Word: ralphs
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...Sometimes Europeans are bored with European brands," says Jacques-Franck Dossin, a Goldman Sachs luxury-goods analyst based in London. "Ralph Lauren is cooler. It's different. It's from the U.S." Carol Pope Murray, an analyst at Salomon Smith Barney in New York City, more or less agrees. "Yes, I think there is a consumer in Europe who will buy the product," she says. "But the issue is and has always been, Can they do it and make a profit...
...American brand, and in March he took the dramatic step of moving his men's fashion show from New York City to Milan. That show, for fall clothing, and the one for spring 2003 that followed last month, were well received by the local press. WITH RALPH LAUREN MAN IS ELEGANT AGAIN, gushed a headline in the Milan daily Corriere della Sera. The international press played up the competition between Lauren and the European king of menswear, Giorgio Armani. Again a compliment: no such comparison was made when Calvin Klein staged his first men's shows in Italy. Lauren...
...factory, doesn't make a single shirt or dress itself. "Owning a factory is a two-edged sword," says CEO Farah. "It works great on the way up. No one yet understands how it works on the way down." In other words, although Farah says Polo Ralph Lauren plans to move some of its production from Asia to independent European factories, why take the risk of hiring lots of workers, who are more expensive in Europe and hard to lay off? Says Farah: "It's not at the core of how we want to operate...
Then there is distribution. In the U.S. 47% of Polo Ralph Lauren's revenues comes from selling to third-party retailers, mostly big American department stores in which Lauren controls a vast amount of floor space. In Europe there are simply not enough department stores to support such a strategy. If Lauren wants to sell in Europe, he will have to build, staff and run his own stores. That's an expensive proposition, in part because the stores his European customers frequent are on expensive streets in the city centers, not in suburban shopping malls...
Undaunted, Polo Ralph Lauren says it plans to spend more than $1 billion on its European expansion over the next five years. "When Ralph invests, it's for the long term," says Ron Baron, CEO of Baron Funds, which has $137 million invested in Polo Ralph Lauren. First up: new stores in Manchester, Glasgow and Antwerp, as well as in London and Paris. To start, the company will focus on just half of Lauren's many offerings, including the top-of-the-line collections for men and women, children's wear, men's sportswear and Ralph Lauren Blue Label...