1. business and industrial

UNIVERSITY OF OREGON
Mar ch 13, 2009
INVESTMENT GROUP
Consume r Goods
POLO RALPH LAUREN CORPORATION
HOLD
Stock Data
Price (52 weeks)
Symbol/Exchange
Beta
Shares Outstanding
Average daily volume
(3 month average)
Current market cap
Current Price
Dividend
Dividend Yield
Valuation (per share)
DCF Analysis
Comparables Analysis
Current Price
Weighted Implied Price
$31.22-$82.02
RL/NYSE
1.53
99,100
2,044,260
$3,450,662
$34.82
$.20
.60%
$29.74
$33.86
$35.96
$31.80
Summary Financials
Revenue
Income
2009 Trailing 12
Months (Thousands)
5,035,400
465,000
BUSINESS OVERVIEW
Polo Ralph Lauren Corporation (NYSE—RL), originally Ralph Lifshitz, was founded by Ralph Lauren in 1967. The
Company began by selling creatively designed neckties. The popularity of the Polo label led to the opening of the company’s
first boutique located in Bloomingdales during 1969. Currently, the company is involved in the design, marketing, and
distribution of upscale lifestyle products for both men and women. Polo Ralph Lauren owns rights to numerous trademarks,
including the “famous polo player astride a horse.” The Company was incorporated in Delaware during the summer of 1997.
As of March 29, 2008, Ralph Lauren employed 11,700 persons domestically and 3,300 persons in foreign countries. In the
summer of 2007, the company approved a $250 million stock buyback program. In addition to the $250 million buyback, they
expanded their buyback program by an additional $250 million in May 2008.
Covering Analyst: Thomas S. Donohue
Email: [email protected]
The University of Oregon Investment Group (UOIG) is a student run organization whose purpose is strictly educational. Member
students are not certified or licensed to give investment advice or analyze securities, nor do they purport to be. Members of UOIG
may have clerked, interned or held various employment positions with firms held in UOIG’s porfolio. In addition, members of UOIG
may attempt to obtain employment positions with firms held in UOIG’s portfolio.
Polo Ralph Lauren Corporation
Univer sit y of Or egon I nvest ment Gr oup
The Company operates both domestically and internationally and generates revenue from three distinct but integrated business
segments. These segments are Wholesale, Retail, and Licensing.
Wholesale Segment
The wholesale segment derives revenue from the sales of products to upscale and mid-tier department and specialty stores in
both domestic and international markets. At the end of the Company’s 2008 fiscal year, Polo Ralph Lauren products were
sold through approximately 10, 806 doors. 8,611 of these doors are located throughout the United States and Canada, 2,075
doors throughout Europe, and 120 doors in Japan. It is worthy to note that products sold in the Asia/Pacific Region are
distributed by licensing partners and these sales are accounted for in the Licensing Segment. During 2008, the Company
invested nearly forty-nine million dollars in shop-within-shops. These shop-within-shops are specially allocated floor spaces in
stores that are entirely devoted to Polo Ralph Lauren products. Macy’s Inc. and Dillard Department Stores Inc. are two of
Polo Ralph Lauren’s biggest wholesale customers accounting for 24% and 12% of sales, respectively.
Historically, the wholesale segment has been the Company’s largest source of revenues. In 2008, the segment accounted for
56.5% of total revenues. In addition, the segment was responsible for 65.3 % of operating income.
Retail Segment
As of March 29, 2008, the Company’s retail segment was comprised of 155 retail stores and 158 factory stores worldwide. The
Company is looking to expand the retail store base as a primary long-term goal. Eight retail stores were opened in FY2008,
and the company is anticipating opening anywhere between 10-15 retail stores during FY2009. The retail stores are intended
to reinforce the Company’s luxury image and feature exclusive product lines that are not always distributed to wholesalers.
The Company generally leases their stores for periods ranging between five and ten years, often with renewal options.
Polo Ralph Lauren also sells products online via http://RalphLauren.com. The website offers customers access to the entire
product portfolio of Polo Ralph Lauren apparel, accessories, and home products. During 2008, the website averaged 2.6
million visitors a month. In addition, the website resulted in 1.3 million customers throughout FY2008.
Historically, the retail segment has been the Company’s second largest source of revenues. In 2008, the segment accounted
for 39.2% of total revenues and 23.6% of operating income. The Company hopes to expand their retail segment by opening
more stores every year, but it is unlikely that the retail segment will ever become the company’s premier revenue source.
Licensing Segment
Polo Ralph Lauren licensing partners pay royalties based upon sales of Polo Ralph Lauren products. In general, partners are
subject to a minimum royalty fee for the right to use Polo Ralph Lauren trademarks and design services. Licenses usually are
subject to three to five year terms, and Polo Ralph Lauren may grant the licensee conditional renewal options. Polo Ralph
Lauren works closely with their licensing partners to insure that the company can maintain a unified and consistent brand
image. Typical qualities that Polo Ralph Lauren looks for in licensing partners are (1) leaders in respective markets, (2)
contribute the majority of the product development costs, (3) provide the operational infrastructure that is required to support
the business, and (4) own the inventory. Approximately 16% of licensing revenue for FY2008 can be attributed to two
partners: WestPoint Home, Inc. (8%) and Peerless, Inc. (8%).
The licensing Segment is the Company’s smallest source of revenues. In 2008, the segment accounted for only 4.3% of total
revenues and only 11.2% of operating income. The Company is looking to expand their wholesale and retail segments by
assuming direct control of these segments from their licensing partners so it is likely that the licensing segment will become
insignificant in comparison two the other two business segments.
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Polo Ralph Lauren Corporation
Univer sit y of Or egon I nvest ment Gr oup
Product Offering
One of Polo Ralph Lauren’s strengths is their diversified product offering. This diversification has allowed Polo Ralph Lauren
to become one of the world’s most widely recognized families of consumer brands. The Company offers four product
categories: Apparel, Accessories, Home, and Fragrance.
Apparel-- These products comprise an extensive collection of men’s, women’s and children’s clothing. The
Company offers tailored made-to-measure suits, sophisticated sportswear, sports coats, dress pants, tuxedos, outerwear, rental
formalwear, silhouettes, hooded sweatshirts, blue jeans, leather jackets, and Western shirts. Apparel is the Company’s most
successful product category in terms of sales volume.
Accessories-- Polo Ralph Lauren offers handbags, scarves, belts, sunglasses, jewelry, footwear, neckties, leather
goods, luggage, cuff links, and other formal wear accents. The Company is looking to expand revenue growth by expanding
the popularity of their handbags, especially in Japan.
