EXHIBIT 99.1
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Polo Ralph Lauren Corporation (ticker: RL, exchange: New York Stock Exchange)
News Release -5/26/04
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POLO RALPH LAUREN TO ACQUIRE CHILDRENSWEAR LICENSEE
NEW YORK--(BUSINESS WIRE)--May 26, 2004--Polo Ralph Lauren Corporation
(NYSE:RL) today announced that it has signed a definitive agreement to
purchase certain assets of RL Childrenswear Company LLC, its licensee for
childrenswear in the United States, Canada and Mexico.
"Over the past few years, we have taken strategic steps to establish more
direct control over our valuable brand on a worldwide basis. From our
geographic acquisitions of our European operations and our majority
interest in our Japanese business, to our assuming operational
responsibility of our Lauren brand, we have been able to build our brand
on a consistent global view. We are now adding another important business
that we believe we can continue to expand. Since launching Polo for boys
25 years ago, we've developed a substantial global business extending
beyond boys to include newborns, infants, toddlers and girls," said Ralph
Lauren, Chairman and Chief Executive Officer. "We believe we can continue
to build our brand by introducing additional product categories,
expanding this business through our Ralph Lauren retail stores, and
building a larger global business."
"Our relationship with our licensee has been a mutually rewarding one
over the years and together we have built a sizeable childrenswear
business in North America," said Roger Farah, President and Chief
Operating Officer. "This transaction positions us to take advantage of
very favorable demographics that support growth in children's apparel and
other related product categories. Direct ownership allows us to further
develop the brand and leverage our operational expertise to optimize the
financial contribution to our Company."
The purchase is a cash transaction for approximately $230 million,
subject to final closing adjustments, with contingent and deferred
payments, not to exceed $20 million, over the next three years. The
transaction is expected to close in June 2004. Consummation of the
transaction is subject to review under the provisions of the
Hart-Scott-Rodino Antitrust Improvements Act and other customary closing
conditions.
The transaction is expected to be neutral to Polo Ralph Lauren's earnings
in Fiscal 2005, after taking into account the elimination of licensing
royalties from the children's business upon closure of the transaction.
The Company expects wholesale revenues in the first full year of
operation in Fiscal 2006 to be more than $200 million with earnings per
share in the range of $0.15 to $0.20.
RL Childrenswear Company LLC, or its affiliated company, S. Schwab
Company, Incorporated, has been a Polo Ralph Lauren licensee since 1993,
holding exclusive licenses to design, manufacture, merchandise and sell
newborn, infant, toddler, and girls and boys clothing in the United
States, Canada and Mexico. The current license agreement will terminate
in 2013. S. Schwab Company, Incorporated, also designs, manufactures and
distributes infants' and children's apparel under the Little Me and
Little Tikes brands.
UBS Investment Bank acted as the exclusive financial advisor to Polo
Ralph Lauren with respect to this transaction.
Although Polo Ralph Lauren Corporation and RL Childrenswear Company LLC
have executed a definitive agreement, no assurance can be given that the
transaction will close
as contemplated. Certain statements including, without limitation, the
statements made by Ralph Lauren and Roger Farah and the statements relating
to the earnings outlook contained herein constitute "forward-looking
statements" within the meaning of the U.S. Private Securities Litigation
Reform Act of 1995. Such forward-looking statements are based on current
expectations and involve certain risks and uncertainties. Actual results
might differ materially from those projected in the forward-looking
statements. Among the factors that could cause actual results to materially
differ are the following: risks associated with implementing the Company's
plans to enhance its worldwide luxury retail business, inventory management
program and operating efficiency initiatives; risks associated with the
start-up of the Lauren line; risks associated with changes in the
competitive marketplace, including the introduction of new products or
pricing changes by the Company's competitors; changes in global economic
and political conditions; risks associated with the Company's dependence on
sales to a limited number of large department store customers, including
risks related to extending credit to customers; risks associated with the
Company's dependence on its licensing partners for a substantial portion of
its net income and risks associated with a lack of operational and
financial control over licensed businesses; risks associated with general
economic downturn and other events leading to a reduction in discretionary
consumer spending; risks associated with financial distress of licensees,
including the impact of our net income and business of one or more
licensees reorganization; risks associated with changes in social,
political, economic and other conditions affecting foreign operations or
sourcing and the possible adverse impact of changes in import restrictions;
risks related to fluctuations in foreign currency affecting our foreign
subsidiaries; foreign licensees' results of operations and the relative
prices at which we and our foreign competitors sell products in the same
market and our operating and manufacturing costs outside of the United
States; risks associated with our control by Lauren family members and the
anti-takeover effect of multiple classes of stock; risks associated with
consolidations, restructurings and other ownership changes in the retail
industry; risks associated with competition in the segments of the fashion
and consumer product industries in which the Company operates, including
the Company's ability to shape, stimulate and respond to changing consumer
tastes and demands by producing attractive products, brands and marketing,
and its ability to remain competitive in the areas of quality and price;
risks associated with uncertainty relating to the Company's ability to
implement its growth strategies; risks associated with the Company's entry
into new markets either through internal development activities or through
acquisition; risks associated with the possible adverse impact of the
Company's unaffiliated manufacturers inability to manufacture in a timely
manner, to meet quality standards or to use acceptable labor practices and
other factors detailed in the filings made by the Company with the
Securities and Exchange Commission. The Company undertakes no obligation to
publicly update or revise any forward-looking statements, whether as a
result of new information, future events, or otherwise.
Polo Ralph Lauren Corporation is a leader in the design, marketing and
distribution of premium lifestyle products in four categories: apparel,
home, accessories and fragrances. For more than 35 years, Polo's
reputation and distinctive image have been consistently developed across
an expanding number of products, brands and international markets. The
Company's brand names, which include "Polo", "Polo by Ralph Lauren",
"Ralph Lauren Purple Label", "Polo Sport", "Ralph Lauren", "Blue Label",
"Lauren", "Polo Jeans Co.", "RL", "Chaps", and "Club Monaco" among
others, constitute one of the world's most widely recognized families of
consumer brands. For more information, go to http://investor.polo.com.
CONTACT: Polo Ralph Lauren, New York
Investor Contact: Denise Gillen, 212-318-7516
Media Contact: Nancy Murray, 212-813-7862
SOURCE: Polo Ralph Lauren Corporation