Polo Ralph Lauren's Southeast Asia Business

This is a recent article in a Wall Street Transcript Report...

RL -

Ms. Brodbar: Our portfolio is concentrated to just 20 companies, so we look for the winners in each sector. Ralph Lauren (RL) is a dominant lifestyle brand. Relative to other luxury players, it is still predominantly a U.S. brand, with 70% of its sales generated in the U.S. There is a huge opportunity for Ralph Lauren to expand overseas, where luxury apparel spending is projected to grow at a rate much faster than the U.S. About five years ago, the company bought back their European licensee and since that time have grown the business to north of $1 billion from just $200 million at the time of acquisition.

And we believe there is still room for solid growth. RL is now instituting the same strategy in Asia, as they bought back Japan almost two years ago and acquired the Southeast Asian licensee at the beginning of 2010, which includes such countries as China, Hong Kong, Taiwan and Malaysia, to name a few. Today the Southeast Asian business is roughly $150 million in sales, and we believe it can grow to become a billion-dollar business. The bottom line is that RL has got a long growth runway, both in the U.S. and overseas. In the U.S. RL should benefit from expanding product categories, like handbags, shoes, watches and dresses, and expanding distribution points, with American Living at J.C. Penney (JCP) and Blue Label at Saks (SKS). Overseas RL should continue to grow through expanding geographies and increasing brand awareness.

Micheal A. Williams