For the past 40 years, Ralph Lauren, 68, has spearheaded the growth of his lifestyle company, one of the most respected businesses in fashion, as its chairman and chief executive officer.
Since Roger Farah came on board in 2001 as president and chief operating officer of Polo Ralph Lauren Corp., the company has accelerated its expansion, growing into a $4.3 billion global powerhouse as it brought some key licenses in-house, launched several new businesses, opened more of its own stores and stepped up international expansion.
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Farah, 54, is a former retailer who began his career at Saks Fifth Avenue and later took on increasingly responsible positions at Rich’s Department Store in Atlanta, Federated Merchandising Services, Macy’s and Venator Corp. Since joining Polo, he has helped transform the company into one of the world’s fastest-growing luxury brands, quadrupling its European business, establishing a global infrastructure and amplifying Lauren’s worldwide presence.
In a rare dual interview, Lauren and Farah discussed what makes their partnership work, the path the business has taken over the last few years and where Polo is headed over the next decade.
WWD: To what do you attribute the strong partnership the two of you have?
Roger Farah: Ralph is in charge of everything and what he doesn’t want to do, I do. It’s very simple. There are no ambiguities involved.
WWD: Are there specific areas you’re in charge of, Roger? And is Ralph totally in charge of the creative? Roger, do you ever get involved in what the line should look like, or any of the creative meetings?
Ralph Lauren: There’s no doubt there are areas where I might have more expertise and areas where Roger has more expertise. What makes this very good is that I think that we have a very good rapport and understanding. Roger and I talk about everything. We even talk about movies. I have a lot of respect for what Roger does and what he’s brought to the company, which is a great management style and knowledge of Wall Street and knowledge of retail and each of the broad sections. And we communicate very well. I don’t think we sit on top of each other. I work on retail, and I work with Roger on retail. Roger will go and look at the line, tell me what he thought wasn’t good, and what he thought was great. What works well is that we have a lot of respect for each other and that we respect each other’s role.
WWD: How did you two get together?
R.L.: I asked Roger to come with me about 11 years ago. And at that point he wasn’t sure where he was going to go or what he wanted to do. Ultimately, he went his own path and I went mine. We weren’t public at the time. I was just going public and realized that I needed to find someone. I knew Roger through the years. And so we had a few meetings and I think at that time Roger didn’t feel it was the right place for him and I promoted from within. A few years later, Roger and I met at a party and we talked and we got together then.
R.F.: I think we’ve known each other on and off for almost 25 to 30 years and certainly I have respect for Ralph and what the company was doing for many, many years. I guess having been in the industry and being in and out of all sorts of designers and wholesale businesses, I knew most of the key suppliers. Ralph was always what everybody held up as the standard of excellence. I think when we decided to work together it was because of that respect. And it’s now turned into a real friendship. So work conversations, personal conversations, outside interests all sort of blend and work their way through all of our interactions. We meet formally during the week just to make sure we’re both moving fast and we have a time that we both look forward to and we’re sort of talking multiple times during the day, bouncing ideas, talking about people or business issues.
WWD: Do you have certain divisional people that report to you, Roger, and certain ones that report to you, Ralph? Is there a clear delineation in the reporting structure?
R.F.: I would say I spend more time with the operating side of the house, the financial side of the house. And Ralph spends more time with the creative side. But I think both sides feel comfortable coming in and out of each of our worlds. And then we talk a lot about both.
WWD: Ralph, when you make a decision, or you’re looking at a line, will you make that decision as the ceo or more as a designer?
R.L.: Working on a fashion line has nothing to do with being a ceo or not being a ceo. I think what I look at in this company is where we are, where we’re going to go, what we’re going to be and how we’re going to get there. And so that’s what I do. And so whether it’s what’s going on in Europe, what’s going on in retail or where we’re going to open some stores, whether we’re going to open in China or not in China, that’s something I’m very involved with.
And at the same time, the movement certainly of the brand and what we’re going to look like and developing a new concept or wherever we are, whether it’s Rugby, Chaps, Ralph Lauren, Lauren, Polo. But in terms of whether we’re going to open up in Russia or not, we talk about that….So we work very well together. And there are areas where Roger has more experience and is better at it than I am.
WWD: What are those?
R.L.: Well, I think he’s very, very good working on every level. He’s a very smart guy, so to pull out one thing, it’s really not right. We talk about everything. He’s very tuned into everything. So it’s not like if I show him a product he says, “What’s that? I don’t know what that’s about.” He knows about the product, he knows how it’s made, he knows everything about it.
He was a fashion leader at Saks and his whole career was in the buying world, the merchandising world. So he’s got a good background in that. And I think you have to be very smart. And also his years before he came here, he worked for a public company and learned a lot about how to work with Wall Street, an area that I never really did.
R.F.: You know, it’s interesting, a lot of people talk about creative versus commerce, and the way that intertwines in a lot of businesses. Often it works and sometimes it doesn’t work. But really between Ralph and I, we have almost 75 years of experience between the two of us. I think Ralph is unique in that he’s clearly been the inspiration and the designer, but he’s also a unique businessman and has unbelievable vision for what’s around the corner and where we should be going.
Having been a retailer and having been in the fashion business, plus being a businessman myself, I think we can play interesting roles together and that’s somewhat unique in this industry. So I think that’s part of why it works for us in a way that may not be as common.