Home-- Home products include bedding, bath, furniture, fabric, wallpaper, paint, tabletop, and giftware items.
Fragrance-- Polo Ralph Lauren introduced their fragrance brand, Lauren for women and Polo for men, in 1978.
Currently, Polo Ralph Lauren offers 18 additional fragrances.
Marketing and Advertising
Polo Ralph Lauren manages their marketing on a centralized basis worldwide to ensure consistency of quality and
presentation. Advertisements are intended to portray a lifestyle rather than a specific product, and most advertisements
feature numerous Polo Ralph Lauren products. The Company’s primary medium of advertisement is print with major
campaigns during the fall and spring retail seasons. The Company also advertises select product categories through television
and outdoor media. The Company expensed approximately $188 million in advertising their products during FY20008, which
was an increase of approximately 4% from FY2007. Marketing is a critical means for the company to establish themselves over
their competition.
Sourcing, Production, and Quality
The Company does not own or operate any of it’s own production facilities. Instead, they contract with over 400 different
manufactures worldwide to produce their products. In FY2008, less than 2% (by dollar volume) of Polo Ralph Lauren
products were produced in the United States. The other 98% was produced primarily in Asia, Europe, and South America.
The two manufactures that contribute for the most total production operate in China, Hong Kong, Indonesia, Macau,
Philippines, and Sri Lanka. The outsource of production has helped the Company control and maintain their cost of goods
sold and maintain a fairly constant gross profit margin. The Company’s wholesale revenue segment must commit to
manufacture the vast majority of their products before they receive an official customer order, which means the Company has
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Polo Ralph Lauren Corporation
Univer sit y of Or egon I nvest ment Gr oup
to correctly estimate their product demand. The Company recently estimated demand incorrectly and was left with an influx
of inventory larger than usual.
FISCAL Y EAR 2008
Fiscal year 2008 was both a busy and successful year for Polo Ralph Lauren as the Company posted strong sales and
celebrated their forty-first anniversary and tenth year as a publicly traded company. The Company expanded their Black Label
Brand by providing a greater offering of men’s and women’s sportswear and also assumed direct control of their small leather
goods products. In addition, the company successfully launched American Living at 575 JC Penney stores. The launch of
American Living will give the opportunity to present their products to a larger audience, thus creating the opportunity for
more sales. The biggest news was the completion of transactions that allowed the Company to acquire control of certain
Japanese businesses that were formerly conducted under licensed agreements. The acquisition was funded with the
Company’s available cash and a one-year term loan of 20.5 billion yen. The term loan was repaid by its maturity date. The
Company views this as a critical step in diversifying their geographic revenue mix. The Company’s goal is to have the United
States, Europe, and Asia to each represent one-third of their revenues. However, it is unlikely that this goal will be achieved in
the near future because of the dramatically weakened global economy. Thus, it is likely that the United States will continue to
attribute a majority of the company’s sales.
RECENT NEWS
02/17/09—Polo Ralph Lauren Corporation announced that it had reached an agreement to assume direct control of its
wholesale and retail distribution in South East Asia from its licensee partner Dickson Concepts International Limited.
Dickson will continue to operate as the company’s licensee partner until January 1, 2010. The South East Asia region is
defined by the following countries: China, Hong Kong, Indonesia, Malaysia, Singapore, the Philippines, Singapore, Taiwan,
and Thailand. Robert Farah, Chief Operating Officer, said “We are grateful to Dickson Concepts for enabling us to establish Polo Ralph
Lauren as a premier lifestyle brand throughout the region over the last two decades, and we look forward to working closely with them on a smooth
transition.”
02/05/09—Polo Ralph Lauren Corporation released their third quarter earnings for 2009 on Feb. 5th. The company’s third
quarter fiscal net income fell by 6.6%. The company cut their fiscal year outlook based on their third quarter results. Kerry E
Grace cited that, “Clothing retailers, especially makers of luxury brands, have been suffering as consumers cut back their discretionary purchases
amid the global recession.” The company announced that they now expect profits of $3.85-$4.00 per share, which is down from
$4.00-$4.10 per share.
INDUSTRY
Governments around the world have used virtually every weapon at their disposal to combat the economic crisis, with
economic stimulus packages and cuts in interest rates aimed at rousing the financial markets while encouraging consumer
spending. Despite these unprecedented efforts, it will take time for consumers to feel the benefits of the measures and start
shopping/spending in any meaningful way. This can be testified to be true by one of the most dismal holiday shopping
seasons for retailers in decades, which is often the strongest sales seasons for retailers. In addition, these efforts have done
little in the short run to stimulate the economy as unemployment in the United States rose to 8.1% this month. The loss of
jobs and the fear of job loss is restricting consumer spending even more.
Inflation is no longer artificially propping up consumer spending figures, which is one of the reasons as to why retail sales have
lost their strong numbers. Sales figures are now based upon the value of goods sold, instead of the volume, which will equate
to a sharp decline in retail sales. According to a recent retail outlook report from Fitch Ratings Inc., personal expenditures are
projected to falls over 1.6% in 2009. Clothing sales fell 2.6% in December, often one of the biggest spending months for
consumers. This cut in personal expenditures does not appear to be in the best interest of mid-tier to high-end retailers.
However, it is more favorable for large value based retailers, such as Wal-Mart and Kohl’s. Despite the favorability, Kohl’s
still experienced sales slipping by 13.4% at the beginning of 2009.
Broadly speaking, Polo Ralph Lauren operates under the Consumer Discretionary sector. This sector accounts for
approximately 8.9% of the total S&P1500. Historically, this sector has accounted for 8%-12%, so this year the sector is on the
low side. As of November 7, 2008 the sector had outperformed the market with a loss of 32% compared with the 34%
market loss. However, analysts expect the sector to begin to under perform throughout 2009. The probability of
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Polo Ralph Lauren Corporation
Univer sit y of Or egon I nvest ment Gr oup
underperformance is attributed to the fact that the sector contains diverse industries such as automakers, homebuilders, media,
and retail. It is important to note that the economy has weakened since November, and with each month consumers may be
inclined to spend less money on discretionary items.
