Published On: Wed, Feb 5th, 2014

Ralph Lauren Reports Solid Quarterly Earnings : Company Outfits US Winter Olympic Team

Ralph Lauren

 

Ralph Lauren has recently clothed the Sochi US Winter Olympics team in some very jaunty and very stylish team uniforms. These flaunt the flag quite shamelessly, yet somehow, as always, he has managed to do the job with absolutely perfect taste.

So it is, too, with the company’s latest quarterly financial results, announced today, which are also impeccably tailored.

Revenues for the 2013 December quarter, the company’s third fiscal quarter, rose on strong Christmas holiday sales to US$2 billion, up by 9.2% on the same quarter the previous year. Revenues for the nine months rose too, by 5.3%, to US$ 5.6 billion compared to the previous year as well.

The company achieved net income for the quarter of US$237 million or US$2.57 per diluted share compared to US$216 million or US$2.31 per diluted share in the same quarter the year before.

For the nine months the numbers were net income of US$623 million, or US$6.74 per diluted share, which was exactly the same total dollar earnings as the previous year’s achievement, for the full nine months.

With about 90 million shares outstanding, which trade currently at about US$146 each the company has a current market capitalization of over US13 billion and has a trailing twelve months P/E ratio of 19 x times earnings (it made about US$1 per share in the quiet shopping period of their fiscal fourth quarter last year).

Clearly the market likes the shares at that multiple and thinks retailing has some legs in it still, or at least that Ralph Lauren itself does. The share price has basically quadrupled cyclically since the depth of the recession four and a half years ago, though has managed to tread water for much of the last year.

Ralph Lauren continues to be managed by its eponymous founder, Ralph Lauren himself, who is a walking definition of modern American style. He also continues to control the corporation with a lock on 85% of the voting interests through use of multiple voting stock. His, and his family’s, total ownership position is a lot less at about 33% – still worth about US$4.3 billion.

He pays himself well, too, with a base salary of US$1.75 million and last year a bonus earned of over US$10.7 million. I think most people would says he earns his keep, and the only pertinent question may be what to do about succession planning.

The Executive Vice Chairman, and Board Director, Roger Farah was paid pretty well last year too, with a base salary of US$900, 000 and a bonus earned of over US$8.6 million, so he could be a candidate.

On the other hand, Ms. Jacqwyn Nemerov was promoted from Executive Vice President to become President and Chief Operating Officer in November 2013. Prior to her new role, she had served as an Executive Vice President since September 2004. She has also been a Director of the Company since February 2007. Earlier before she was hired by Ralph Lauren she was President and Chief Operating Officer of Jones Apparel Group, from 1998 until 2002.

Finally there is Ralph Lauren’s own son David Lauren, who has been with the Company since 2000, and who serves as Executive Vice President of Global Advertising, Marketing and Communications. He has also been a member of the company’s Board of Directors since August 2013. In addition, he serves as a member of the Board of Trustees for the Ralph Lauren Center for Cancer Care and Prevention.

About Ralph Lauren Corporation

Ralph Lauren Corporation is a leader in the design, marketing and distribution of premium lifestyle products in four categories: men’s and women’s clothing, home furnishings, accessories and fragrances.

Founded over 45 years ago, Ralph Lauren’s reputation and distinctive image have been consistently developed across an expanding number of products, brands and international markets. The company became publicly listed in 1997.

Its’ brand names include Polo by Ralph Lauren, Ralph Lauren Purple Label, Ralph Lauren Collection, Black Label, Blue Label, Lauren by Ralph Lauren, RRL, RLX, Ralph Lauren Childrens-wear, Denim & Supply Ralph Lauren, Chaps and Club Monaco. Collectively these constitute one of the world’s most widely recognized families of consumer brands.

About Ralph Lauren

Ralph Lauren, who today is 74, is Chairman and CEO of Ralph Lauren, the company that bears his name.

For over four decades, he has cultivated the iconography of America into a global lifestyle brand, and he is an internationally recognized fashion designer.

He was born in 1939 in the Bronx as Ralph Lifshitz, to Jewish immigrants from Poland.

After attending parochial schools he graduated from the DeWitt Clinton High School in 1957. When he was 16, like many others who have followed a similar path, he Anglicized his surname to just Lauren – later he said he was made fun of a lot as a kid because his name had “shit” in it, which one can certainly imagine would not be too comfortable.

From 1962 to 1964 he served his draft term in the US Army; afterwards working briefly for Brooks Brothers and then as a salesman for a tie company. In 1966, when he was still 26 he left to establish his own company working out of a cupboard in the Empire State Building, where he took cast off fabrics and turned them into ties.

He sold the ties to small shops in New York, until eventually Neiman Marcus placed a large order. In 1967, Lauren opened a necktie store of his own where he also sold ties of his own design, under the label “Polo.” He later received the official rights to use the Polo trademark from Brooks Brothers, though they kept the rights to their own “original polo button-down collar”.

In 1971, he expanded his line and opened a Polo boutique on Rodeo Drive in Beverly Hills. 20 years later he had 35 boutique stores all over the US, took the company public in 1997 and by 2009 reported annual revenues of US$5 billion for the first time.

In 1964, he married Ricky Anne Loew-Beer in New York. They have three children together, Andrew, David and Dylan.

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