WWD: Do both of you set the strategy, or Ralph, are you more the person who’s going to set the strategy and Roger’s going to execute it?
R.L.: I think we have different moments. We really do discuss it. I might say, “I want to do this.” I think in retail I’m very, very involved in the concept of what I want to do in stores, and where they should open, and should we do this kind of store here. It doesn’t matter what it is, we sit down and talk about a lot of ideas.
WWD: Do you usually agree on things?
WWD: And what happens when you don’t agree? Do you have a mediator or bring a third person in?
R.L.: Well if we don’t agree, I win.
WWD: How does that make you feel, Roger?
R.F.: It’s very clear.
R.L.: Hey listen, I think over the years I have worked with different people, very few people, but I’ve worked with people. And I think you have to know the talent of the people that you work with, what they’re not good at and what they are good at. And I know what Roger does and how good he is. And I also know that he’s a man who knows how to manage and knows what to do. So there’s nothing I have to tell Roger.
What we do do is discuss things. It’s not about telling him, “This is how I’m going to do it.” This is a very good set up. We have respect for each other, and I’ve been around a long time and I started this company, so I have an understanding of where I want to go. I’ve had years where it didn’t go as well, and I’ve had years where it went well. Working with Roger has given me a kind of ability to do what I do best and I’ve given him the ability to do what he does best. And I think that’s the best way anybody can work.
R.F.: What’s interesting about this, you know, honestly, it’s Ralph’s company, it’s his vision, it’s 40 years of success, it’s his name on the door, he’s the largest shareholder. I mean all the realities of that we all understand. But Ralph rarely plays that card, which makes it better for everybody because it’s not “do it because I want to,” it’s because it’s a dialogue and what do you think, and think about this and come back in a week or two, let’s talk about it some more.
R.L.: I have times when I will say something to Roger, “I really want to do this,” and he’ll say, “Let me think about it.” He wants to think about it, which I happen to like because I know that he’s going to think about it, and I know that maybe I may not be thinking right. I love the fact that someone’s going to actually say, “Ralph, I’ve been thinking about it, and I don’t think it’s the right thing,” instead of “Ralph, you’re great, I know you’re right.” Because then I’ll bury myself.
R.F.: We’ll go and do some research and we’ll get some thought around it. I think Ralph throws out a lot of ideas, and I don’t think that in the end, there’s anybody who sees the world through the lens that he sees it. And the rest of us have to think about those things and come back with thoughts, reactions and then strategies.
WWD: Is there an example of something that you came up with, and he didn’t think it was a good idea, or vice versa? Anything specific?
R.L.: We have ideas. I take credit for all of them.
WWD: You get credit for all them?
R.F.: All the ones that work, Ralph did. All the things we missed is because the rest of us didn’t want to do it.
WWD: Has it been working incredibly well the last six years versus the first 34? Have you noticed a change in the way the business has worked since Roger got here?
R.L.: You know, the company goes through different levels. I started out having labels put on a tie and delivering it myself to the stores. The level at one time was not the same level as it was. When Peter Strom [former vice chairman] was here, he was a great partner. He brought the company to a certain level to where it needed to be at that point because we had great rapport and great respect for each other. We were dealing with specialty stores and we were dealing with a much smaller concept. And it was complicated and it was as busy as it is today. It was complicated and demanding and we made our rules.
‘An Instinct for Business’
Then with Roger coming in, the world is a lot more complicated. It’s a global company, it’s more demanding, it’s more projects, there are more brands. We have a huge business now and it takes more people, it takes better management, it takes more systems. It takes a much higher level of sophistication. So there’s no comparison.
I think what you want to look at is, were we a good company then, are we a good company now? I think we were a very good company then, as you know, we were leaders on every level. We opened retail before other people, we did a lot of things. So I think we were a very good company, I think we’re a great company today. And I think Roger helped make it a great company.
R.F.: With that said, we spend a lot of time thinking about the next 10 or 20 years because one of the unique aspects of Ralph and his vision is a sort of relentless dissatisfaction with the status quo and how do we make it better. So there’s a reality to the 40 years in this business and the success. But you wouldn’t believe the amount of time we’ve spent talking about the future and really where we can go and where we can go on a global stage. It’s very exciting.
WWD: What does the future look like for Polo?
R.F.: It’s really fun. I mean quite frankly, I don’t know how many people in this industry today would say they’re having fun.
WWD: How do you see the next 10 years?
R.L.: I remember having an interview with you years ago when I said I’m taking back my women’s business. You know, there are visions that you have and I think the question is, you start these visions and sometimes they work and sometimes they go fantastically well. There is a consistency in terms of looking at the world and there’s a new topic that’s come out — reinvention. [But] I don’t think you reinvent yourself. I think you broaden your scope. You don’t reinvent yourself, you don’t change. What’s been wonderful about this company is the consistency of the company going forward and looking at what’s around and knowing how to attack and going after that, understanding where the world is going, understanding what might be available to you and approaching that in a plan.
And some of it is not a plan…it is instinct. An instinct for the business. It’s understanding the way the business works, understanding consumers, understanding the nature of where the world is going. I think I’ve always been able to do that. And in the world of fashion and design, I think you’re projecting nine months in advance, you’re saying where are we going, people don’t know.