Centrally, Polo Ralph Lauren operates in the textile- apparel/clothing industry. This industry, like much of the consumer
goods sector, has been and will likely continue to be constrained by significant cuts in consumer spending for the foreseeable
future. The cuts have been fueled by high levels of consumer debt, rising costs of health care, depressed conditions in the
housing market, rising unemployment levels, and extremely low consumer confidence levels. The U.S. Bureau of Economic
Analysis announced that consumer spending was down .2% in December, which was the fifth consecutive monthly drop. It is
likely that Polo Ralph Lauren and similar companies will feel the cuts in spending, as luxury goods are often the most
expendable to consumers. The depressed economic times have been an attributing factor as to why some large retailers are
filing for bankruptcy, such as Sharper Image, Linen’s & Things, Bombay Co., and Lillian Vernon.
Despite the tough year for wholesalers and retailers, online sales are and should continue to be relatively healthy. Online
shopping is convenient for consumers because it can be done without leaving the home. Analysts at Emarketer projected that
online retail sales will be $136.8 billion for 2008, which is an increase of 7.2% from 2007. However, this is also a decrease of
19.8% from 2006-2007. Analysts are predicting only a 4.1% growth rate in online sales in 2009. This low growth rate will
likely mean that Polo Ralph Lauren will not be able to grow their online sales as quickly as the company had intended.
Polo Ralph Lauren competes with companies primarily on the basis of responding to changes in consumer preferences,
maintaining brand recognition, ensuring retail floor space, and the creation of value propositions for customers. In order to
drive growth many companies have pursued global expansion, brand acquisitions, emphasis on the Internet as a sales medium,
aggressive advertisement campaigns, and cost reduction through supply chain improvements. Polo Ralph Lauren has
exercised a number of these strategies, in order to continue to be a strong player in the industry. I believe that for a company
to be a sound investment that the company must possess certain qualities that give the company a clear advantage over its
competition. Ralph Lauren does have qualities that give the company an advantage over its competition. For instance, the
company has strong brand recognition, significant global reach, and adequate floor space. These qualities helped the company
be very profitable during the various favorable economic times over the course of the last nine years. Historically, trends show
that department stores shift their strategy towards high-end luxury goods during favorable economic times. During recessions,
however, they will shift their strategy towards value buys. This trend does not favor Polo Ralph Lauren given the economic
hardships seen around the globe. As a result, the company is seeing investment downgrades around the market.
Macy’s, the company’s biggest wholesale customer, has seen sales slip 5.4% during their last operating year. In addition, the
company recently announced that it would cut 7000 jobs. This represents a cut of approximately 4% of its workforce. In
addition to being a customer of Polo Ralph Lauren, the company could also become a competitor. In order to differentiate
themselves from competitors, Macy’s has begun to emphasize their own private brands. This could have negative affects on
Polo Ralph Lauren if consumers choose to trade down during the weak economic period.
It would have been helpful to be able to pinpoint the Company’s market share, but they operate in an industry where this
number is hard to come by and is not as material as in other industries. For instance, there are so many different companies
that operate in this industry that market share numbers would be fragmented and possibly not reflective of a company’s
strength. In addition, Polo Ralph Lauren offers a more diversified product offering than many companies in this industry. I
did, however, come across market shares for the Company in an earlier year (2005), which stated that the Company had a 25%
market share. Unfortunately, the article did not state which companies were included in this industry, which makes me
question this number.
At the beginning of the company’s FY2009, Strong international sales growth had helped Polo Ralph Lauren withstand the
challenging U.S. retail environment, however global markets have also been severely depressed, so it is likely that Polo Ralph
Lauren will face dramatic decreases in sales volume during the end of FY2009 and throughout FY2010. In order for the
Company to achieve double-digit growth levels, the company would need to see an overall improvement throughout the
global economy. For instance, national economies such as Japan, China, and various European nations will have to rebound
at approximately the same time as the United States. If the rebound in economies is fragmented, the Company will not be
able to grow as healthily because they are relying on global expansion to drive growth.
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Polo Ralph Lauren Corporation
Univer sit y of Or egon I nvest ment Gr oup
S.W.O.T. A NALYSIS
Strengths
• Diversified product offering
• Sound leadership through Chairman and CEO Ralph Lauren
• Favorable consumer brand recognition
• Expanding international growth in China, Japan, and other Asian markets
• The company has been in business for nearly 42 fiscal years
• Expansion of shop-within-shops
• Outsource the majority of their production
• Strong financial position
Weaknesses
• Two wholesale customers account for 36% of wholesale revenue
• Business is cyclical with the highest sales volume seen during the back-to-school and holiday seasons
• Rely on licensing partners to preserve the value of the company’s licenses
• During periods of recession Ralph Lauren products are often considered discretionary items
• Currency Fluctuations
Opportunities
• Create acceptable value proposition for retail customers
• Partnerships with other companies
• Improve brand recognition in developing countries
Threats
•
•
•
•
•
High levels of consumer debt could adversely affect sales
High levels of unemployment
Low levels of consumer credit
Changes in consumer preferences regarding style
The loss of a major wholesale customer due to global macroeconomic conditions
PORTER’S 5 FORCES A NALYSIS
Supplier Power—moderate and stable
As previously mentioned in the report, Polo Ralph Lauren contracts for the manufacture of their products. The
Company is not entirely reliant on one manufacturer as they contract with over 400 different manufacturers around the world.
I think that this means that no single supplier or manufacturer has too much power over the company. Raw materials
necessary for the production of the Company’s products include but are not limited to fabrics, buttons, and other trims.
Given the fact that Polo Ralph Lauren contracts with numerous manufacturers, I believe that supplier power is moderate and
stable because if an individual manufacturer becomes too expensive the Company can dissolve their business relationship with
them. However, it is worth mentioning that switching suppliers may be costly for the Company.
Barriers to Entry—moderate and increasing
This year has been marked by significant cuts in discretionary spending by consumers due to a housing market crash,
stock market crash, and an overall downturn in the global economy. The lack of consumer confidence and decreased
spending would place significant pressure on a new company’s operating margins.
In addition, consumers often buy the brand of clothing that they are the most familiar with. Brand recognition is very
important, and it is difficult for a relatively unknown company to compete with Polo Ralph Lauren on this basis. In addition
to the importance of brand name recognition, a company would have to acquire adequate floor space to compete with Ralph
Lauren. Acquiring this floor space could become difficult as department stores, such as Macy’s, are often already pressed for
space. These qualitative points lead me to believe that the barriers to entry are moderate and increasing.
