When it comes to the investment community, Ralph Lauren knows the importance of longevity.
Five years ago, at the Polo Ralph Lauren annual shareholders' meeting, when the company was celebrating both its 35th anniversary in business and fifth year as a publicly traded firm, the chairman told attendees a public company needs to be able to do at least two things in order to succeed: "You have to prove longevity and that you can deal with Wall Street." He concluded then that the company had done both.
At this year's annual meeting in August, as the group marks its 40th anniversary and its 10th year on Wall Street, the focus was again on longevity.
"Through the years, we have had the same formula for running our business," Lauren stated. "We are not about trendy fashion. It's not a hot retailer. It's about longevity, which is unheard of in the fashion business, which is all about youth and change."
Wall Street seems to agree. The company went public with Ralph Lauren ringing the bell at the New York Stock Exchange on June 12, 1997. Its initial public offering price was $26 a share, and the stock closed the day up over 21 percent at $31.50. Earlier this month, the stock was trading at $77, a 196 percent premium over the IPO price.
According to Jennifer Black, analyst at her research firm, "A $10,000 investment in the company at its IPO price would be worth around $29,200 near the end of September."
Still, Lauren over the years hasn't been thrilled with the company's stock price. He bemoaned to shareholders at the company's August 2000 annual meeting that fiscal 2000 was then the most profitable in the firm's history, with a 15 percent increase in net income and a 7.5 percent increase in revenue, yet the stock was trading around $19 a share.
Since then, Polo's stock has climbed higher, riding the luxury wave over the last few years that boosted shares of such firms as Coach.
Since its IPO, the stock has not split. As of Oct. 2, the 52-week high was $102.58, and the low was $64.77. Polo Ralph Lauren has a market capitalization of $8 billion, and 94 percent of the company's shares are held by institutional investors, according to Capital IQ. Those investors include Janus Capital Management, FMR Corp. (Fidelity), Vanguard and Buckingham Capital Management.
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