3 Key Trends for Polo Ralph Lauren

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Industry competition, international expansion, and brand identity will go a long way in shaping Polo Ralph Lauren's ( RL ) outlook as it competes against other premium apparel and accessories players like Coach ( COH ), Liz Claiborne ( LIZ ) and Ann ( ANN ). Below we provide a brief synopsis regarding our expectations for each of these key trends.

We have a $111 price estimate for Polo Ralph Lauren's stock , about 10% below market price. While our price estimate currently sits below market price, we have actually raised our number roughly 60% since mid-2010. During this time, Ralph Lauren's stock price has seen a similar jump - up about 70%.

Increasing Competition from Private Labels

In recent years, private labels have accounted for an increasing share of sales at department stores. This has hurt brands like Polo Ralph Lauren, which derives a large portion of its revenues through sales to department stores. The trend has forced Polo Ralph Lauren to invest heavily in its own retail channel in order to remain competitive.

We believe this trend will continue into the future as firms in the highly competitive apparel industry realize the importance of forward/backward integration for sustained growth.

International Expansion Will Help Sustain Growth

Facing increasing competition and slow growth in developed markets, Polo Ralph Lauren has shifted its strategic focus to expanding operations in emerging markets, particularly in Asia. The South East Asian market is fast becoming a focal point of the global retail industry, with major retailers across the globe fast forwarding their plans of growing their presence in this region.

As Asian consumers, backed by increasing disposable income, are showing an inclination toward luxury goods, Polo Ralph Lauren can leverage its image as a luxury retailer to gain a foothold in this market.

Polo Ralph Lauren Has a Strong Brand Identity

Polo Ralph Lauren's greatest competitive advantage has been its ability to maintain the strength of its brand for the past twenty years. While many fashion companies have struggled to retain customers with the changing fashion trends, Polo Ralph Lauren has not only remained strong but also leveraged its brand name internationally.

In the fashion industry, notoriously marked with changing tastes and short lived brand appeal, Polo seems to have an unassailable competitive position.

Another advantage for Polo Ralph Lauren is its wide consumer reach. With a large portfolio of brands, the company offers products at every price point from discount (Chaps) to luxury (Ralph Lauren Collection), widening its target demographic.

See our complete analysis of Polo Ralph Lauren stock here



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Investing Ideas , Stocks , US Markets

Referenced Stocks: ANN , COH , LIZ , RL

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