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Polo Ralph Lauren Corporation
Univer sit y of Or egon I nvest ment Gr oup
Buyer Power—Moderate and increasing
For the most part, Polo Ralph Lauren provides products that are a luxury and not a necessity. This means that their
sales directly depend on consumer confidence. Individual consumers lives often do not depend on the ability to consume Polo
Ralph Lauren or other fashionable products. Consumer preferences drive the fashion industry, and as the economy continues
to weaken product pricing is becoming more important than usual for their demographic consumers. Individual consumers
are spending less money this year and are willing to forego the purchase of expensive clothes. In addition, the Company’s
wholesale segment has two large customers. The loss of one of these customers would be great, which gives wholesale
customers a certain degree of leverage over the Company. The fact that Polo Ralph Lauren provides a luxury good as opposed
to a necessity and that the Company has two large customers in the wholesale segment leads me to believe that buyer power is
moderate and increasing.
Threat of Substitutes—Low and stable
The threat of substitute goods is low and stable. Polo Ralph Lauren targets the upper-middle class- to upper class
consumers. These social groups tend to dress formally and to buy other formal lifestyle products. Stereotypically, these social
groups have the most disposable income and are likely to buy formal clothes to enhance their wardrobe. Given a long enough
time frame, there is also little substitute for clothing. There is always the possibility that people will choose to dress down, but
it is unlikely that the “formal look” will ever go out of style.
Degree of Rivalry—Moderate and Increasing
The rivalry between companies targeting the upper-middle class to upper class is high. There are numerous brands to
choose from, and companies compete primarily on the basis of brand recognition and consumer preferences. Price
competition is usually not a significant issue for companies like Polo Ralph Lauren due to their demographics disposable
income base, but as the economy continues to weaken more and more people are willing to forego certain purchases due to
pricing factors. The current stressed global economy is putting more pricing pressure than usual on companies like Polo
Ralph Lauren. This pricing pressure could lead to an increase in competition, which leads me to believe that rivalry is
moderate and increasing.
CATALYSTS
Upside
•
•
•
•
Increased consumer confidence
Favorable seasonality (back-to-school and holiday seasons)
Enhanced health of global macroeconomic environment
Wide availability of consumer credit
Downside
• Loss of a major customer
• Continued deterioration of global economy
• Litigation concerning the company’s outsource production facilities
COMPARABLES ANALYSIS
The comparable companies used in the comparables analysis were chosen based on their exposure to similar risk factors,
product offering, customer base, target demographic, and debt structure. All of the comparable companies chosen were also
listed as comparable competitors in Polo Ralph Lauren’s 2008 annual report. The comparable companies chosen were: Coach
(COH), Estee Lauder Companies (EL), Warnaco Group Inc. (WRC), Phillips-Van Heusen Corp. (PVH), and Abercrombie &
Fitch. (ANF). All five companies were weighed equally at 20%. I weighed all five companies equally because I thought all of
the companies showed good comparability in terms of product offering, customer base, and debt structure. The four
multiples used to reach an implied price were: EV/Revenues, EV/Gross Profit, EV/EBITDA, and EV/OCF. I think that
the use of four multiples is an effective way to present a balanced and thorough overall view of a company’s effectiveness in
terms of sales volume, ability to generate profit from sales, and ability to generate operating cash flow. The four multiples
were weighed equally at 25% because there weren’t any outliers present in the resulting multiples. The multiples led to a fairly
tight range of implied prices ($28.63-$37.62). The final result was an implied price of $33.86. Polo Ralph Lauren is currently
trading at $35.96, an overvaluation of 6.21%. The comparable analysis was weighed 50-50 against the DCF, as my comparable
analysis implied price was within $4.12 of the DCF implied price.
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Polo Ralph Lauren Corporation
Univer sit y of Or egon I nvest ment Gr oup
Coach Inc. (COH) 20% Weighting
Coach Inc. offers premium lifestyle accessories for both men and women. The Company has a fairly diverse product portfolio
offering handbags, footwear, jewelry, wearables, business cases, sun wear, watches, travel bags, and fragrance products. The
Company generates revenue from two business segments: Direct-to-consumer segment and indirect segment. The direct-toconsumer segment generates revenues from the sales of Coach products directly from Coach stores. Coach stores are located
in shopping centers and metropolitan areas throughout the United States, Canada, and Japan. The indirect segment generates
revenues from the sale of Coach products through intermediaries such as department stores. Macy’s, Dillards, and Nordstrom
are three of Coach’s biggest indirect segment customers.
I think that Coach offers good comparability to Ralph Lauren on the basis of a couple factors. One factor is that the
Company derives revenue from similar business segments. Coach’s indirect segment can be likened to Ralph Lauren’s
wholesale segment and Coach’s direct-to-consumer segment is similar to Ralph Lauren’s retail segment. The two companies
also have a diversified product offering. In addition, both companies products are most often considered by consumers to be
a discretionary item.
Estee Lauder Companies. (EL) 20% Weighting
Estee Lauder Companies Inc. is involved in the manufacture of skin care, hair products, make-up, and fragrance products.
The Company has global reach with products sold in over 140 countries. Some of the Company’s brand names are Estee
Lauder, Aramis, Clinique, Prescriptives, Lab Series, Origins, MzAzC, Bobbi Brown, La Mer, Aveda, Jo Malone, Bumble and
bumble, Darphin, American Beauty, Flirt!, Good Skin, Grassroots, Ojon and Eyes by Design. These brands could be
considered direct competitors to certain Ralph Lauren products, in particular the Company’s fragrance line. The Company
sells products through upscale department stores, specialty retailers, and prestige saloons. Estee Lauder products are sold
through over 25,000 points of sale.
Estee Lauder offers comparability to Ralph Lauren on the basis of global reach and similar customer base. Both companies
are attempting to expand their international appeal and reach. In addition, certain Ralph Lauren products compete directly
with certain Estee Lauder products.
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Polo Ralph Lauren Corporation
Univer sit y of Or egon I nvest ment Gr oup
Warnaco Group Inc. (WRC) 20% Weighting
Warnaco Group Inc. is involved in the design, marketing, and distribution of intimate apparel, sportswear, and swimwear.
The Company has recognizable brand names owning Calvin Klein, Speedo, Chaps, Warner, and Olga. The Company has a
global reach with products sold primarily to wholesalers, such as Macy’s. In addition, the Company operates over 740 Calvin
Klein retail stores around the world.
Much like the other comparable companies, Warnaco Group is very similar to Ralph Lauren through customer base, global
breadth, target demographic, and also has a very similar debt structure.
Phillips Van Heusen Corp. (PVH) 20% Weighting
Phillips Van Heusen Corp is an apparel company that designs and markets dress shirts, sportswear, neck ties, and footwear.
