NEW YORK — Polo Ralph Lauren is refocusing its jeans brands.
The company will discontinue the Polo Jeans Co. brand in the U.S. market in 2007 as part of its plans for its global denim business. The company, which bought back the Polo Jeans license for $355 million in February from Jones Apparel Group, will maintain the Polo Jeans brand internationally. In the U.S., the company will expand the denim offerings in the Lauren and Polo Ralph Lauren businesses for women and men, respectively.
Polo’s repurchase of the Polo Jeans license was considered a good move, because the contract with Jones restricted Polo’s ability to design denim products under its other labels, such as denim offerings in either the Polo or Lauren businesses.
“The company is moving away from the Polo Jeans Co. brand in spring 2007,” a Polo Ralph Lauren spokeswoman confirmed Tuesday. “We’ve already told our key retailers. The business will be replaced with a premium denim line for men available through the Polo Ralph Lauren label and a women’s denim line [under] the Lauren label.”
Joy Herfel, president of the Polo Ralph Lauren men’s wear division, will oversee the men’s denim offering, while Kim Roy, president of Lauren women’s wear, will head up the Lauren denim business. Both operations are already working on design specs and production matters to be ready for shipment for spring 2007, the spokeswoman said.
“These moves are consistent with the company’s current financial plans for fiscal 2007,” she added.
The company said during its third-quarter conference call in February, shortly after it closed on the Polo Jeans acquisition, that it expected Polo Jeans sales to be $200 million for 2007. At the time, Polo said it was focused on quality sales, including cutting back the volume to $200 million from $300 million, with most of that cutback expected from the off-price sales channel.
An industry source said it should not be a problem for the company to meet its $200 million volume expectation through the new businesses via Lauren in women’s and Polo Ralph Lauren in men’s, since both provide the group with higher margins than those being generated in the Polo Jeans operation. The company is also expected to keep the sales space in department stores that is allocated to the Polo Jeans brand. The designer company will convert that space to other Polo labels.
As for the Polo Jeans brand, the overseas line already offers a higher premium quality, and an industry source familiar with the Polo Ralph Lauren business said no changes should be expected in the international denim business.
The company is scheduled to report fourth-quarter and full-year earnings on Thursday.
Polo Ralph Lauren in February said third-quarter profits leaped 20.9 percent, bolstered by strong sales of its luxury goods. For the three months ended Dec. 31, net income was $90.7 million, or 84 cents a diluted share, compared with $75 million, or 72 cents, in the same year-ago quarter. Total revenues rose 10.4 percent to $995.5 million from $901.6 million, which included sales of $933.2 million, up 10.6 percent from $843.6 million, and $62.3 million in licensing royalties.
While there won’t be any Polo Jeans stores in the U.S. as a retail strategy, the company does operate a few Double RL stores for high-end denim apparel. Another retail concept to keep an eye on for possible denim expansion is Rugby, which was launched in 2004 and is geared toward capturing the burgeoning college market. The Polo spokeswoman declined to comment on whether Rugby would expand its denim offerings.
Key differences between Polo and Ralph Lauren Rugby are fit and price points, with several Rugby categories priced 40 percent lower than either the Polo, Blue or Black labels. Denim, which accounts for 10 to 15 percent of the Rugby business, includes jeans that retail for $78, compared with women’s Blue Label denim jeans at $125.