P o l o 	   R a l p h 	   L a u r e n 	  Brianca	  German	  FTM	  385	  601	  March	  24,	  2011	  With	  input	  from	  R...
Company	  Overview	  Ticker	  Symbol:	  RL	  Headquarters:	  625	  Madison	  Ave.	  New	  York,	  New	  York	  Total	  Ann...
 	  	  	  	  	  	  	                                                                                                      ...
Article	  1	                Ralph	  Lauren	  is	  one	  of	  the	  top	  US	  luxury	  brands	  and	  it	  plans	  to	  op...
Article	  3	                We	  have	  noticed	  the	  trend	  of	  Ralph	  Lauren	  becoming	  more	  global	  and	  con...
Article	  6	               In	  opening	  stores	  and	  gaining	  more	  control	  of	  the	  market	  Ralph	  Lauren	  i...
References	       1. Bertner,	  Jaclyn.,	  and	  Jennifer	  Mosscrop.	  "RILA	  Praises	  Quinn	  for	  Signing	  E-­‐    ...
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Polo Ralph Lauren Stock Analysis

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Transcript of "Polo Ralph Lauren Stock Analysis"

  1. 1. P o l o   R a l p h   L a u r e n  Brianca  German  FTM  385  601  March  24,  2011  With  input  from  Rasoul  Butler,  Ashley  Hardesty,  Pherin  Gregory,  Marissa  Monroe    
  2. 2. Company  Overview  Ticker  Symbol:  RL  Headquarters:  625  Madison  Ave.  New  York,  New  York  Total  Annual  Sales  in  2010:  $4,978,900  Locations:  New  York,  NY;  Paris,  France;  Milan,  Italy;  Tokyo,  Japan;  London,  England;  Greenwich,  CT;  Moscow,  Russia;  Chicago,  IL  Branded  merchandise  available  in  approximately  9,000  different  retail  worldwide  Target  Market:  Women,  Men  &  Young  Children  that  enjoy  adventure,  culture  and  vintage  pieces  that  are  incorporated  into  their  own  style    Stock  Statistics     Date   Open   Close   Net  Change   %  Change   Total  Volume     31-­‐Jan-­‐11 104.23   107.18   2.95   2.83%   1,142,000   1-­‐Feb-­‐11   107.9   106.91   -­‐0.99   -­‐0.92%   1,217,600   2-­‐Feb-­‐11   106.62   106.82   0.2   0.19%   702,400   3-­‐Feb-­‐11   106.86   108.59   1.73   1.62%   721,500   4-­‐Feb-­‐11   108.76   112.56   3.8   3.49%   1,545,400   7-­‐Feb-­‐11   112.66   113.84   1.18   1.05%   870,700   8-­‐Feb-­‐11   114.25   115.77   1.52   1.33%   1,132,000   9-­‐Feb-­‐11   120.41   125.35   4.94   4.10%   3,488,800   10-­‐Feb-­‐11   124.51   126.98   2.47   1.98%   1,612,700   11-­‐Feb-­‐11   126.24   126.87   0.63   0.50%   663,600   14-­‐Feb-­‐11   126.87   126.46   -­‐0.41   -­‐0.32%   902,000   15-­‐Feb-­‐11   125.72   125.04   -­‐0.68   -­‐0.54%   851,500   16-­‐Feb-­‐11   125.75   125.56   -­‐0.19   -­‐0.15%   488,800   17-­‐Feb-­‐11   124.93   124.92   -­‐0.01   -­‐0.01%   730,300   18-­‐Feb-­‐11   125.05   127.98   2.93   2.34%   918,000   22-­‐Feb-­‐11   126.49   123.78   -­‐2.71   -­‐2.14%   985,500   23-­‐Feb-­‐11   123.94   122.1   -­‐1.84   -­‐1.48%   1,418,100   24-­‐Feb-­‐11   121.93   123.79   1.86   1.53%   1,112,700   25-­‐Feb-­‐11   124.42   125.29   0.87   0.70%   819,800   28-­‐Feb-­‐11   125.43   126.71   1.28   1.02%   811,200   1-­‐Mar-­‐11   126.91   124.1   -­‐2.81   -­‐2.21%   1,041,300   2-­‐Mar-­‐11   124.11   124.29   0.18   0.15%   743,300   3-­‐Mar-­‐11   125.83   126.46   0.63   0.50%   624,800   4-­‐Mar-­‐11   126.45   125.29   -­‐1.16   -­‐0.92%   637,500   7-­‐Mar-­‐11   126.06   124.62   -­‐1.44   -­‐1.14%   469,800   8-­‐Mar-­‐11   124.87   126.6   1.73   1.39%   747,000   9-­‐Mar-­‐11   126.02   126.78   0.76   0.60%   546,500   10-­‐Mar-­‐11   125.15   125.51   0.36   0.29%   709,000    