Some of the Company’s popular brands are Van Heusen, IZOD, Arrow, G.H. Bass & Co., Geoffrey Beene, Sean John,
Donald J. Trump Signature Collection, Kenneth Cole New York, DKNY, Tommy Hilfiger, Nautica, and Perry Ellis Portfolio.
The Company operates its own stores and sells products both to wholesalers and licensers.
Phillips Van Heusen Corp. is a good comparable company because the Company’s principal product is clothing. PVH
clothing competes directly with Ralph Lauren clothing. Both companies have products in department and specialty stores and
have mentionable global reach. In addition, the Company also has a very comparable debt structure.
Abercrombie & Fitch. (ANF) 20% Weighting
Abercrombie & Fitch is a specialty retailer that operates stores usually located in malls. The Company’s products include
outerwear, jeans, shirts, and personal care products for both men and women. As of 2008, the Company operated 1035 stores
in the United States, Canada, and the United Kingdom.
Although Abercrombie & Fitch’s target demographic is often slightly different than Polo Ralph Lauren’s, the Company still
offers comparability on similar risk factors and product offering.
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Polo Ralph Lauren Corporation
Univer sit y of Or egon I nvest ment Gr oup
DISCOUNTED CASH FLOW A NALYSIS
DCF Synopsis
The DCF was forecasted through 2018 using the percent of sales method. The DCF projections were made with the intention
to illustrate conservative, or even pessimistic, growth to display an accurate presentation of risks that may act as potential
barriers to the Company in the future (namely consumers being careful with their discretionary income and international
economies recovering at different points of time). I relied heavily on company guidance, analyst estimates, industry
speculation, and personal interjection to project out the various line items in the DCF. The DCF led to an implied price of
$29.74, which is an overvaluation of 17.31%, given that the company is trading for 35.96.
Beta
In order to derive a beta, I performed a five-year monthly regression of Polo Ralph Lauren’s adjusted closed prices against the
S&P 500. Through this, I reached a beta of 1.53 with a standard error of .22. This beta appears reasonable given the 52-week
range of Polo Ralph Lauren stock prices ($31.22-$82.02).
Revenue
In order to project the company’s revenues, I recognized the business segments that Polo Ralph Lauren has traditionally
generated revenue from and projected future growth on each of the business segments. To clarify my previously mentioned
use of conservative growth, it is important to note that the growth is not conservative to the point where I believe that the
revenue projections are simply inaccurate. When I say conservative growth, I am simply suggesting that I believe that the
company’s growth levels will be lower than some of the other analyst projections that I have seen. I believe that the company
will have lower and slower growth levels due three key reasons. (1) The stressed state of the retail industry. (2) I believe that
the recovery times of global markets will arrive at different times, which will in turn hinder the company’s growth. In order to
have the strong double-digit growth that the company has had in the past they need healthy global economies. (3) I believe
that even after the economy recovers, both in domestic and global markets, that consumers will still hold onto their
discretionary income a little tighter than in the past.
There were three trends that I wanted to illustrate with my revenue projections. One was that the company’s wholesale
segment would continue to account for the majority of revenues ranging from 57%-58%. The second was for the company’s
retail segment to experience higher growth rates coming out of the recession than the wholesale segment as the company
intends to open up more retail stores which will increase the opportunity for retail segment sales. Despite this growth, the
retail segment would still only account for less than 40% of total revenues. Lastly, the company’s license segment would
experience negative growth due to the company obtaining direct control of certain licensee operations in global operations.
The primary basis of my projections was company guidance and the use of various analyst projections. For FY2009, the
company projected total revenues to be roughly 4,972,000 (in thousands). The company suggested that their wholesale segment
would be leading the way in terms of segment growth and as a percentage of revenue. The retail segment would have very
little growth as the company believed that sales would be less here as the items in the retail stores are generally more expensive
and the segment does not have as many opportunities for sales. The licensing segment would see negative growth, like the
past, due to the company gaining direct control of certain licensee operations. FY2010 will be most reflective of the current
economy, in terms of growth, as the company reports on an annual basis that is roughly a year ahead. The company will
experience negative growth throughout all segments, minus the license segment (due to the company extending licensee
agreements in foreign markets) and will finish the year with total revenues shrinking by roughly two percent. I wanted to
illustrate sales making a rebound from negative growth in FY2011 as a result of improving economic conditions. Fiscal years
2012 & 2013 were meant to show the company’s strongest future growth, but still not as strong as past levels (due to global
economies recovering at different times). From FY2014 on to perpetuity, I trended the growth rates down to rates that would
be reflective of the company’s free cash flows growing at approximately three percent during the terminal year of the DCF.
Cost of Goods Sold
Historically, the company’s cost of goods sold has been consistent as a percentage of revenue at 45%-46%. This is in large
due to the fact that the company out sources the majority of production, which has allowed the company to control their costs
associated with making sales. The company has been quoted saying that their costs are “locked in”, however many analysts
10
Polo Ralph Lauren Corporation
Univer sit y of Or egon I nvest ment Gr oup
believe that rising material and labor costs will pressure profit margins in the long term. Given this, I have chosen to raise the
company’s cost of goods sold annually by increments of .25%. The company predicted that their cost of goods sold be
roughly 46% of revenues in 2009, so I used this as a starting point. The result of the increases is a cost of goods sold as a
percentage of revenue of 48.25% in the terminal year. This in turn causes the company’s gross profit margin to fall from 54%
to 51.75%.
Selling, General, and Administrative Expenses
The company’s historical SG&A expense has been variable, but in a fairly tight range with a low of 38.73% and a high of
41.83% of revenue. Given the company’s FY2009 quarterly results, it appears that the SG&A will tend to be on the high end
of the historic range. Thus, I have projected that the company will have an SG&A expense as a percentage of revenue of 41%
in 2009. This increase was a result from the company assuming direct control of certain licensee agreements and a larger lease
expense as the company opened up more retail stores. I believe that this will be a future trend for the company so I have
chosen to increase SG&A as a percentage of revenue by .25% annually. This combined with the declining gross profit margin
will cause the company’s operating income to decrease by .5% annually.
Interest and Other Income, Net
Some analysts would probably choose not to forecast this line item. However, this line item has been very consistent for the
company. Going forward, I do not have any reason to believe that this will be any different. Given this, I projected that the
company will receive .5% of revenue annually in interest and other income.
Interest Expense
During the years 2005 and 2006, the company had an interest expense as a percentage of revenue of .33%. It is to my
understanding that in 2007 the company issued more long-term debt, which raised the interest expense to .5% in 2007. This
was raised to .53% in 2008. Given the company’s quarterly results, I projected that this expense will increase slightly to .55%.