I just got off my spring show. Three days later I’m supposed to know where I’m going for the next year, which is totally impossible. And everyone says, “It’s late, we have to do it, we have to do it.” And it’s an amazing thing. So you step back and you start to sit down and you start to work. And it doesn’t come all at once, it comes as you go along. So to think I could come back right away and come up with another great idea every minute…
I think it’s about the way the movement of the company goes, the movement of the world and you move with the times, and I believe that one person can’t be the genius of the whole world. It’s about teams, it’s about give and take, it’s about opening up. And I think Roger and I open up. We have the camaraderie and we also have a group of people that we work with that are part of the team and that have their voice and their opinions. So it is a company that has a lot of voice and has a lot of spirit and we work together.
And going forward and projecting where we’re going, some of it’s easy because you look at the world and you say we’re now an international company, you know, where are we going to go next? We’re going to go to Germany, we’re going to go here, we’re going to go there. We also have brands, we have all kinds of things.
So what we do have is we’ve been consistent in our point of view. We have built brands that are growing tremendously. And it’s a matter of taking what we have and figuring out how we’re going to use them as we go around the world. For instance, we went to Japan and built a great store there. We probably could build another five stores there, and it wouldn’t [feature] the same product. So we have a wealth of background in terms of brands that we’ve built and how we’re going to go about it.
WWD: Are there a lot of areas left in Europe that you feel you still need to penetrate further?
R.F.: We just started.
WWD: What countries are high on the list to open up stores?
R.F.: I don’t know that it’s necessarily brand new countries. The fact is that we’ve owned the [European] license now for seven years. The business has grown fourfold in seven years; we’ve had enormous success. And I think we’re just scratching the surface. I don’t think we’re fully developed in any of the major countries. We’re opening two or three stores in Paris next year, which I think is going to give the company a whole new face to that important fashion customer. The Milan store was a major statement in that important capital. So I think we’re really just starting in Europe against the opportunities even in the developed markets, let alone some of the new markets.
WWD: What about Dubai?
R.F.: We’re in Dubai. We have four stores in Dubai.
WWD: What are your plans for retailing in China?
R.F.: I just got back from a trip to Japan and Hong Kong and I went into China for the day. It’s a fascinating market with a growing luxury customer and one that is status-conscious. So whether they’re coming through Hong Kong as a gateway to the rest of the world or whether they’re in their local provinces, the Chinese market over time will really be an important one.
WWD: How soon until you open up a store there?
R.F.: We have eight or 10 licensed stores there. Not nearly on the scale of Milan or Omotesando [Tokyo] or even the Moscow stores we opened. But there’s no doubt that market will be a huge market for us in the future.
WWD: How are you feeling about retailing in India?
R.F.: All unfolding. They love the Ralph Lauren brand. I don’t think they’ve been exposed to as much of the content as we’ve begun to expose Europe to, or we’ve done here in the United States. So I think it’s not only been countries we want to go into, it’s what’s the offering, what’s the store look like.
WWD: At what level would you go into India and China? Would you go in at the highest level?
R.F.: I think they can all work, it’s a question of what do you want to introduce in the beginning, and how do you want to move from that.
WWD: Do you think it’s best to go in at the higher level and then introduce less expensive products? Is that the strategy?
R.L.: I think it depends on the area. The strategy is that we have a hundred different ways of doing it. So what’s exciting about the company is that ability to have men’s, women’s, children’s, home, Rugby, RRL, RLX. We have brands that are infants and they’re starting to show their heads as we move on. When we opened in Japan, all of a sudden RRL was a big star. And so we have a lot of ways to go when we go to an area. When I say we opened our showcase store or flagship…flagships used to be a dirty word I remember at one time. It used to be people thought flagships were for advertising the brand, but you lose money there. Where do you make the money, you’re making the money on the [licensed products]. So what we have is the ability to open a legitimate store that has multibrands, depending on what you might see. We have the ability to then focus in on individual brands and say OK, we’ve got this business that could be potentially really strong. We have a women’s business, we can open a men’s business without a women’s business. You know? We have many ways to go. And so we look at internationally as where we’re going, certainly. And we see internationally, it’s unlimited.
WWD: Luxury accessories are so hot these days at all the top designer companies. What is your global strategy for luxury accessories, and how is it going so far?
R.L.: In Russia, we opened up with the accessories department on the main floor. So it’s all bags and shoes, and it goes up to Collection and then it goes up to men’s wear on the top floor. And that is really predominantly a women’s store with a tremendous amount of Collection, a tremendous amount of accessories. And that’s been amazing. So we are seeing another dimension of our business that is going to be growing. So it’s not a matter of saying are we also getting into the bag business, we’re building a brand.
WWD: So all the leather goods are done in-house now, right? You have that license back?
WWD: And it’s all at a high level or multitiered?
R.F.: Just to be clear, the handbag business, the license runs out with Wathne at the end of this year. We’ve been doing the Collection handbags in-house for the last couple of years. We bought back small leather goods and belts, we bought back footwear. So by the end of this year we’ll have all of the leather pieces and parts that we’ll be doing in-house.
A Growing Global Reach
WWD: Are there other licenses that are outstanding that you hope to bring back at the end of ’08 or ’09, or somewhere on the horizon? Or do you now have everything in-house that you want to have in-house?
