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Ralph Lauren Inc. Strategic Opportunities
Discussion Materials | February 12, 2016

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• Joshua Rindler
• Indiana University, Kelley School of Business, 2019
• Majors: Accounting & Finance
• Matthew Meyers
• Indiana University, Kelley School of Business, 2019
• Majors: Accounting & Finance
• Luke Gibson
• Indiana University, Kelley School of Business, 2019
• Majors: Accounting & Finance
• Pooja Sajeev
• Indiana University, Kelley School of Business, 2019
• Majors: Accounting & Finance
• Raj Desai
• Indiana University, Kelley School of Business, 2019
• Majors: Finance & Business Analytics
Rightview Partners
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Table of Contents
I. Executive Summary 4
II. Apparel and Footwear Industry 6
III. Ralph Lauren Overview 9
IV. Primary Acquisition Target 12
V. Valuation Summary 14
VI. Secondary Acquisition Target 19
VII. Appendix 21

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I. Executive Summary

5. Executive Summary
 Overview
• Ralph Lauren is a leader in the sale of premium lifestyle products all over the world with a market cap of $7.2
billion
• Currently, the company is implementing their Global Reorganization Plan, in which Ralph Lauren aims to
expand the brand’s international presence, as well as streamline costs to decrease operating costs
 Current Positioning
• Operating expenses have been very high for Ralph Lauren and it is something that the company is looking to
lower, although they are aware that the Global Reorganization Plan will significantly increase operating costs
• Sales have risen over the past five years due to recent acquisitions. As a result, Ralph Lauren has decided to keep
investing in acquisitions, especially to further their Global Reorganization Plan
• Ralph Lauren is looking to expand their accessories sector in order to increase revenues, as well as to expand
their product selection
 Assessment
• In order to increase shareholder value, Ralph Lauren must reduce operating costs, while continuing to
implement their Global Reorganization Plan
• Ralph Lauren must buy a company that has the same brand reputation and quality for premium lifestyle
products whose main sale is accessories
• The company being acquired must also sell globally with a main focus in Asia, since this is were Ralph Lauren
has the least stores
• By buying a company, Ralph Lauren will be able to decrease operating expenses and increase revenue, hence
increasing shareholder value
 Recommendation
• We recommend that Ralph Lauren buys Salvatore Ferragamo, a leader in the luxury goods industry that sells
accessories globally through retail stores, third-party operated stores, department stores, and specialty stores
• As a backup, we recommend that Ralph Lauren buys Cole Haan, a global lifestyle brand company whose main
revenue source is shoes
By decreasing operating costs and
introducing new stores, Ralph
Lauren will be able to increase
shareholder value.
Our recommendation works in
accord with the Global
Reorganization Plan, by working
to expand globally, while also
completing Ralph Lauren’s goal of
increasing accessories sales.
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II. Apparel and Footwear Industry