Going forward I held this expense as a percentage of revenue constant at .50% as increases or decreases would likely be
negligible on the analysis and this is a difficult line item to project because it is speculatory in nature.
Depreciation & Amortization
The company’s depreciation and amortization expense has been fairly constant ranging from 3.14% of revenues to 4.12% over
the span of FY2005-FY2008. I think that this expense, as a percentage of revenue, will continue this trend into the future.
The company generally leases space for their retail stores, so it is unlikely that depreciation expense will increase significantly
from this. Given the historical trend, I projected depreciation and amortization to be four percent of revenues from FY2009
into perpetuity.
Capital Expenditures
The company’s capital expenditures are generally expenses associated with global retail store expansion, construction of shopwithin-shops, and technological infrastructure. Historically, the company’s capital expenditures have ranged from 4.23%5.32% of revenues. Through guidance, I projected that the company’s capital expenditures be roughly 5% of revenues during
FY2009. In FY2010, I projected a low level of capital expenditures to reflect a down year in business sales and investment.
This led to capital expenditures worth 4% of the company’s revenues. Beginning in FY2011 and extending into the terminal
year, I projected capital expenditures, as a percentage of revenue, to be 4.5%. This percentage reflects a historically normal
investment into the company.
Net Working Capital
The company’s current assets have been fairly consistent ranging from 36.80%-42.77% as a percentage of revenue during
FY2005-2008. The slight fluctuations can generally be attributed to the company’s varying inventory levels from year to year.
The company’s third quarter financial results indicated an increase in inventory levels, likely because of the significant
downturn throughout the global economy. In FY2008, the company had inventory levels worth approximately 10.55% of
revenues, while the FY2009 third quarter data showed an increase of roughly 5%. This led me to project that the company’s
current assets to increase to roughly 45% as a percentage of revenue for FY2009. I think that the company will then adjust
their production levels in an effort to control inventory levels. Due to this, I projected current assets to decrease back down
to more historical levels beginning in FY2010 and continuing on into perpetuity.
11
Polo Ralph Lauren Corporation
Univer sit y of Or egon I nvest ment Gr oup
As a percentage of revenue, the company’s current liabilities have ranged from 14.91%-22.52%. In general, however, the
company’s current liabilities have ranged from 18%-20% of revenues. This trend is likely to continue into the future, which is
why I projected current liabilities to stay within the middle of the range.
Tax Rate
The company has had a variable tax rate due to the company’s practice of the asset and liability method of accounting for
income taxes. This method allows the company to defer income taxes to later years. During FY2008 the company was taxed
below the standard rate, and analyst projections believe that the company will continue to be taxed below the standard rate for
FY2009. In FY2010-2011, however, the company will be taxed at a higher rate as a result of the deferred taxes. It is very
speculatory to project the variations in the company’s tax rate to far out into the future, which is why I projected the company
to have a standard 35% tax rate beginning in FY2012. I think that this will allow any increases or decreases in the tax rate to
effectively net out over the course of time.
RECOMMENDATION
My analysis of Polo Ralph Lauren leads me to believe that the company is well positioned in their industry. The company has
favorable brand recognition, strong sales, global reach, and a diversified product offering. However, the current outlook for
the company is bleak given that consumers are continually cutting discretionary spending and searching for a “value buy”.
The Comparables Analysis showed that the company was overvalued by 6.21% and the DCF showed an overvaluation of
17.31%. I weighed the two equally at 50%, which led to a weighted implied price of $31.80 an overvaluation of 11.58%. The
result of the overall analysis suggests to me that Polo Ralph Lauren is for the most part fairly valued by the market. The
company could be slightly overvalued because of the strengths outlined throughout the report. Given this, I am
recommending a hold on Polo Ralph Lauren in all University of Oregon Investment Group portfolios.
12
Polo Ralph Lauren Corporation
Univer sit y of Or egon I nvest ment Gr oup
APPENDIX 1 – COMPARABLES ANALYSIS
(Numbers in thousands of Dollars) Ralph Lauren. RL
Weight
NA
Current Share Price
35.96
Shares Outstanding
99,100
Market Cap
3,563,636
Long Term Debt
419,600
EV
3,983,236
