Polo Ralph Lauren CorporationRL

Morningstar Rating

Stock Research and Analysis

by Kimberly Picciola

Polo Ralph Lauren has been holding up okay in a challenging retail environment, which we attribute to its well-diversified merchandise offering as well as its global presence. However, we think demand for its goods, particularly its high-end lines, Read more

Bulls Say

We think Polo Ralph Lauren remains a traffic driver, giving department stores the incentive to keep significant floor space available for the company's merchandise.

The company has been reacquiring licenses for some of its brands. Not only does this provide more direct opportunities for revenue growth and margin expansion, but it also affords the company more control over its image.

By expanding its specialty retail store base, the company is gaining control of the price at which its goods are sold. This should lead to improved merchandise margins.

Polo is benefiting from its global presence and brand name despite a challenging environment. Read more

Bears Say

The company's fate is still largely tied to that of department stores, which have been losing market share for years. Macy's accounted for about 11% of total sales last fiscal year.

Although Polo Ralph Lauren has been successful at placing its products in both luxury and off-price stores, too much distribution through the lower-priced channels could tarnish the premium image of the brand.

By nature, fashion caters to a fickle consumer base. Should Polo Ralph Lauren's styles fail to resonate with shoppers, its top line could take a hit.

Founder, CEO, and chairman Ralph Lauren effectively controls around 85% of all voting shares. His decisions may not be in the best interest of minority shareholders. Read more

Strategy

Polo Ralph Lauren acquired a number of formerly licensed businesses in order to maintain control of its merchandise and product quality and is now working to integrate these into the business. It is Read more

Management

Ralph Lauren founded the firm in 1967 and has been CEO and chairman since its IPO in 1997. In general, we find overall corporate governance very poor, with many provisions that dim the voice of minority shareholders. Lauren owns approximately 2.5% of Read more

Profile

Polo Ralph Lauren markets, designs, sources, and distributes a wide range of apparel and accessories through department stores, specialty retailers, and its own chain of Read more

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