  3. 3.                   -1.00% -3.00% -2.00% 1.00% 0.00% 2.00% 3.00% 4.00% 5.00% 1,000,000   1,500,000   2,000,000   2,500,000   3,000,000   3,500,000   4,000,000   500,000   0   31-­‐Jan-­‐11   31-Jan-11 2-­‐Feb-­‐11   2-Feb-11 4-­‐Feb-­‐11   4-Feb-11 6-­‐Feb-­‐11   6-Feb-11 8-­‐Feb-­‐11   8-Feb-11 10-­‐Feb-­‐11   10-Feb-11 12-­‐Feb-­‐11   12-Feb-11 14-­‐Feb-­‐11   14-Feb-11 16-­‐Feb-­‐11   16-Feb-11 18-­‐Feb-­‐11   18-Feb-11 20-­‐Feb-­‐11   20-Feb-11 22-­‐Feb-­‐11   22-Feb-11 24-­‐Feb-­‐11   24-Feb-11 Total Volume 26-­‐Feb-­‐11   26-Feb-11 28-­‐Feb-­‐11   28-Feb-11 Percent Change 2-­‐Mar-­‐11   2-Mar-11 4-­‐Mar-­‐11   4-Mar-11 6-­‐Mar-­‐11   6-Mar-11 8-­‐Mar-­‐11   8-Mar-11 10-­‐Mar-­‐11   10-Mar-11 % Total  Volume   Change    
  4. 4. Article  1   Ralph  Lauren  is  one  of  the  top  US  luxury  brands  and  it  plans  to  open  its  first  company-­‐owned  stores  in  Mainland  China,  joining  a  line  of  up-­‐market  Western  brands  eager  to  serve  increasing  demand  from  affluent  Chinese  consumers.    Ralph  Lauren  is  known  for  its  preppy  look  pioneered  by  its  founder  Ralph  Lauren,  who  planned  to  establish  an  e-­‐commerce  presence  in  China  and  elsewhere  in  Asia  to  reinforce  its  brand.    China  was  described  as  a  “once-­‐in-­‐a-­‐lifetime  opportunity.”    The  company  is  trying  to  move  quickly  to  accelerate  strategies  of  e-­‐commerce  in  order  to  aid  in  overlaying  the  brand  positioning  that  they  are  trying  to  achieve.     The  company’s  plans  for  China  are  part  of  a  broader  effort  to  step  up  its  performance  in  Asia,  where  licensees  have  previously  handled  its  business.    Asia  accounted  for  just  over  9%  of  the  group’s  revenues  of  $4.9  billion  in  its  most  recent  fiscal  year,  and  about  70%  of  its  business  coming  from  North  America.    The  group  has  recently  taken  over  control  of  its  licenses  in  South  Korea  and  Japan.    Ralph  Lauren  is  also  looking  to  open  high-­‐profile  company-­‐owned  stores  throughout  Asia,  in  contrast  with  its  previous  dependence  on  licensees  focused  on  selling  its  men’s  wear  line  through  concessions  or  leased  space  in  department  stores.       To  reinforce  its  image  as  a  lifestyle  brand  that  embraces  not  only  fashion  but  also  accessories,  home  furnishings  and  other  items,  Ralph  Lauren  also  relies  on  its  stores  in  its  home  US  Market.    Ralph  Laurens  expansion  to  China  locations  will  help  raise  profits  since  the  Asian  consumers  are  demanding  western  brands.    Article  2   According  to  Women’s  Wear  Daily,  Ralph  Lauren  said  their  third  quarter  profits  and  sales  rose  at  a  double-­‐digit  pace.    It  also  raised  its  2011  profit  outlook,  quarterly  dividend  and  stock  buyback  authorization.    This  is  good  news  to  current  stockholders  and  potential  investors.    The  week  this  was  announced,  RL  stock  reached  an  all-­‐time  high  of  $128.04  before  closing  at  $125.35,  which  put  them  up  8.3%.    If  investors  know  there  will  be  a  large  return  on  their  investment  at  some  point,  due  to  percentage  increases  in  stock  and  higher  dividends,  they  are  more  likely  to  invest.    