Revenues (trailing 12 months)
5,035,400
Gross Profit (trailing 12 months) 2,744,200
EBITDA (trailing 12 months)
914,300
OCF (trailing 12 months)
684,000
Multiples
EV/Revenue
0.79
EV/Gross Profit
1.45
EV/EBITDA
4.36
EV/OCF
5.82
Coach. COH Estee Lauder Companies. EL Warnaco Group Inc. WRC Phillips-Van Heusen Corp. PVH Abercrombie & Fitch Co. ANF Weighted Average
20%
20%
20%
20%
20%
100.00%
14.46
21.60
20.13
16.70
20.52
18.68
321,000
196,700
46,200
51,500
87,100
140,500
4,641,660
4,248,720
930,006
860,050
1,787,292
2,493,546
25,100
1,406,400
163,800
399,600
100,000
418,980
4,666,760
5,655,120
1,093,806
1,259,650
1,887,292
2,912,526
3,238,800
7,836,400
2,073,400
2,498,700
3,540,300
3,837,520
2,401,800
5,799,600
914,700
1,233,400
2,361,700
2,542,240
1,183,400
979,800
179,100
340,000
932,000
722,860
1,029,200
610,300
113,200
248,600
1,052,800
610,820
1.44
1.94
3.94
4.53
0.72
0.98
5.77
9.27
0.53
1.20
6.11
9.66
0.50
1.02
3.70
5.07
0.53
0.80
2.02
1.79
0.75
1.19
4.31
6.06
Implied Price
Current Price
Under (Over) Valued
Implied Price Weights
33.64 25.00%
28.63 25.00%
35.53 25.00%
37.62 25.00%
33.86
35.96
-6.21%
13
Polo Ralph Lauren Corporation
Univer sit y of Or egon I nvest ment Gr oup
APPENDIX 2 – DISCOUNTED CASH FLOWS ANALYSIS
(In thousands of U.S. Dollars)
2005
Net Revenue
3,305,400
% Growth
Cost of Goods Sold
1,620,869
% Revenue
49.04%
Gross Profit
1,684,531
Gross Margin
50.96%
Selling, General, and Administrative Expenses
1,382,520
% Revenue
41.83%
Operating Income
302,011
% Revenue
9.14%
Interest and Other Income, net
4,600
% Revenue
0.14%
Interest Expense
11,000
% Revenue
0.33%
Income Before Provision For Income Taxes
299,366
% Revenue
9.06%
Provision for Income Taxes
107,400
Tax Rate
35.88%
Net Income
191,966
Net Margin
5.81%
Add Back Depreciation: Depreciation and Ammortization 103,633
% Revenue
3.14%
Add Back Interest Expense*(1-Tax Rate)
7,054
% Revenue
0.21%
Operating Cash Flow
302,653
% Revenue
9.16%
Current Assets
1,413,763
% Revenue
42.77%
Current Liabilities
622,410
% Revenue
18.83%
Net Working Capital
791,353
% Revenue
23.94%
Change in Net Working Capital
781,951,000
Capital Expenditures
175,845
% Revenue
5.32%
Free Cash Flow
-781,824,192
Discounted Free Cash Flows
2006
3,746,300
13.34%
1,723,900
46.02%
2,022,400
53.98%
1,476,900
39.42%
545,500
14.56%
13,700
0.37%
12,500
0.33%
502,900
13.42%
194,900
38.76%
308,000
8.22%
127,000
3.39%
7,656
0.20%
442,656
11.82%
1,378,500
36.80%
843,500
22.52%
535,000
14.28%
-256,353
158,600
4.23%
540,409
2007
4,295,400
14.66%
1,959,200
45.61%
2,336,200
54.39%
1,663,400
38.73%
672,800
15.66%
26,100
0.61%
21,600
0.50%
643,300
14.98%
242,400
37.68%
400,900
9.33%
144,700
3.37%
13,461
0.31%
559,061
13.02%
1,685,900
39.25%
640,300
14.91%
1,045,600
24.34%
510,600
184,000
4.28%
-135,539
2008
4,880,100
13.61%
2,242,000
45.94%
2,638,100
54.06%
1,932,500
39.60%
705,600
14.46%
24,700
0.51%
25,700
0.53%
642,100
13.16%
222,300
34.62%
419,800
8.60%
201,300
4.12%
16,802
0.34%
637,902
13.07%
1,893,500
38.80%
908,600
18.62%
984,900
20.18%
-60,700
217,100
4.45%
481,502
2009 Q1-3A
3,794,500
NA
1,698,200
44.75%
2,096,300
55.25%
1,516,600
39.97%
579,700
15.28%
18,500
0.49%
20,500
0.54%
548,900
14.47%
187,400
34.14%
361,500
9.53%
138,000
3.64%
13,501
0.36%
513,001
13.52%
2,004,200
52.82%
721,300
19.01%
1,282,900
33.81%
298,000
129,900
3.42%
85,101
0.25
2009 Q4E
1,177,920
NA
588,960
50.00%
588,960
50.00%
522,092
44.32%
66,868
5.68%
6,362
0.54%
6,848
0.58%
95,182
8.08%
31,588
33.19%
63,594
5.40%
60,897
5.17%
3,902
0.33%
128,393
10.90%
2,263,000
919,898
1,343,102
60,202
120,100
10.20%
-51,909
-50,454
2009 E+A
4,972,420
1.89%
2,287,160
46.00%
2,685,260
54.00%
2,038,692
41.00%
646,568
13.00%
24,862
0.50%
27,348
0.55%
644,082
12.95%
218,988
34.00%
425,094
8.55%
198,897
4.00%
17,403
0.35%
641,394
12.90%
2,263,000
45.51%
919,898
18.50%
1,343,102
27.01%
358,202
250,000
5.03%
33,192
1.25
2010
4,868,309
-2.09%
2,251,593
46.25%
2,616,716
53.75%
2,008,178
41.25%
608,539
12.50%
24,342
0.50%
24,342
0.50%
608,539
12.50%
225,159
37.00%
383,379
7.88%
194,732
4.00%
17,039
0.35%
595,151
12.23%
1,947,324
40.00%
924,979
19.00%
1,022,345
21.00%
-320,757
194,732
4.00%
721,176
625,634
2.25
2011
5,038,182
3.49%
2,342,755
46.50%
2,695,427
53.50%
2,090,845
41.50%
604,582
12.00%
25,191
0.50%
25,191
0.50%
604,582
12.00%
223,695
37.00%
380,887
8%
201,527
4.00%
17,634
0.35%
600,047
12%
2,015,273
40.00%
957,255
19.00%
1,058,018
21.00%
35,673
226,718
4.50%
337,656
261,443
3.25
2012
5,378,762
6.76%
2,514,571
46.75%
2,864,191
53.25%
2,245,633
41.75%
618,558
11.50%
26,894
0.50%
26,894
0.50%
618,558
11.50%
216,495
35.00%
402,062
7%
215,150
4.00%
18,826
0.35%
636,039
12%
2,151,505
40.00%
1,021,965
19.00%
1,129,540
21.00%
71,522
242,044
4.50%
322,473
222,853
4.25
2013
5,757,912
7.05%
2,706,219
47.00%
3,051,693
53.00%
2,418,323
42.00%
633,370
11.00%
28,790
0.50%
28,790
0.50%
633,370
11.00%
221,680
35.00%
411,691
7%
230,316
4.00%
20,153
0.35%
662,160
12%
2,303,165
40.00%
1,094,003
19.00%
1,209,162
21.00%
79,622