R.F.: We just signed a deal with Richemont to do fine watches and jewelry. We thought we needed a partner that had expertise and they were the biggest and best in the world; they were very excited to do Ralph Lauren product for high-end distribution. So we have a partner in that part of the accessory business, which is also a hot part of the business right now.
WWD: How high end are we talking about?
R.L.: Very high end. We haven’t decided on our prices yet, but it’s big time. We’re basically starting out with watches. Jewelry is a part of it. They’re not going to be sold at airports.
WWD: Is this a global launch, or just for
R.F.: Well, Richemont is a global company. Very little of what we do today is domestic only. Everything we think about, every brand Ralph talks about, every strategy we see with international potential. So the initial distribution is kind of limited. The schedule should start next fall and then the rollout after that will be extremely high end, very limited but on a worldwide basis.
In terms of other accessories products, we developed a worldwide license with Luxottica for eyewear. And they are the largest global player in that category and are really interested in global distribution. So we want to marry up all the accessory categories with our global aspirations. That product just started delivering this year and we expect that to build in the years to come.
WWD: On the domestic front, do you see anymore growth for Polo men’s wear here in the United States?
R.F.: Worldwide retail volume [for Polo men’s wear] is almost over $2 billion, which is by far and away the largest men’s wear brand by a factor of four times anybody else. I think people don’t always see the size or the scale of that business and its impact on the men’s wear industry. Women’s wear is about $1.6 billion. Interesting, in our own retail stores, women’s wear does more than men’s wear does.
WWD: How long has that been the case?
R.F.: The last two years.
WWD: What do you attribute that to?
R.L.: It’s a result of the women’s getting stronger. I think it’s a result of more attention, more a sense of growth certainly, adding new dimensions to women’s wear. And it’s been constantly expanding. Blue Label, Black Label, Collection, our label, there are all these brands. So women’s wear is really growing and it takes up a good part of the store now.
WWD: Are there plans to open any more women’s Collection stores domestically?
R.L.: That’s possible. We have large stores and depending on the areas we might open a separate women’s store, we might open a separate men’s store. But that’s what we are going through right now.
WWD: What about department stores? Do you see the women’s business in department stores growing and what are your latest beefs with department stores? Remember when you took them to task at the WWD CEO Summit several years ago? Are you pleased with your business in department stores?
R.L.: I think a lot of department stores are really alive, and they’re really doing what they have to do and I think they’re energetic. And whatever I said at that time I got spanked for. But no, I think they agreed on some level. I think that I don’t have that comment to make anymore. Seriously, I would make it if I felt I had to. I think they’re energetic, I think they’re looking for newness, they’re looking for youth, they’re working real hard.
WWD: Are you expanding your business in department stores right now? Are you getting more space? Are you still thinking about this or are you thinking more globally and opening your own freestanding stores?
R.F.: Well, I think when you talk about department stores, we talk about department stores globally. So if it’s Harrods and we’ve opened this magnificent Collection, Black Label shop there, we just repositioned the men’s store there. Or whether it’s Isetan where I was at a grand opening where there was a World of Ralph Lauren men’s wear, it was Purple, Black and Blue all in one environment. These are major statements about the brand, major installations with the best products and the best service. I think we’ve been careful about new doors but tried to make the doors we’re in very important. And whether that’s shop build-outs or visual support or assortments, or where need be, service supplements, we’ve done a lot of things to enhance those environments and we really watch that business carefully on a global basis.
WWD: Was it you who said that you were not going to give any markdown money or did that happen before you got here? That was one of your early statements.
R.F.: I said we weren’t going to take returns.
WWD: How is it working out?
R.F.: It’s fine, we don’t take returns. We didn’t want people to buy it if they didn’t think they could sell it. And we work very hard to make sure the assortment’s right. But overselling and having too much inventory that ended up in the off-price channel, it was always a vicious circle that was not healthy for anybody. So doing that several years ago, I think has actually improved the business and helped with the product flow. Because customers really want to shop what’s new and different. They want fresh product flow. They don’t want to be sitting with product that’s been on the floor for three or four months. So I think that our desire to help that channel was with the right advertising, the right shop environments and the right selling service, training and specialty support. Those are the things we can do to help any of the retailers.
R.L.: The other things that have helped is by opening more stores and different stores, expanding on our own stores.
WWD: That’s what you always used to say even from the very beginning, right? That opening your own stores helped the department store business.
R.L.: And it’s true and it always has been. When I decided to open a store on Madison Avenue, Marvin Traub [ceo of Bloomingdale’s at the time] doubled the business. He physically doubled it in terms of saying we’re not going to lose our position. And so we both helped each other and I think at that time, as our retail expanded, the stores that were looking to us, they were happy that we expanded in our own stores because it helped their image, it helped propel the products.
WWD: Your global business is 30 percent of the total. Is that a percentage that you want to keep or are you looking to grow that as the business grows?
R.F.: We’ve said repeatedly we think the world will divide up into a third in Europe, a third in Asia and a third in the United States. So that means the international business itself could be twice as big as the U.S. Today, the U.S. is 70 percent.
WWD: And when do you see that happening?
R.L.: [joking] Tomorrow.
