Ralph Lauren: A Bronx Cowboy In Europe?

  • ANTONIO CALANNI/AP

    Ralph Lauren acknowledges the audience on the runway in Milan

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    Then there is distribution. In the U.S. 47% of Polo Ralph Lauren's revenues comes from selling to third-party retailers, mostly big American department stores in which Lauren controls a vast amount of floor space. In Europe there are simply not enough department stores to support such a strategy. If Lauren wants to sell in Europe, he will have to build, staff and run his own stores. That's an expensive proposition, in part because the stores his European customers frequent are on expensive streets in the city centers, not in suburban shopping malls.

    Undaunted, Polo Ralph Lauren says it plans to spend more than $1 billion on its European expansion over the next five years. "When Ralph invests, it's for the long term," says Ron Baron, ceo of Baron Funds, which has $137 million invested in Polo Ralph Lauren. First up: new stores in Manchester, Glasgow and Antwerp, as well as in London and Paris. To start, the company will focus on just half of Lauren's many offerings, including the top-of-the-line collections for men and women, children's wear, men's sportswear and Ralph Lauren Blue Label, a new women's casual line that will make its debut this September. What won't be coming are the lowest of the Lauren lines — Chaps and Lauren — those produced by licensees in the U.S.

    "Thirty-five years of business in the States taught us what we want to do and what we don't want to do," says Farah, who will oversee the retail operations in Europe. "What we want to do is establish the high end of our business first." Lauren too thinks his experience in the U.S. can help him in Europe. "I started out in America piece by piece. Now I'm coming with all the equipment," he says. But not always waving the American flag. "All the stores are international now. Someone who is 12 years old doesn't know if Armani is Italian. These stores are a part of life; you respond to them based on if you like them or not."

    It would be easy to say that Lauren's view is a simplistic one, that he doesn't know Europe very well, that he speaks only English, that he doesn't shop the stores in Milan. He is not, he says, a "kiss-kiss kind of fashion guy." So how could he possibly understand the European psyche? You might answer that question with a question: How can a working-class boy from the Bronx, who changed his name from Ralph Lifshitz, understand the psyche of the American upper class, which is what his clothes embody? Lauren has been railing against this sort of criticism since he started his business. "The idea that there is a correlation between where you come from and what you make is ridiculous," he says. "I have a taste level people respond to."

    His father was a struggling artist who painted houses to pay the bills — a heritage Lauren points to with pride. "At 12 years old, I was wearing tennis sweaters and Bermuda shorts, but I was wearing them to play basketball," he says. The designer Calvin Klein grew up not far from Lauren at about the same time. He told Women's Wear Daily, "When I was a child in the Bronx, I would see him and think, 'Who is this person? Who dresses like that?'"

    Lauren now lives something close to the life depicted in the ads for his clothes. He has a 14,000-acre ranch in Colorado, a Fifth Avenue duplex and homes in Bedford, N.Y., on New York's Long Island, and in Jamaica. He collects antique cars and watches and owns a garage full of motorbikes.

    Last year Polo Ralph Lauren reported about $2.4 billion in revenue. The second most popular designer, Giorgio Armani, reported about half that. Those numbers help prove Lauren's point: he doesn't have to understand the psyche of his customers; he just has to have a sense of style they understand and want. In the U.S. he has made that connection. In the rest of the world? Well, Giorgio Armani and Ermenegildo Zegna will certainly be watching. And so will Wall Street.

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