259,106
4.50%
323,432
199,495
5.25
2014
6,109,973
6.11%
2,886,962
47.25%
3,223,011
52.75%
2,581,463
42.25%
641,547
10.50%
30,550
0.50%
30,550
0.50%
641,547
10.50%
224,541
35.00%
417,006
7%
244,399
4.00%
21,385
0.35%
682,789
11%
2,443,989
40.00%
1,160,895
19.00%
1,283,094
21.00%
73,933
274,949
4.50%
333,908
183,822
6.25
2015
6,415,877
5.01%
3,047,542
47.50%
3,368,336
52.50%
2,726,748
42.50%
641,588
10.00%
32,079
0.50%
32,079
0.50%
641,588
10.00%
224,556
35.00%
417,032
7%
256,635
4.00%
22,456
0.35%
696,123
11%
2,566,351
40.00%
1,219,017
19.00%
1,347,334
21.00%
64,240
288,714
4.50%
343,168
168,617
7.25
2016
6,688,090
4.24%
3,193,563
47.75%
3,494,527
52.25%
2,859,159
42.75%
635,369
9.50%
33,440
0.50%
33,440
0.50%
635,369
9.50%
222,379
35.00%
412,990
6%
267,524
4.00%
23,408
0.35%
703,921
11%
2,675,236
40.00%
1,270,737
19.00%
1,404,499
21.00%
57,165
300,964
4.50%
345,793
151,647
8.25
2017
6,907,528
3.28%
3,315,613
48.00%
3,591,914
52.00%
2,970,237
43.00%
621,677
9.00%
34,538
0.50%
34,538
0.50%
621,677
9.00%
217,587
35.00%
404,090
6%
276,301
4.00%
24,176
0.35%
704,568
10%
2,763,011
40.00%
1,312,430
19.00%
1,450,581
21.00%
46,082
310,839
4.50%
347,647
136,075
9.25
2018
7,114,753
3.00%
3,432,869
48.25%
3,681,885
51.75%
3,077,131
43.25%
604,754
8.50%
35,574
0.50%
35,574
0.50%
604,754
8.50%
211,664
35.00%
393,090
6%
284,590
4.00%
24,902
0.35%
702,582
10%
2,845,901
40.00%
1,351,803
19.00%
1,494,098
21.00%
43,517
320,164
4.50%
338,901
118,396
14
Polo Ralph Lauren Corporation
Univer sit y of Or egon I nvest ment Gr oup
APPENDIX 3 – REVENUE PROJECTIONS
Revenue Projections (in Thousands of U.S. Dollars)
Wholesale
% Segment Growth
% of Revenues
Retail
% Segment Growth
% of Revenues
Net Sales
% Growth
Licensing Revenue
% Segment Growth
% of Revenues
Net Revenues
% Growth
2005
1,712,100
51.80%
1,348,600
40.80%
3,060,700
244,700
7.40%
3,305,400
2006
1,942,500
13.46%
51.85%
1,558,600
15.57%
41.60%
3,501,100
14.39%
245,200
0.20%
6.55%
3,746,300
13.34%
2007
2,315,900
19.22%
53.92%
1,743,200
11.84%
40.58%
4,059,100
15.94%
236,300
-3.63%
5.50%
4,295,400
14.66%
2008
2,758,100
19.09%
56.52%
1,912,600
9.72%
39.19%
4,670,700
15.07%
209,400
-11.38%
4.29%
4,880,100
13.61%
2009 Q1-3
2,075,700
NA
54.70%
1,570,100
NA
41.38%
3,645,800
NA
148,700
NA
3.92%
3,794,500
NA
2009 Q4E 2009 A+E
765,143 2,840,843
NA
3.00%
64.96%
57.13%
361,626 1,931,726
NA
1.00%
30.70%
38.85%
1,126,769 4,772,569
NA
2.18%
51,151
199,851
NA
-4.56%
4.34%
4.02%
1,177,920 4,972,420
NA
1.89%
2010
2,784,026
-2.00%
57.19%
1,883,433
-2.50%
38.69%
4,667,459
-2.20%
200,850
0.50%
4.13%
4,868,309
-2.09%
2011
2,895,387
4.00%
57.47%
1,939,936
3.00%
38.50%
4,835,323
3.60%
202,859
1.00%
4.03%
5,038,182
3.49%
2012
3,127,018
8.00%
58.14%
2,052,942
9.00%
38.17%
5,179,960
7.13%
198,802
-2.00%
3.70%
5,378,762
6.76%
2013
3,345,909
7.00%
58.11%
2,217,177
8.00%
38.51%
5,563,087
7.40%
194,826
-2.00%
3.38%
5,757,912
7.05%
2014
3,546,664
6.00%
58.05%
2,372,380
7.00%
38.83%
5,919,044
6.40%
190,929
-2.00%
3.12%
6,109,973
6.11%
2015
3,723,997
5.00%
58.04%
2,502,860
5.50%
39.01%
6,226,858
5.20%
189,020
-1.00%
2.95%
6,415,877
5.01%
2016
3,872,957
4.00%
57.91%
2,628,003
5.00%
39.29%
6,500,961
4.40%
187,130
-1.00%
2.80%
6,688,090
4.24%
2017
2018
3,989,146
3.00%
57.75%
2,733,124
4.00%
39.57%
6,722,269
3.40%
185,258
-1.00%
2.68%
6,907,528 7,114,753
3.28%
3.00%
APPENDIX 4 – DCF ASSUMPTIONS
DCF ASSUMPTIONS
Tax Rate
Risk Free Rate (10 Year Bond)
Market Risk Premium
Beta
Cost Of Equity (CAPM)
% Equity
Cost of Debt
% Debt
WACC
Terminal Growth Rate
35.00%
2.50%
7.00%
1.53
13.21%
89.47%
3.25%
10.53%
12.04%
3.00%
PV Of Future Cash Flows
Terminal Value
PV Of Terminal Value
Firm Value
Long Term Debt
Equity Value
Shares Outstanding
2,017,527
3,860,952
1,348,833
3,366,360
419,600
2,946,760
99,100
Implied Share Price
Current Share Price
Under (Over) Valued
29.74
35.96
-17.31%
Weighted DCF & Comps Price
DCF Implied Price
Comps Implied Price
Weighted Implied Price
Price
29.74
33.86
31.80
Current Price
(Overvalued)
35.96
-11.58%
Weight
50.00%
50.00%
100.00%
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Polo Ralph Lauren Corporation
Univer sit y of Or egon I nvest ment Gr oup
APPENDIX 5 – BETA SENSITIVITY ANALYSIS
Beta
1.97
1.86
1.75
1.64
1.53
1.42
1.31
1.20
1.09
St. Deviation
2
1.5
1
0.5
0
-0.5
-1
-1.5
-2
Implied Price
22.30
22.99
23.79
24.70
29.74
27.01
28.47
30.21
32.30
Undervalued
-37.99%
-36.06%
-33.85%
-31.30%
-17.31%
-24.89%
-20.82%
-15.99%
-10.19%
APPENDIX 6 – REFERENCE PAGE & ECONOMIC GRAPHS/CHARTS
•
•
•
•
•
•
•
•
•
•
•
Polo Ralph Lauren Annual & Quarterly Reports
Morningstar reports
Argus Reports
Bank of America/Merrill Lynch reports (Robert Ohmes and Helena Tse)
Plunkett’s Retail Industry Almanac 2009
Marketing Daily
Reuters
Yahoo Finance
Google Finance
Fact Set
SEC webpage
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Polo Ralph Lauren Corporation
Univer sit y of Or egon I nvest ment Gr oup
17
Polo Ralph Lauren Corporation
Univer sit y of Or egon I nvest ment Gr oup
18