R.F.: In our lifetime. I’m hedging my bet and Ralph’s now saying tomorrow. Now you get the gist of the relationship. Now we negotiate for tomorrow turning into by the end of the week. How about that?
WWD: Now turning to the Global Brand Concept subject. When Penney’s comes out with their new line [American Living], will it have any Ralph Lauren identity whatsoever?
WWD: So how is the world going to know it’s your aesthetic or your marketing prowess?
R.L.: OK, what they will know is it all started with the sense that we walked around, we looked at things, we got approached by different people. One of the things I noticed is that the same brands are all over the place and what the large stores really need is individuality that they don’t have. They’re getting the lines after these other places have them. They’re always on the bottom of the rung. So basically it was what’s missing in the market, and where is an area of growth? And one of the areas of growth was the ability to be able to have some of these large stores have their own brands, which they are not that great at, building their own team and building their own brand. Maybe they’re getting better than they were, but basically coming up with a concept, promoting it, advertising it, developing it is really what growing the brand is about.
And we’ve been approached by many different companies to develop a brand for them that would be theirs. And what we believe in is we can do it if they’re large enough to be able to do it and give them a look. And I think that’s another philosophy. I certainly believe in designers, I believe in Ralph Lauren, I believe in where we’re reaching. I also do believe that stores need [exclusivity]. When you walk in a store you need to know that “Hey, I can only buy here.” And so in developing something, that’s what we are doing — developing a brand that they can have.
Polo’s Next $1 Billion Brand
WWD: But will that customer know you designed it?
R.L.: They don’t have to know it’s Ralph Lauren. They just have to like it.
WWD: Is the product that good that they don’t even have to know it’s Ralph Lauren?
R.L.: You know, when I started, there was no name. They bought my ties, they bought my shirts, I wasn’t as known as other designers, and they loved the ties, the shirts and my accessories.
WWD: But they were high-quality. Is this going to be really high-quality stuff?
R.L.: No it’s good value. It’s great value, it’s legitimate products. It doesn’t matter if it’s mid-price, high-price or low-price. It’s quality for what it has and it has an ability to project a world, not just a product. It’s not just a shirt, it’s a style, it’s a whole concept.
WWD: How does the first collection look?
R.L.: Amazing. I’m very proud of it. I think they’re very thrilled.
WWD: When is it being delivered? How many stores are going to get it?
R.F.: For February delivery. 575.
WWD: Do you have financial ownership of the line?
R.F.: We own the label. We’re building the product and we’ll ship it to them.
WWD: And then if it doesn’t sell, do you still own it? Or do they own it, they bought it?
R.F.: No, no, they buy it, they own it, it’s their product.
R.L.: But it’s their own brand. There’s no competition.
WWD: So you have no responsibility for it afterward if it doesn’t sell?
R.L.: No, they buy it, they sell it. And Chaps is at Kohl’s and they own it and they buy it.
WWD: Are you in any serious discussions with any other big retailers to do the next project?
R.L.: No. We’ve been approached, but we have a lot on our plate. We’re fully, fully extended now.
WWD: So how big is this [American Living] business going to be? What’s the projection five years out?
R.F.: A little over a billion. It’s going to be within a couple of years over $1 billion at retail. We’ll see where it goes after that.
WWD: So it will be $500 million in wholesale for Polo because you own the merchandise. Are your people here making it or have you got other people elsewhere making it?
R.L.: They’re all over.
WWD: Where is the line designed?
R.L.: It’s designed here [at Polo’s offices].
WWD: So you’re looking at well over $1 billion at retail in five years? As far as other retailers that you’re in discussions with, is there anybody that you’re negotiating with right now?
R.L.: We’ve been approached by a lot of good stores, the right stores. It’s something we plan to do, develop other brands.
R.F.: But here again one of the opportunities with American Living is to take it internationally because Penney’s is really a domestic business. We certainly have a lot of large international retailers.
WWD: The American Living label can go to China, for example?
WWD: Does Penney’s share in any of the profits on American Living? They’re spending a lot of money on the advertising of it initially in the U.S., right? It’s all their advertising budget?
R.L.: It’s our advertising budget. We’re advertising.
WWD: When do the ads break?
R.L.: I think they’re going to be on the Academy Awards.
We didn’t do this because we were hurting, we did this because we’re not hurting. When you’re hurting, you can’t do this. So we’ve done this and it’s one of the many concepts that we’ve come up with in the course of a year. And our main business is Polo Ralph Lauren business and the Ralph Lauren business and all the brands that we’ve developed on a high level and our retail business and the international growths of that. So that’s really where we are going. The ability to do both is unique. And the ability to believe that we can do both is unique. And I think we feel it’s going to work. And there is no name on it except American Living and we can build American Living into a new brand.
WWD: Would you ever appear in an ad for American Living?
R.L.: No. It’s not Ralph Lauren. You have to forget it’s Ralph Lauren.
WWD: I know it’s not Ralph Lauren, but just to give it a little push or a little introduction or go on talk shows and talk about it.
R.L.: Five hundred stores is a lot of push.
WWD: What about Rugby? How is that doing and are there plans to open up more stores? Do you think the Web site will ever have e-commerce capabilities in the near future?
