Business Valuation of Polo Ralph Lauren Corporation - Mark Moore ...

Evaluation of the Quality of DisclosureCritical accounting policies are those that are most important to the portrayal of thePolo Ralph Laurens Company’s financial condition and the results of operations, andrequire management’s most difficult, subjective and complex judgments as a result of theneed to make estimates about the effect of matters that are inherently uncertain.In the letter to the shareholders and their annual 10 K report, Polo Ralph Laurenreports most of the information, but does not present detailed information on theircorporate structure such as their exact liabilities and their cost of those liabilities at all, aswell as their current assets. Polo does do a good job at disclosing the information abouttheir return over past years relative to the S&P 500 index. They also briefly explain thecompanies break down, Polo Ralph Lauren operates in three integrated businessoperation segments: wholesale, retail and licensing. Wholesale consists of women’s andmen’s apparel designed and marketed worldwide, which are divided primarily into threegroups: Polo Brands, Lauren and Collection Brands. Retail consists of their worldwideRalph Lauren retail operations that sell the product through full-price and outlet storesand Club Monaco full-price and outlet stores. Licensing consists of product, internationaland home licensing alliances, each of which pay royalties based upon sales of ourproduct, and are generally subject to minimum royalty payments.The Management gave brief explanations on all three of the business Segments thatmake up Polo Ralph Lauren. Wholesale operating income decreased primarily as a resultof decreased net sales in our domestic men’s business and European wholesaleoperations. The incremental effect of Lauren sales in the fourth quarter on the wholesalebusiness income from operations was largely offset by start up and ordinary operatingexpenses associated with the Lauren wholesale business.20