Polo Ralph Lauren Offering Scores High With Investors

Investors rushed Thursday for one of Seventh Avenue’s biggest stars--Polo Ralph Lauren Corp.--when its stock went on sale to the public for the first time. The demand was so great that the offering price was raised from $25 to $26 a share, and trading opened at $32.125.

Analysts estimated that the stock offering of 29.5 million shares, which raised $767 million, may have been five to 10 times oversubscribed. That caused brokers to go into the market and buy at higher prices for their clients.

After company founder Ralph Lauren, who got his start in the garment business 30 years ago selling neckties, rang the opening bell on the New York Stock Exchange, the shares in his company traded as high as $33 before closing at $31.50.

“Obviously, the brand name goes a long way in an offering like this,� said Allison Malkin, a vice president at Dillon Read & Co. “It’s definitely trading at a premium to its direct competitors.�

As for whether the stock has staying power at that price, opinions were mixed.

“It deserves to be positioned as a consumer franchise because it paved the way for other menswear designers,� Malkin said. “But it’s obviously trading at a premium now. It will only stay at $31 if it can meet or beat analysts’ earnings estimates.�

One analyst, who asked not to be named, said the stock has “lowest-common-denominator appeal. . . . They buy it because they have the shirts. It’s trading way too high.�

Of the total shares, the apparel design company sold 9.4 million, raising $244.4 million. But the bigger stake was sold by the designer himself, who sold 17.9 million shares at the offering price for $465.4 million.

Some brokers and analysts have questioned the value of fashion-house stocks--which in the last several years have sold well initially. However, some of them, such as the stock of Donna Karan International Inc. and Designer Holdings Ltd., have lost much of their value in the last year.

Lauren, some said, may be different. His company has a solid record of earnings and good management, they said. In addition, they believe his company’s well-known name will help it expand into new markets around the world and attract partners who want to license his name in other product lines.

Lauren has already diversified beyond men’s and women’s apparel into home furnishings, children’s apparel and perfume lines. He is about to enter the athletic-footwear business as well.

Even after the offering, Lauren will keep tight control of his company. His family will retain nearly 90% of the voting rights by owning all 46 million shares of the company’s outstanding Class B stock. That stock entitles the holder to 10 votes per share; public shareholders can buy only Class A stock, with one vote per share.