R.F.: Yes, I think the success of ralphlauren.com has been amazing. And what we’ve learned about the Internet customer and the shopper on the Internet has been a fascinating seven-year journey because that’s how long this has been unfolding. And we also have learned a lot about people using the site informationally internationally. So while we do commerce domestically, we certainly broadcast a lot of that information with Ralph Lauren around the world now.
We are in the process of building a state-of-the-art distribution facility in North Carolina — 330,000 square feet to service just the Internet business. So a call center, a customer service center and a pick and pack, a distribution facility which will be up and running starting November. Once that’s complete, then we can begin to look at adding Rugby as an e-commerce site. We don’t really have the ability to handle that business until that facility is complete. We’re just starting to open sections of it this November and it’ll be done by March of next year.
WWD: How big is Polo’s Internet business right now, and what percentage of the total business is it?
R.F.: We don’t really break it out. I think we have a five-year compounded growth rate at 38 percent per year. And it’s by far and away the largest single place to buy Ralph Lauren in the world.
WWD: Bigger than any of your top stores?
R.F.: Better, and bigger by a lot, of any of the top stores. So the customer has really found that shopping experience to be terrific. We get the highest marks for the site, which really David Lauren should get a lot of credit for. And we get very high marks for customer service and whether it’s mothers who want to buy children’s clothes after work or whether it’s people buying luxury all the way down to basics, it’s unbelievably successful.
WWD: Are you looking to open more Rugby stores?
R.L.: Yes, Rugby is just beginning. There’s a cult following on Rugby already. Rugby recently opened an outpost at Colette in Paris for two weeks.
R.F.: It had 84 percent sell-throughs in one week on the products.
WWD: Now you’re looking to open Rugbys throughout Europe?
R.F.: And eventually Asia. When I was in Japan, there was a huge underground business of people buying Rugby here and going to Japan and selling it for twice as much. So as Ralph said, there’s a cult following that’s developed in just a couple years.
WWD: How many Rugby stores do you have now?
WWD: What about Polo Jeans? Are you relaunching it?
R.L.: We’ve taken it back and we’ve reestablished what Polo is and expanded our space in some of the larger department stores and maybe some small specialty stores. What we’ve done with Polo Jeans is we’ve taken the jeans business and expanded it into a whole world so that we have Polo, in the Rugby store we have Rugby jeans. We have RRL, which is growing in a very interesting way because we’ve opened specialty stores. And so the RRL jean has become another cult.
WWD: On a totally different subject, what are your thoughts on being a public company? Is it something that took getting used to? How has the company changed since you’ve gone public?
R.L.: I was a private company for 30 years, over 30 years. So at the point I went public I thought the company was going to have a lot more growth. I wasn’t looking to leave the business. A lot of people thought that when they go public, they were getting out. My feeling was that I hadn’t been an international brand. I wanted to grow internationally, I want to develop. All the things that I’m doing now is where I was going. So I felt it was great for growth. As a public company, it’s a little different. So yes, you get a report card as a public company, you get a report card as a fashion company. And so I’ve lived with that for 30 years. I was about 6-feet 5-inches when I started. We went public at a very high number. We were a very, very successful company, probably the most successful company.
WWD: At what price did you go public?
R.L.: $26, but we had to get to know the business, it was a lot more complicated than I had thought. I think we had some growing pains and some areas of learning how to do it.
WWD: Is there a lot more pressure on you?
Life as a Public Company
R.L.: Since I went public, the analysts have come in and said, “All right Ralph, where are you going to go tomorrow, in 30 years? So where’s your growth?” Well, we showed them that there is growth. Sometimes the growth is not immediate. Sometimes you’re planting seeds for the future. And I think one of the most important things about our company is that it was never a one-shot deal, “look how hot we are, look how cold we are.” It was a steady climb throughout the years and throughout the business. And I think that’s a very, very important thing to look at.
And so when we did things, we invested in the future. We had plans to open other stores, we had plans to build new businesses. It all takes money and it all takes looking forward to where we’re going. And that’s how we approach the business. And I think we had to learn how to work that and I think Roger’s expertise in that area was very, very important. And his ability to know Wall Street and to project. And I think that he brought that great talent.
R.F.: You know, the other reality of being public is the pressure cuts both ways because it gives you a discipline, it gives you a focus. The beauty of Ralph’s vision is that it’s not a short-term vision and you just have to communicate to Wall Street that we are going to invest in the future, we are not taking short cuts, we won’t ever do things to the business that will help in the short run but hurt in the long run. And the patience to see that play out I think has rewarded those shareholders who have invested in the company and stayed with it. I think the fact that we also can say Ralph’s the largest shareholder. So we’re always operating in the best interest of the largest shareholder and that provides a certain amount of comfort for people. Ralph has not taken his money out of the company. He has reinvested.
WWD: Does being public change the decision-making?
R.F.: No, we don’t run the business on a quarter-to-quarter mentality. I mean, we certainly would prefer to make the quarter as to not, but we really are investing for the long term. In the last five years we’ve reinvested over $2 billion back in this business. There are not many people who either have the financial strength to do that or have the courage to do that or have the foresight into what are those opportunities. That fact that we’ve done it well, our shareholders have won.
WWD: Do you look at the stock every morning? Are you watching it all day long? Do you get upset?
R.L.: When it’s going up, I look at it everyday. When it’s going down, I don’t look at it. There are weeks that go by I don’t look at it.
