship GPT-4 now ranks 95th in LM Arena),” per Brenda Duverce and Lula Sheena.

Deutsche Bank on inflation: “Inflation risks are still being underestimated, with a remarkable complacency across key assets. That is particularly so when you consider that the 2021-23 inflation spike wasn’t anticipated at all in advance. And it’s already the 4th year in a row (so far) that markets have overestimated how dovish the Fed are going to be. Today, there are several factors coalescing at a global level that can push inflation higher still. Most notably, tariff rates are rising, with a 10% baseline in the US and several sectoral tariffs already imposed. There’s still the looming prospect of tariffs on August 1 which markets simply aren’t pricing in yet. In the Euro Area, there’s a huge fiscal stimulus in the pipeline, at a time when unemployment is at multidecade lows,” per Henry Allen.

Macquarie on the Fed split: “Comments coming from Fed officials suggest that the FOMC is cleaving, with a vocal side arguing for rate cuts to begin now, and another side (including Jay Powell) still wanting a delay. But that split persist, could evolve into a split along political lines, with one side swayed by political motives, and the need to accommodate fiscal policy, at the expense of adherence to the price stability mandate. This would contribute to US yield-curve steepening,” per Thierry Wizman and Oliver Allen.

Around the watercooler

Top economist sounds the alarm even louder on the housing market and says homebuilders are ‘giving up’ by Jason Ma

There’s a ‘scary’ recession warning hidden in the too-good-to-be-true economic data, Wells Fargo warns, by Jason Ma 

Crayola CEO’s how-to-succeed guide for new hires: Lose the tie and pretend you don’t know anything by Irina Ivanova

Experienced software developers assumed AI would save them a chunk of time. But in one experiment, their tasks took 20% longer by Sasha Rogelberg

After earnings fell by $300 million, Cardinal Health’s CEO went ‘ruthless’ to turn it around—and he says workers backed him because ‘people want to win’ by Emma Burleigh

CEO Daily is compiled and edited by Joey Abrams and Jim Edwards.

This is the web version of CEO Daily, a newsletter of must-read global insights from CEOs and industry leaders. Sign up to get it delivered free to your inbox.



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Epstein grand jury documents from Florida can be released by DOJ, judge rules

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A federal judge on Friday gave the Justice Department permission to release transcripts of a grand jury investigation into Jeffrey Epstein’s abuse of underage girls in Florida — a case that ultimately ended without any federal charges being filed against the millionaire sex offender.

U.S. District Judge Rodney Smith said a recently passed federal law ordering the release of records related to Epstein overrode the usual rules about grand jury secrecy.

The law signed in November by President Donald Trump compels the Justice Department, FBI and federal prosecutors to release later this month the vast troves of material they have amassed during investigations into Epstein that date back at least two decades.

Friday’s court ruling dealt with the earliest known federal inquiry.

In 2005, police in Palm Beach, Florida, where Epstein had a mansion, began interviewing teenage girls who told of being hired to give the financier sexualized massages. The FBI later joined the investigation.

Federal prosecutors in Florida prepared an indictment in 2007, but Epstein’s lawyers attacked the credibility of his accusers publicly while secretly negotiating a plea bargain that would let him avoid serious jail time.

In 2008, Epstein pleaded guilty to relatively minor state charges of soliciting prostitution from someone under age 18. He served most of his 18-month sentence in a work release program that let him spend his days in his office.

The U.S. attorney in Miami at the time, Alex Acosta, agreed not to prosecute Epstein on federal charges — a decision that outraged Epstein’s accusers. After the Miami Herald reexamined the unusual plea bargain in a series of stories in 2018, public outrage over Epstein’s light sentence led to Acosta’s resignation as Trump’s labor secretary.

A Justice Department report in 2020 found that Acosta exercised “poor judgment” in handling the investigation, but it also said he did not engage in professional misconduct.

A different federal prosecutor, in New York, brought a sex trafficking indictment against Epstein in 2019, mirroring some of the same allegations involving underage girls that had been the subject of the aborted investigation. Epstein killed himself while awaiting trial. His longtime confidant and ex-girlfriend, Ghislaine Maxwell, was then tried on similar charges, convicted and sentenced in 2022 to 20 years in prison.

Transcripts of the grand jury proceedings from the aborted federal case in Florida could shed more light on federal prosecutors’ decision not to go forward with it. Records related to state grand jury proceedings have already been made public.

When the documents will be released is unknown. The Justice Department asked the court to unseal them so they could be released with other records required to be disclosed under the Epstein Files Transparency Act. The Justice Department hasn’t set a timetable for when it plans to start releasing information, but the law set a deadline of Dec. 19.

The law also allows the Justice Department to withhold files that it says could jeopardize an active federal investigation. Files can also be withheld if they’re found to be classified or if they pertain to national defense or foreign policy.

One of the federal prosecutors on the Florida case did not answer a phone call Friday and the other declined to answer questions.

A judge had previously declined to release the grand jury records, citing the usual rules about grand jury secrecy, but Smith said the new federal law allowed public disclosure.

The Justice Department has separate requests pending for the release of grand jury records related to the sex trafficking cases against Epstein and Maxwell in New York. The judges in those matters have said they plan to rule expeditiously.

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Sisak reported from New York.



