ALTERATIONS AT POLO: CLUB MONACO TOPS FARAH’S ‘THINGS TO DO’
Byline: Eric Wilson
NEW YORK — Taking stock of his first year as Polo Ralph Lauren’s president and chief operating officer, Roger Farah said on Wednesday he has some changes in store for the company.
Most notably, Polo is planning major changes in the Club Monaco retail chain, which it acquired two years ago, by narrowing its product offering into men’s and women’s collections beginning this fall and eliminating its distinct home, kids and active CMX collections. Its men’s collection will also be redesigned to appeal to a broader customer base, while prices will drop for its basic and denim sportswear.
“The first year has been a disappointment,” Farah said, speaking at a Banc of America Securities consumer conference. “The previous management could not take the company to the next level.”
Polo still sees the Club Monaco brand as having strong potential as a vertical retail operation, with long-term retail expansion plans. But Farah hedged the company’s previously ambitious expansion plans, saying this would not be an aggressive year for its retail growth.
John Mehas, who was named chief executive officer and president of Club Monaco in November, has been charged with streamlining the division’s infrastructure, which Farah said was complicated by its breadth of product offerings, which even included a restaurant in one of its Canadian flagships.
“The women’s collection was good, but the product was a tad overpriced because of the company’s infrastructure,” he said. “The men’s product was poor and oriented toward too narrow a customer base. It was too extreme in its fashion and has not been democratic enough. You will begin to see a more approachable fashion content with the fall collection.”
Farah also discussed several recent developments within Polo aimed at improving the company’s operations and long-term health. Among them, the company has secured a commitment with its Japanese licensing partner to invigorate what had been a flat business over the past few years with a capital campaign that includes building new stores there. Sales in Japan, Polo’s second largest market after the U.S., were $471 million in its 1999-2000 fiscal year.
Farah’s campaign to improve Polo’s infrastructure and operations has also resulted in improvements in its shipping cycle, he noted. After an internal audit showed that its ticketing and shipping process was slower than its peer group by a third, changes were instituted throughout the company. As a result, much of its ticketing has been moved from a Greensboro, N.C., factory to Asia.
“We already cut 10 days out of our turnaround time, so we’ve gone from horrendous to poor,” Farah said.
Farah also confirmed that plans are in place to launch a men’s Lauren Ralph Lauren collection late this spring, patterned after its successful women’s line licensed to Jones Apparel Group, and that Polo will be launching new fragrances this fall.
He also hinted that Polo might consider terminating some of its existing licenses and developing certain categories in-house in the interest of increasing its share of the profit of those cases and thereby improving value to its shareholders. The company currently has 29 licensing partners, he said, noting that Polo has recently closed its innerwear license with Sara Lee and consolidated two licenses for kids’ wear. At the same time, Polo has expanded its home offerings with a new categories such as lamps, lighting and floor coverings, and might start a collection of bath accessories and hardware.
In a separate development, Polo announced on Wednesday that Dennis P. Kelly had been named vice president of risk management and controller. He reports to Gerald Chaney, senior vice president and chief financial officer, and was most recently senior vice president and cfo of Betesh Group, an accessories distributor.