When  a  company  is  known  to  do  well,  consumers  are  more  likely  to  buy  from  them,  because  there  is  little  fear  of  them  disappearing,  as  many  companies  have  been  forced  to  do  with  the  recent  state  of  the  economy.    Another  contributing  factor  mentioned  by  WWD  was  Polo’s  Asian  global  market.    They  have  had  a  presence  in  the  Asian  market  for  a  while  now  but  have  recently  (since  2008)  been  regaining  control  of  their  licensed  operations  there.    The  company  took  direct  control  of  its  previously  licensed  South  Korean  operations  on  January  1,  2011,  as  mentioned  earlier.    The  president  of  Polo  noted:  “The  Asian  customer  is  driving  a  large  part  of  the  growth  in  the  luxury  market,  both  at  home  and  abroad.”  (WWD)              
  5. 5. Article  3   We  have  noticed  the  trend  of  Ralph  Lauren  becoming  more  global  and  controlling  of  its  own  stores  throughout  the  stock  observance.    As  we  moved  along  towards  the  middle  of  the  six  weeks  we  also  notice  that  although  prices  were  high  this  was  the  third  lowest  stock  prices  compared  to  the  other  opening  and  closing  stock  weeks.    In  researching  our  it  was  found  that  cotton  cost  were  at  an  ultimate  high  during  this  week,  which  may  have  caused  the  moderate  change  in  the  Ralph  Lauren  stock.    According  to  the  article,  “Consumers  are  going  to  see  an  uncharacteristic  upswing  in  clothing  prices”  and  less  purchasing.        Article  4   Ralph  Lauren  holds  a  major  influence  in  the  retail  industry.    As  noted  before  The  RL  brand  has  started  opening  and  taking  more  control  over  its  licensed  stores  within  the  Asian  market.    With  this  being  said,  it  must  be  noted  that  not  only  has  Ralph  Lauren  been  creating  new  pathways  for  its  brand  but  Coach  as  well.    Coach  has  been  noticed  opening  new  doors  for  its  brand,  during  week  three  of  the  stock  study,  which  may  explain  the  fluctuations  within  Ralph  Lauren’s  stock  during  this  week.    Coach  is  a  major  competitor  of  Ralph  Lauren,  therefore  impacting  their  stocks  for  the  week  as  well  as  their  own.      Along  with  Coach  opening  new  doors  during  this  week  it  was  also  Valentine’s  Day,  which  could  have  had  some  miscellaneous  impact  to  their  numbers  as  well.    Article  5   Just  as  was  seen  during  week  three  of  the  stock  observance  for  Ralph  Lauren  we  noticed  another  increase  in  cotton  prices.    The  article  that  was  found  to  represent  this  data  predicted  that  since  Cotton  has  become  such  a  large  commodity  within  the  retail  industry,  and  their  being  a  lack  of  resources  to  accommodate  this  need  for  the  agricultural  product  prices  for  cotton  will  continue  to  rise.    The  article  stated  that  by  2012  revenue  for  cotton  would  increase  by  more  than  80%  from  years  before.    As  cotton  growers  such  as  China  continue  to  improve  and  industrialize  cotton  will  continue  to  be  raised  in  price.    Ralph  Lauren  who  is  controlling  more  of  its  stores  in  its  Asian  market  including  China  may  or  may  not  have  an  upper  hand  when  it  comes  to  the  distribution  for  the  cotton  and  the  prices  given.    With  prices  rising  for  cotton  it  may  also  hurt  Ralph  Lauren  with  much  of  its  products  being  created  using  this  specific  agricultural  product.    This  would  also  affect  not  only  the  production  side  of  Ralph  Lauren  but  also  its  retail  side  due  to  the  increase  in  price  for  the  brands  clothing.    As  the  cotton  prices  increase  so  does  the  brand  price  in  order  to  keep  up  with  the  Cost  of  Goods  that  are  being  sold.    The  increase  in  price  for  this  specific  brand  may  cause  consumers  to  reluctantly  pay  for  the  product  depending  on  how  high  the  prices  are  increased.              