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Miss Universe co-owner gets bank accounts frozen as part of probe into drugs, fuel and arms trafficking

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Mexico’s anti-money laundering office has frozen the bank accounts of the Mexican co-owner of Miss Universe as part of an investigation into drugs, fuel and arms trafficking, an official said Friday.

The country’s Financial Intelligence Unit, which oversees the fight against money laundering, froze Mexican businessman Raúl Rocha Cantú’s bank accounts in Mexico, a federal official told The Associated Press on condition of anonymity because he was not authorized to comment on the investigation.

The action against Rocha Cantú adds to mounting controversies for the Miss Universe organization. Last week, a court in Thailand issued an arrest warrant for the Thai co-owner of the Miss Universe Organization in connection with a fraud case and this year’s competition — won by Miss Mexico Fatima Bosch — faced allegations of rigging.

The Miss Universe organization did not immediately respond to an email from The Associated Press seeking comment about the allegations against Rocha Cantú.

Mexico’s federal prosecutors said last week that Rocha Cantú has been under investigation since November 2024 for alleged organized crime activity, including drug and arms trafficking, as well as fuel theft. Last month, a federal judge issued 13 arrest warrants for some of those involved in the case, including the Mexican businessman, whose company Legacy Holding Group USA owns 50% of the Miss Universe shares.

The organization’s other 50% belongs to JKN Global Group Public Co. Ltd., a company owned by Jakkaphong “Anne” Jakrajutatip.

A Thai court last week issued an arrest warrant for Jakrajutatip who was released on bail in 2023 on the fraud case. She failed to appear as required in a Bangkok court on Nov. 25. Since she did not notify the court about her absence, she was deemed to be a flight risk, according to a statement from the Bangkok South District Court.

The court rescheduled her hearing for Dec. 26.

Rocha Cantú was also a part owner of the Casino Royale in the northern Mexican city of Monterrey, when it was attacked in 2011 by a group of gunmen who entered it, doused gasoline and set it on fire, killing 52 people.

Baltazar Saucedo Estrada, who was charged with planning the attack, was sentenced in July to 135 years in prison.



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Elon Musk’s X fined $140 million by EU for breaching digital regulations

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European Union regulators on Friday fined X, Elon Musk’s social media platform, 120 million euros ($140 million) for breaches of the bloc’s digital regulations, in a move that risks rekindling tensions with Washington over free speech.

The European Commission issued its decision following an investigation it opened two years ago into X under the 27-nation bloc’s Digital Services Act, also known as the DSA.

It’s the first time that the EU has issued a so-called non-compliance decision since rolling out the DSA. The sweeping rulebook requires platforms to take more responsibility for protecting European users and cleaning up harmful or illegal content and products on their sites, under threat of hefty fines.

The Commission, the bloc’s executive arm, said it was punishing X because of three different breaches of the DSA’s transparency requirements. The decision could rile President Donald Trump, whose administration has lashed out at digital regulations, complained that Brussels was targeting U.S. tech companies and vowed to retaliate.

U.S. Secretary of State Marco Rubio posted on his X account that the Commission’s fine was akin to an attack on the American people. Musk later agreed with Rubio’s sentiment.

“The European Commission’s $140 million fine isn’t just an attack on @X, it’s an attack on all American tech platforms and the American people by foreign governments,” Rubio wrote. “The days of censoring Americans online are over.”

Vice President JD Vance, posting on X ahead of the decision, accused the Commission of seeking to fine X “for not engaging in censorship.”

“The EU should be supporting free speech not attacking American companies over garbage,” he wrote.

Officials denied the rules were intended to muzzle Big Tech companies. The Commission is “not targeting anyone, not targeting any company, not targeting any jurisdictions based on their color or their country of origin,” spokesman Thomas Regnier told a regular briefing in Brussels. “Absolutely not. This is based on a process, democratic process.”

X did not respond immediately to an email request for comment.

EU regulators had already outlined their accusations in mid-2024 when they released preliminary findings of their investigation into X.

Regulators said X’s blue checkmarks broke the rules because on “deceptive design practices” and could expose users to scams and manipulation.

Before Musk acquired X, when it was previously known as Twitter, the checkmarks mirrored verification badges common on social media and were largely reserved for celebrities, politicians and other influential accounts, such as Beyonce, Pope Francis, writer Neil Gaiman and rapper Lil Nas X.

After he bought it in 2022, the site started issuing the badges to anyone who wanted to pay $8 per month.

That means X does not meaningfully verify who’s behind the account, “making it difficult for users to judge the authenticity of accounts and content they engage with,” the Commission said in its announcement.

X also fell short of the transparency requirements for its ad database, regulators said.

Platforms in the EU are required to provide a database of all the digital advertisements they have carried, with details such as who paid for them and the intended audience, to help researches detect scams, fake ads and coordinated influence campaigns. But X’s database, the Commission said, is undermined by design features and access barriers such as “excessive delays in processing.”

Regulators also said X also puts up “unnecessary barriers” for researchers trying to access public data, which stymies research into systemic risks that European users face.

“Deceiving users with blue checkmarks, obscuring information on ads and shutting out researchers have no place online in the EU. The DSA protects users,” Henna Virkkunen, the EU’s executive vice-president for tech sovereignty, security and democracy, said in a prepared statement.

The Commission also wrapped up a separate DSA case Friday involving TikTok’s ad database after the video-sharing platform promised to make changes to ensure full transparency.

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AP Writer Lorne Cook in Brussels contributed to this report.



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