7. 7
Macroeconomic Landscape
• The US Federal Reserve has recently commenced an interest rate hike from 0% to 0.25% to a rate of 0.25% to 0.5%. Federal Reserve
chairwoman Janet Yellen signaled that the opinion of the Federal Reserve is that the underlying health of the US economy is quite
strong.
• The Consumer Sentiment Index has currently been rising pushing the sale of consumer goods across a variety of sectors. This
increase has been occurring steadily since the end of 2011.
• By the same token Italian Consumer Confidence has been increasing over the past year, and is currently at a 5-month high at
118.9, as of January 2016. This is of no surprise considering that the Italian unemployment rate has also been steadily decreasing
• Despite the overall strength of the Italian economy as a whole with increases across the board in key economic indicators. The
Italians struggle with their currency due to the declining value of the Euro.
• Banks have been increasing their lines of credits more freely toward subprime borrowers across a majority of areas. This can
expect to trigger an uptick in consumer spending.
The dollar’s strong
position against the
Euro makes the
current market
optimal for European
investments.
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• Men’s clothing sales has had an average annual sales growth of 17.4% since 2010. With increased access to ecommerce and the
innovations with mobile application based sales, men’s interest in apparel has cited a strong projection and continued growth in the
coming years.
• Shoes have had a 13.6% average annual sales growth online, alongside men’s clothing. This is a clear cut indicator as the fashion
industry move farther towards online retailing, although the industry remains profitable, men’s clothing outpaces it by a
considerable margin.
• With increased consumer discretionary spending, all sectors of luxury retail can expect an uptick in sales. Industry Outlook is
expected a slow growth in 2016 in Shoes, with a growth rate hovering around 3.4%-3.7% for the next several years
• Industry is expected to have a relatively small fluctuation in revenue in recent years. Volatility in the market is linked to the
recession, according to analysts across the board. However an increase in recent consumer discretionary spending will trigger back
higher sales across all sectors of the luxury retail industry including shoes.
• Analysts are currently worried about the recent slowed growth in the Asian markets, in which much of the industry expansion has
taken place over the past several years, given the high demand for American and European luxury goods. A few months of slowed
growth can not counteract China’s past years of steady economic growth.
Industry Outlook
0
1
2
3
4
5
6
7
8
2014 2015 2016 2017 2018 2019
RevenueGrowth(%)
Revenue Growth Rates in Men's & Boy's Apparel
0
0.5
1
1.5
2
2.5
3
3.5
4
4.5
5
2014 2015 2016 2017 2018 2019
RevenueGrowth(%)
Revenue Growth Rates in Footwear
The worst year for the Men’s &
Boy’s Apparel industry has just
past us, with a huge projected
uptick in revenue. Meanwhile
the growth in footwear is
projected to experience a large
drop. From a pure industry
analysis perspective, this is the
perfect time for a footwear
acquisition.
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III. Ralph Lauren Overview
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10. Ralph Lauren Company Overview
 Overview
• International leader in the business of premium lifestyle products, including apparel,
accessories, home furnishings, and other licensed product categories due to
exceptional design, marketing, and distribution, as well as a long-standing reputation
• Ralph Lauren has an extensive global reach, with merchandise available through our
wholesale distribution channels at approximately 13,000 different retail locations
worldwide
• Ralph Lauren is currently concerned with their operating expenses. Due to both the
decline in net income and high operating expenses, operating income decreased by
$3 million over the past year
• Ralph Lauren competes with other retail brands primarily on the basis of service,
which depends on their ability to obtain additional points of distribution and
sufficient retail floor space
 Company Management – Doug Black, CEO
• Former President and COO of
Oldcastle, grew net sales more than
10x and oversaw over 100
acquisitions
• Brought with him highly qualified
senior manager with functional
expertise in strategy and
development
• Undertaking a variety of initiatives
including target pricing, category
management, sales force performance
and supply chain management
• At local level they have focused on
gaining market share by empowering
area managers and their teams to
develop local strategies
0
20
40
60
80
100
120
140
160
180
200
ClosingPrice(InDollars)
Ralph Lauren Closing Prices
Trading prices depend on accuracy of
estimated financial performance. Ralph
Lauren predicts operating expenses to
rise, leading to declining trading prices.
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11. The Americas
7308
Europe
5311
Asia
128
Wholesale Channels
Global Reorganization Plan
 Global Reorganization Plan
• Goal of this plan is to reorganize the company from its regional structure
to a global-brand based operating structure, which our plan caters
towards
• The plan will ideally streamline Ralph Lauren’s business processes to
improve the company’s cost structure and reduce operating expenses
• Ralph Lauren’s long-term strategy includes expanding the brand’s
presence internationally, extending our direct-to-consumer reach,
expanding our accessories offerings, and investing in our operational
infrastructure
 Recent Acquisitions Over Past Five Years
• Over the past five fiscal years, our
sales have grown by approximately
35% to $7.620 billion in Fiscal 2015
from $5.660 billion in the fiscal year
ended April 2, 2011. This growth
has been attributable to acquisitions
over these five years.
• Ralph Lauren has invested $1.741
billion for acquisitions and is
willing to continue to invest more to
implement their long-term strategy
5
5.5
6
6.5
7
7.5
8
2011 2012 2013 2014 2015
Revenue(InBillionDollars)
Ralph Lauren Revenue
The
Americas
58
Europe
27
Asia
58
Retail Stores
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IV. Primary Acquisition Target

