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Polo Ralph Lauren Receives Olympic Boost

22 August 2008 - Markets - Editor

Since the opening ceremony for the 2008 Beijing Olympics on 8 August, which saw the United States Olympic team parading through the Bird’s Nest Stadium kitted out in Ralph Lauren designed navy blue blazers, complete with the distinctive Polo logo, and white button downs with white trousers, Polo Ralph Lauren (NYSE: RL) has risen by 8.8 percent in New York Stock Exchange trading.

This increase is seen by many to be a direct result of the international exposure the brand has received through the games and expectations are that once the Olympic Games are over, Polo Ralph Lauren shares may buckle under the pressure of a contracting European economy and declines in both the British pound and the Euro. About 20 percent of the prestigious New York-based fashion label’s sales come from Europe and plans are underway to increase this to a third. These plans include an increased presence at Harrods in London and the opening of a new clothing store for women on Paris’ premier fashion row, Avenue Montaigne. This will be followed in the spring of 2009 with a new flagship store on Paris’ Left Bank. Moreover, there are plans to increase sales at the sixteen Polo Ralph Lauren stores in Europe as well as the more than 2,000 other stores that stock the brand.

Since the beginning of 2008, Polo shares have risen by 18 percent, primarily on the strength of European business and currencies. The company’s latest quarterly sales results were up by 4 percent, with gains made by foreign currencies against the U.S. dollar accounting for around half of the increase.

Although a spokesman for the company has expressed confidence in the continued growth of European business, some analysts are less than enthusiastic about future prospects in Europe, at least in the short term, taking into account that the European economy is contracting for the first time since the Euro was introduced just less than a decade ago. On the other hand, based on the fact that Polo has beaten profit estimates in the past four consecutive quarters, some analysts have a more positive outlook, even predicting that stock will climb from its close on the NYSE of $72.94 on 21 August to $80 in the near future.

As the Olympic Games in Beijing wind down to an end, the U.S. Olympic team prepare to join the closing ceremony parade dressed once more in a Ralph Lauren design. No doubt investors will be watching with keen interest in the coming months, to see how Polo Ralph Lauren’s stock will perform.

 


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