Designer Ralph Lauren, who built a fashion powerhouse on luxury designs inspired by country club chic, announced Tuesday he is stepping down as chief executive officer and named the head of Gap Inc's (GPS.N) populist Old Navy brand to the position.

Ralph Lauren Corp hired Stefan Larsson, the global president of Gap's Old Navy division, as CEO of Ralph Lauren Corp (RL.N), the company 76-year-old Lauren founded in 1967.

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Shares of the company rose 3.79 percent to $108 in trading after the bell.

Lauren will continue to serve as executive chairman and head its design team, the company said in a statement.

Larsson, who will join Ralph Lauren and its board in November, is credited with reviving sales at Old Navy division, successfully implementing a model of offering trendy clothes at low prices.

Annual sales at the business rose 8 percent in 2014 and became Gap's biggest business. Sales for the division were $6.62 billion, or 40.3 percent of Gap's total.

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Lauren's fashion empire includes brands Polo and Denim & Supply, and the company makes clothing, accessories, furniture, home decor items and footwear under its labels.

Born Ralph Lifshitz in the Bronx in 1939, Lauren's parents were Jewish immigrants from Belarus, and he changed his name to Lauren at age 16.

The company also said that Jackwyn Nemerov, chief operating officer, would retire in November at which time she will become an adviser to the company.