Top 3 Drivers in Ralph Lauren's Factory store success.

by Trefis Team - Forbes

About Ralph Lauren Factory Stores
Ralph Lauren factory stores in the U.S., Europe and Japan offer selections of men’s wear, women’s wear, children’s apparel, accessories, home furnishings and fragrances. The company also sells excess and out-of-season products through its factory stores.  Factory stores cater primarily to value-conscious customers.


Key Drivers of Factors Stores Profitability

1. Revenue per Square Foot of Factory Stores
Revenue per square foot at Ralph Lauren factory stores has increased from $743 in 2005 to about $1,020 in 2010, an annual growth rate of 6.5% due in part to a sharp rise in 2010. We [Trefis Team] anticipate continued annual growth at a high single digit rate.

2. Number of Ralph Lauren Factory Stores
The number of Ralph Lauren factory stores has increased from 144 in 2005 to 192 in 2010 with new stores added in North America, Asia Pacific and Europe.

Going forward, we [Trefis Team] anticipate that the number of Ralph Lauren factory stores will continue its growth trend towards 250 by the end of our forecast period.

3. Ralph Lauren Factory Stores EBITDA Margin
EBITDA margin for Ralph Lauren factory stores decreased from about 15% in 2006 to 12% in 2008 before recovering towards 16% in 2010. We [Trefis Team] estimate roughly flat EBITDA margin for Ralph Lauren factory stores EBITDA going forward.