WWD: What’s going on lately with the stock, like from the summer to now?
R.F.: I think it’s just market turbulence. There’s been a lot of volatility in the last couple of months. I think we hit an all-time high of $102 a share earlier this summer, which is a testimony to people’s belief in the future of the brand and where we’re going.
WWD: Are your competitors in the same boat in terms of the volatility right now?
R.F.: I think all consumer stocks are being viewed with an eye toward perhaps the customer is going to be squeezed by credit issues or mortgage issues. But as we met with shareholders and investors, I think people were very pleased with the company’s strategies and where we’re going and our execution. You know, the beauty of what Ralph has been speaking to for the last couple of hours is we don’t have to go out and buy brands, we don’t have to be a portfolio of disconnected brands, which was for many years what people thought was safety. This diversity was going to give them safety.
WWD: Do you still believe strongly in Club Monaco?
R.F.: It’s been doing well and we’re pleased with the products they’ve made.
WWD: Was that just an idea at one point? I mean, obviously, you haven’t bought a lot of companies.
R.L.: No, I bought that company early on and what I liked about Club Monaco was they were, as opposed to Gap and Banana Republic, fashion at a price. They were hip fashion, not just general fashion. They had a leadership and a lot of young people who were working at my company were going over to Club Monaco and buying pants and buying…..It was very cool, very hip, and I think it still is. And I think it’s a matter of how much attention we pay to it and all the details in building it. This is a company that’s been growing on every level. So Club Monaco is still part of the picture, we’re not disappointed. I think it’s steadily growing and quietly growing.
R.F.: I just saw the flagship in Hong Kong. It looks spectacular and it was packed.
WWD: Since launching your women’s wear in 1972, how has your aesthetic evolved? Have you had to change with the times to appeal to the way a woman dresses today? Obviously you don’t chase trends, but how has your aesthetic evolved over the past 30 years?
R.L.: Well, I think it has evolved. It has evolved in that the business is better and bigger than it ever has been. I’m happy about that one. It evolves in my world in that you go into my store and you see Ralph Lauren. It is the same. It has its own identity. It’s not like where’s the market, what’s Prada doing? They have their own world, I have my own world. And I think one of the very important parts of our company is its individuality and making its own statement. I think I’ve led the market in many ways. I think that it’s a big world out there for fashion. Everything is going at once today, so you’ve got to be very clear as to who you are and you’ve got to build your business based on who you are, not on somebody else.
WWD: What do you attribute your longevity to?
R.L.: My method is to stay tuned, have a good team of people, to know my identity, to build stores, to have a vision. And we have a diverse audience of women, of 16-year-olds to 60-year-olds. And that keeps growing and the integrity of it keeps working. And the international level.
WWD: Is it hard, though, if some of your designers want to include the hottest trends and you don’t believe in it, but you feel you have to be part of that? If you like a trend, will you pursue it even if it might not be unique?
R.L.: Well, if you don’t watch the world, if you go to take a vacation, you’re out of business. You better stay tuned in. So as far as I’m concerned, I’ve always gone to my own drummer, my own beat and I’ve made my own statement. But within my own statement, I stay tuned to what’s happening and where the changes are and where the moves are and I come up with my own statement, and it may not be anyone else’s statement and it may not be rated as the fashion of the moment, but it’s forever growing.
R.F.: I think it will be interesting when you see the book that’s going to come out [for the 40th anniversary by Rizzoli]. What’s interesting there, within the women’s wear, the different decades of product and how timeless they look yet how appropriate they were for the time and the place that they were developed in the Seventies or the Eighties or the Nineties or the last seven years. There aren’t many people I know in the industry who can say that. A lot of people say, “Well, gee, what were they thinking when they look back 10 years ago on the clothes?” But there’s a Ralph Lauren feeling, there’s an elegance and a feeling that runs through decades and product that’s in there.
R.L.: I put no date on the clothes, you know.
WWD: And this is all you, or you have a team that’s been with you from the beginning?
R.L.: What kind of question is that?
WWD: When it comes to design?
R.L.: [joking] Of course, it’s my genius every day.
WWD: Is there someone who’s been with you since 1967?
R.L.: Do I have help?
WWD: Well, I know you have help, but is there one person who’s [doing the line]?
R.L.: No, I think what we have are teams of people. I think from the word go, it was fabulous. I mean, there were some problems financially in the early days with the women’s, but for that look to stay so consistent and that you’d wear that stuff today. And my reviews were “Ralph does the classic stuff, he does classics.” But, you know, one of the good things about this company is I have a team of people who have talent. And if you don’t have talent in a company you’re not going to be in business. You have to work with talent and I certainly am very actively working every single day. But to say I do it alone, no way. I’m very proud that I have a team.
WWD: How influential is your family in creating this whole business?
R.L.: I think they have been supportive on every level. We have a close family….They’re great critics.
WWD: And they’ll be honest with you?
R.L.: Oh yes. Are you kidding? They’re brutally honest.
WWD: Brutally honest?
R.L.: Yes, sometimes I’m sorry I asked them. Sometimes they don’t understand.
WWD: Are you thinking more of your wife or your daughter, Dylan, when you’re designing these collections?