  6. 6. Article  6   In  opening  stores  and  gaining  more  control  of  the  market  Ralph  Lauren  is  creating  new  strides  for  his  company.    As  the  brand  known  as  Ralph  Lauren  changes  the  consumer  world  is  as  well.    As  the  final  week  started  to  finalize  another  bill  was  passed  that  required  Sales  Tax  on  internet  shopping  to  be  enforced  and  managed.    As  more  people  have  begun  to  shop  online  they  will  be  notified  of  the  sales  tax  that  they  must  pay  for  their  items,  prior  to  this  only  Brick  and  mortar  shops  were  required  to  collect  sales  tax  putting  them  in  a  disadvantage  compared  to  their  online-­‐counterparts  who  could  virtually  sell  their  products  for  cheaper  since  their  was  technically  no  sales  tax  being  put  on  their  items.  This  legislation  signing  appeared  during  the  middle  of  the  Stock  week  for  Ralph  Lauren,  which  could  be  the  reason  for  its  fluctuation  and  eventual  decline  in  the  opening  &  closing  prices  and  their  volumes.    Now  passed  in  four  states  customers  are  being  made  to  pay  the  sales  tax  on  their  internet-­‐purchased  items,  which  may  in  the  future  even  affect  Ralph  Lauren’s  sales  more.     Overall  the  Ralph  Lauren  brand  did  very  well  over  the  six-­‐week  stock  observance.    From  the  statistics  that  was  gained  Ralph  Lauren  was  pretty  consistent.    While  tracking  the  RL  brand  we  did  at  times  see  extremely  high  numbers  as  well  as  low.    These  major  fluctuations  in  a  minor  time  period  were  thought  to  be  from  competitors  such  as  Coach  opening  new  stores  during  week  four  and  also  the  new  Sales  Tax  legislation  signed  created  by  RILA  (Retail  Industry  Leaders  Industry  Association).    With  their  high  fluctuations  during  weeks  two  and  three  these  may  have  been  due  to  Ralph  Lauren  paying  more  attention  to  their  brand  and  managing  it  themselves  in  Japan.    Ralph  Lauren  as  a  brand  and  company  is  doing  very  well,  yet  improvements  within  distinguishing  factors  between  it  and  Coach  would  greatly  help  build  revenue  and  sales.    Also  as  Ralph  Lauren  becomes  more  abundant  within  the  Asian  market  the  brand  could  incorporate  more  Asian  themes  in  order  to  enforce  that  this  brand  is  for  everyone  that  dreams  of  the  lifestyle  that  is  being  created  within  the  Ralph  Lauren  persona.    While  creating  a  more  inclusive  brand  and  distinguishing  Ralph  Lauren  from  competitors  the  brand  Ralph  Lauren  must  also  keep  in  mind  the  new  sales  tax  legislation  that  we  saw  signed  during  the  final  week  of  stock  observance.    This  must  become  one  of  the  primary  goals  in  order  for  Ralph  Lauren  to  keep  their  consumers  satisfied  even  though  they  were  paying  more  for  their  brand  due  to  the  taxation.                  