13.  Overview
• Salvatore Ferragamo, founded in 1927, is a leading producer in the luxury goods
industry that focuses on the creation, sale, and manufacturing of footwear, leather
goods, silk products, and other accessories, all made in Italy.
• The company operates through four business segments (% of revenue by product
category): Footwear (41.5%), Leather Goods (39.9%), Apparel (7.0%),
Accessories/Fragrances (12.9%)
• Salvatore Ferragamo epitomizes the quality and craftsmanship of typical Italian-
made goods, which has helped it penetrate the luxury goods market in over 90
countries.
 Financials
• Enterprise value of $3,232m
• EBITDA of $353m
 Strengths
• Ferragamo’s largest revenue stream is out of the Asia Pacific, which remains
Ralph Lauren’s weakest area; therefore, they can utilize their Brick and Mortar
locations as well as their target demographic to increase sales.
• Ferragamo is known for their luxury shoes, unlike Ralph Lauren where they
struggle to make their shoe department a popular segment.
• Given that the acquisition goes through, RL shouldn’t rebrand the shoes as the
opportunity costs for that sort of marketing campaign would be too high.
 Weaknesses
• Since they are an international company, there will always be risk associated
with currency value fluctuations.
• Their cost structure will be difficult to manipulate based on the fact that their
core competencies are rooted in their expensive hand-made products.
• High levels of debt limits their capability to make a move in the market at the
moment and if a financial problem were to occur, they would have trouble
liquidating their assets.
Salvatore Ferragamo Group
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0
5
10
15
20
25
30
2012 2013 2014 2015 2016
StockPrice(indollars)
Year
Ferragamo Closing Price
36%
26%
10%
23%
5%
% of Revenue
Asia Pacific
Europe
Japan
North America
Central and South
America
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V. Valuation Summary

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Salvatore Ferragamo, Valuation Summary
By running three valuation
models, a target of 11x LTM
EBITDA multiple is derived as the
mean
An 11x multiple results in a total
purchase price of $3,434 million,
using Salvatore Ferragamo’s LTM
EBITDA
($ in millions, except for share price)
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Precedent Transactions Analysis
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Comparable Companies Analysis
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Discounted Cash Flow Analysis
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VI. Secondary Acquisition Target

20.  Overview
• Founded in Chicago, Illinois in 1928 Cole Haan began as simply a men’s
footwear label, but it has now expanded its product line to include not only
shoes, but a variety of items in the fashion industry such as dress for both men
and women, handbags, and various other accessories.
• Cole Haan was acquired by Nike in 1988 and was operated under them until
Nike sold them to Apax partners in 2013
• Cole Haan prides itself on the ability to manufacture and distribute products
that are both comfortable and fashionable.
 Financials
• Nike sold Cole Haan to Apax Partners for $570mm in 2013
• Can expect to be purchased anywhere between $850mm and $950mm
• During 2015, there were a total of 931 exits in the mid market segment, totaling
just over $98B
 Strengths
• Similar to Ferragamo, Cole Haan operates in Asia with 77 store locations in
Japan, which, by utilizing Ralph Lauren is given the opportunity to increase
revenues in this area.
• Cole Haan is already a recognizable brand that offers Ralph Lauren further
access into the area of both footwear and apparel.
 Weaknesses
• Cole Haan is currently going through a time of renovations and new
branding, which might deter certain customers
• After so much time with Nike the brand’s image, in certain categories, has
shifted more towards comfort rather than top of the line fashion products.
Cole Haan Holdings Inc.
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$63
$78
$40
$22
$68
$71
$84
$73
$114
$98
0
200
400
600
800
1,000
1,200
$0
$20
$40
$60
$80
$100
$120
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Exit value ($B) # of exits
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VII. Appendix

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Discounted Cash Flow Analysis (Continued)
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