R.L.: Both. They’re both beautiful. They both like the same things and my daughter likes other things. They have their own vision, but they connect completely. And I think one of the interesting things about the brands is mother and daughter do walk in and buy the same clothes. It’s not like, “Oh mom, that’s old-time stuff.”
R.F.: I think over the years, Ralph, as your family looked for kids’ wear and you and your wife looked for home furnishing products to do the homes, I think it actually came from a lot of personal experience.
R.L.: I actually went into each business based on that. When I got married, I would shop with my wife, and she would say, “Why don’t you have this or why don’t you have that?” So I was tuned into what a woman wears.
WWD: What are you missing now? Anything in particular? Any categories you’re not in that you’d want to be in, such as grandchildren’s clothing?
R.L.: I don’t know. I think I’m looking for an answer to that. I think we’ve covered ourselves. But you never know, tomorrow I might be finding something.
WWD: Would you ever go into electronics? Like Giorgio Armani just did?
R.F.: You know, it’s funny, that restaurant in Chicago that we have [RL, at the Polo flagship], which is sort of an offshoot of the lifestyle. It has today become the number-one restaurant in Chicago.
R.L.: So I think if you ask about the future and where we’re going, I think certainly we’re in the fashion business and certainly we have products that you know about and we’re developing new products and outlets for those products. At the same time, what has been built here is known as, not the cliché word, but the word lifestyle company. I think I created that on some levels. I believe that people have taste and they’ve tasted food, they’ve tasted hotels. And there is a similarity in their taste. And people who wear some of my clothes might want to sleep on the sheets, they like the bed, they like the home, we’ve proven that we could do home years ago. And the next step could very well be the expansion of that, whether it be hotels or whether it be suites or whatever. So that’s a possibility in the future.
WWD: Do you have the same kind of energy that you had 40 years ago? Can you see yourself doing another $10 billion worth of hotels and spas, or do you think David or Roger or Roger’s kids [could run the business]?
R.L.: I think it’s camaraderie, it’s the team that we’ve built. But it’s the message. I’m grooming a team that works and that has taste and style and who have developed talent. And a lot of those people are running other companies.
WWD: Are you pleased with David’s performance?
R.L.: [joking] No, I think it’s terrible.
WWD: Does he have the ability to run this business?
R.L.: [again joking] I think my son is a loser.
WWD: Do you think he has the ability to run this business?
R.L.: No, David is not a designer. He’s not. And I say that he’s learning and he’s done whatever he’s done, I think I’m very happy with it. He works very hard and he’s strong. He reports to Roger as well as reports to me.
WWD: Now Roger, your contract expires in 2010. Do you think you’ll renew it?
R.F.: It’s a long way away, 2010.
WWD: It’s not that far away, it’s two years.
R.F.: We have a lot to do here. My passion for the business is really based on what’s to come. Ralph talks about talent in the company and we’re in the middle of doing some executive training and we’ve got people in their 20s and people in their 30s and people in their 40s all eager to participate in the next phase of this company. So whether it’s David or whether it’s any of the other young people in the company, I think Ralph and I both are committed to the training and development of that next generation so that there will be people to succeed us and there will be people to carry this brand forward because, as you look at the great brands of the world, the truth is that the legacy is carried on if properly executed. And I think that’s what we’re looking to create, generations of talent.
WWD: It’s no longer a family business, obviously, it’s a major public company.
R.L.: It never was a family business.
WWD: Well, it was your business.
R.L.: It was a private company.
WWD: OK, a private company. So a private company could mean that the company is David and Andrew and Dylan.
R.L.: No, no it’s not. It’s a private company that became a public company. And when it becomes a public company, its responsibilities are to its shareholders. They are spending their money on your company, you’ve got to be reliable, you have to replace talent and whether I renew next year or Roger renews next year, my belief is that this company is equipped to go forward and be a successful company for many years to come. And it’s not based on one person.
R.F.: We spend a lot of time with the board, by the way, on succession planning for all the key jobs.
WWD: Ralph, do you have a contract with this company? When is your contract up for renewal?
R.L.: [joking] It’s over next week. I’m getting out.
WWD: It’s been nice knowing you.
R.L.: Whatever I said to you, don’t believe it.
WWD: So you have a contract, too. Obviously this company is beyond just one person. But you’ve trained enough designers to carry on if you decide you’re tired and you want to enjoy your days?
R.L.: You train people, but they’re not in a position to do [what you do]. It’s like anything else. Someone has to prove that they can do things….I’ve led this company for 40 years….But you have to notice that there’s a tremendous amount of product that comes out of this company. And this company has been one of the leaders since Day One in its vision. We grew into retail and we led the way in many, many ways all the way through. And so as much as I love Roger, Roger is not the answer to the company only. He’s got great talent in the company and I believe he will be here and hope that he will be here and I feel the same way about a lot of people in the company. There’s a lot of people that make this company tick and it’s not based on one person. So it’s very important for a public company.
WWD: Do you feel you’d want to work the rest of your life or would you rather enjoy yourself?
R.L.: Well, right now I could probably run around the corner just as fast as you can. Life has many changes. You don’t know where the world is going.
WWD: I mean some people just want to always work. Is that how you feel?
R.L.: I don’t work. This is not work. It’s passion and it’s love. I love what I do. I created this baby and I see that we have a long way to go. And if I thought we had a short way to go, I wouldn’t be here.