LAUREN ROCKS THE BOAT

Byline: A.D.

NEW YORK — As the bridge and designer markets become smaller and more competitive, the better zone is being perceived as a growth opportunity. That’s why Ralph Lauren’s move into the better market through its licensing deal with Jones Apparel is being hailed by retailers and analysts as an astute one. Some predict that the Lauren by Ralph Lauren line will take business from established better-price labels such as JH Collectibles and Liz Claiborne, both of which are trying to reinvigorate themselves.
Others think Lauren could affect the bridge market as well.
“The bridge players have gotten too expensive; I can see the bridge consumers trading down to Lauren’s better line because they feel they are getting a better value,” said an industry analyst who did not want to be named.
“In this age of downsizing, consumers — even the wealthier ones — just don’t want to spend a lot of money on apparel,” said Kurt Barnard, publisher of the Barnard Retail Report. “Lauren’s move is both visionary and one of self-interest. It’s a good example of what a designer can accomplish, if he understands what side his bread is buttered on.”
“Lauren has tapped into a big business opportunity, given the trends in the markets, like the dress-down phenomenon, the aging baby boomers and the interest in branded apparel,” said Theresa Matacia, a vice president at Montgomery Securities, who follows Jones Apparel.
With Lauren’s consumer clout, the new line could shake up other vendors in the same price bracket.
Lauren is going into the new area at the same time some powerful men’s wear brands such as Tommy Hilfiger and Nautica are getting into the women’s sportswear scene, but could find a broader audience. Nautica, a bridge line, offers activewear mixed with sportswear pieces such as leather pants. Hilfiger’s casual line, which highlights denim, is aimed at the better zone and falls between DKNY and Guess.
“Lauren by Ralph Lauren is a major collection, and it addresses lifestyle dressing,” said Andrew Jassin, director at Marketing Management Group, an industry consulting firm. “The other new lines have a more limited appeal.”
The arrival of the new players, including Lauren’s licensed line, “will alter the women’s dynamic, making the surviving companies much sharper,” according to Paul R. Charron, president and chief operating officer at Liz Claiborne Inc.
“To that extent, I welcome their introduction,” Charron said.
The company is gearing up to launch its new in-store shops by the end of July. The shops are designed to spur regular-price selling of the company’s core sportswear brands.
Officials from J.G. Hook, which last November bought back its sportswear business, quickly made note of its new competition when showing a reporter its better-price sportswear line for fall, after a year’s hiatus. The line had been licensed to Sultra Corp. from 1989 until holiday 1994 and was picked up for the following spring season by Donnkenny.
During a recent showroom visit, president Joel C. Orenstein referred to the sportswear line as “the less-expensive version of the new Lauren line.”
J.G. Hook’s fall offerings include twill pants, tweed blazers and equestrian-print two-piece dressing.
Jones and Lauren look like a complementary pair. Lauren is a perfectionist, known as much for his polished image and ad campaigns as for his classic designs, while Jones is a 25-year-old manufacturing and sourcing giant that has succeeded by focusing on specific customer groups. Both are aggressive marketers in their respective niches.
“The deal marries the best of the designer business with the best of the sportswear business,” said Jassin.”They are different enough that both businesses can live simultaneously. Manufacturers can be their own competitors, if they segment the lines properly.”
Polo Ralph Lauren is privately held, but the combination of retail and wholesale sales is estimated at about $1 billion.
Jones is traded on the New York Stock Exchange. In the fourth quarter, ended Dec. 31, its profits increased 20 percent on a 20.9 percent gain in volume, propelled by vigorous sales of casual sportswear. Earnings climbed to $12.1 million, or 45 cents a share, against $10 million, or 38 cents, a year ago.
In the same period, sales rose to $184.6 million from $142.1 million.
In the year, Jones’s profits gained 15.6 percent to $63.5 million, or $2.38, from $54.9 million, or $2.08. Sales advanced 22.6 percent to $776.4 million from $633.3 million. — A.D.

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