By  on May 27, 2009

Ralph Lauren built much of his empire on images of the American West but he’s now looking east — to Southeast Asia — as his firm seeks new pockets of growth in the 21st century.


On Wednesday, as Polo Ralph Lauren Corp. reported lower sales and restructuring charges drove down fourth-quarter profits by 57 percent, the company laid out plans for accelerated growth in selected parts of Asia. Polo will assume direct control of its wholesale and retail distribution in Southeast Asia at the beginning of next year and is creating a Hong Kong-based hub to oversee operations in the region.

“Southeast Asia is projected to grow the most in the next 10 to 12 years, and we’ve been building our organizational teams so we can hit the ground running,” Roger Farah, president and chief operating officer, told WWD, adding the firm ultimately expects the region to account for one-third of its sales.

Farah said eventually the company also will look to India, but right now that market isn’t as developed for luxury brands.

Polo generates $150 million in retail sales across eight Southern Asian countries.

He emphasized that although the focus will be on international expansion, the firm is definitely not cutting back its U.S. operations. Nor is it ignoring Eastern Europe, where it’s begun exploring licensing partnerships, or Japan, where the company hopes to nurture less developed categories such as women’s and children’s wear and accessories.

The road to further expansion should be made easier by Polo’s balance sheet, which, as of the March 28 conclusion of the fourth quarter, listed cash, cash equivalents and short-term investments of nearly $820 million, up from $625.8 million at the end of last year. Long-term debt at yearend was $406.4 million, down from $472.8 million a year ago, with no current maturities.

But even Polo isn’t immune to the recession. For the three months, income was $44.5 million, or 44 cents a diluted share, 4 cents better than consensus estimates. Eliminating $48 million in pretax, noncash asset impairment and restructuring charges, including those from a head count reduction of 500, income was $87 million, or 86 cents. The year-ago profit was $103.5 million, or $1 a share.

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