  7. 7. References   1. Bertner,  Jaclyn.,  and  Jennifer  Mosscrop.  "RILA  Praises  Quinn  for  Signing  E-­‐ Fairness  Legislation."  Chain  Store  Age  (News  And  Analysis  For  Retail  Executives).   N.p.,  1925.  Web.  Mar.  2011.  http://www.chainstoreage.com/article/rila-­‐praises-­‐ quinn-­‐signing-­‐e-­‐fairness-­‐legislation   2. Birchall,  Jonathan.  "Polo  Ralph  Lauren  Eyes  Locations  for  China  Stores."  The   Financial  Times  Feb.  2011.  18.  Lexis  Nexis  Academic.  Web.  10  Feb.  2011.   <http://www.lexisnexis.com/hottopics/lnacademic/?shr=t&csi=306164&sr=HLEA D(Polo%27s+Profits%2C+Shares+Soar+On+Strong+Overseas+Growth)+and+date +is+February%2C%202011   3. Lexis  Nexis  Academic.  Web.  10  Feb.  2011.   http://www.lexisnexis.com/hottopics/lnacademic/?shr=t&csi=306164&sr=HLEA D(Polo%27s+Profits%2C+Shares+Soar+On+Strong+Overseas+Growth)+and+date +is+February%2C%202011   4. "Polo  Ralph  Lauren  Corporation."  (n.d.):  Datamonitor  Company  Profiles   Authority.  EBSCO.  Web.  25  Mar.  2011.   5. Ralph  Lauren.  Ralph  Lauren,  2011.  Web.  31  Jan.  2011.   <http://www.ralphlauren.com/home/index.jsp?direct   6. Ralph  Lauren  Stock  Exchange."  Yahoo!  Finance.  N.p.,  2011.  Web.  31  Jan.  2011.   http://finance.yahoo.com/   7. Ralph  Lauren  Stock  Exchange."  Nasdaq.  N.p.,  2011.  Web.  31  Jan.  2011.   http://www.nasdaq.com/   8. "The  Trend  in  Clothing  Prices:  High  Cotton."  The  Palm  Beach  Newspapers,  Inc..   N.p.,  Feb.  2011.  Web.  14  Mar.  2011.   <http://www.lexisnexis.com/hottopics/lnacademic/?shr=t&csi=144576&sr=HLEA D(The+trend+in+clothing+prices)+and+date+is+February%2C%202011>>.     9. Trefis,  Team.  "Outlook  for  Coachs  New  Store  Openings."  Nasdaq.  N.p.,  Feb.   2011.  Web.  13  Mar.  2011.  <http://community.nasdaq.com/News/2011-­‐ 02/outlook-­‐for-­‐coachs-­‐new-­‐store-­‐openings.aspx?storyid=57830>.>.   10. Tse,  Andrea.  "Cotton  Prices:  Room  to  Rise  Even  Higher."  The  Street.  N.p.,  3  Mar.   2011.  Web.  4  Mar.  2011.   <http://www.thestreet.com/_nasdaq/story/11030175/1/cotton-­‐prices-­‐room-­‐to-­‐ rise-­‐even-­‐higher.html?&cm_ven=nasdaq&cm_cat=free&cm_ite=na>.     11. Yong,  Vicki  M.  "Polos  Profits,  Shares  Soar  on  Strong  Overseas  Growth."  Womens   Wear  Daily  10  Feb.  2011.  1.      

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