Word: laurenized
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Dates: during 1980-1989
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...optation of American culture has got him into trouble on occasion. When he called an expensive jacket the Astaire during the early 1970s, the dancer asked Polo to stop using the name. Lauren complied. He stirred protests from folk-art preservationists in 1982 when he took a fancy to antique quilts and decided to cut up hundreds of them to decorate skirts and other garments in his contemporary collection...
...Lauren delegates most of his company's day-to-day financial oversight to his only co-owner, Polo President Peter Strom, 57, who holds 10% of the stock. When Lauren wants to embark on a new venture, it is Strom's job to calculate what prices they would need to charge and how many items they would have to sell to break even. The huge profits from certain staple items, such as Polo shirts (see box), give Lauren the freedom to expand into riskier products. Example: at any given time Lauren may offer 60 styles of sweaters in his collections...
...Lauren is acutely profit conscious. But since the only shareholders he needs to please are himself and Strom, he has leeway to experiment and to pursue a sometimes whimsical strategy. "I don't have a master plan," he says. "It gets more complicated as it grows." So far, Lauren's whimsy has been highly accurate in locating successful commercial opportunities. Says Strom: "I had no idea it would go like this. I remember saying to myself, 'If this business ever hits $20 million, I'll retire.' But I keep upping the stakes...
...Lauren hired Strom in 1972, in the midst of near fatal financial growing pains. Even though Polo's revenues were galloping ahead at the time, Lauren suddenly discovered that his enterprise was almost bankrupt because of poor financial management and the costs of headlong expansion. To save the company, Lauren pumped his entire $100,000 savings into the firm and offered Strom a share of the business to come aboard from a management job with Norman Hilton, Lauren's early patron and manufacturer...
...partnership made a crucial change in the corporation's structure that enabled it to grow in a healthier manner. From direct manufacturing, Lauren and Strom switched almost entirely to licensing deals in which the manufacturer finances production, shipping and part of promotional costs. Thus they escaped the necessity of investment in the capital-intensive garment- making process, along with many of the subsequent losses caused by any product flops. Since the manufacturer assumes more of the risks under licensing arrangements, Lauren gets a smaller share of any resulting profits. But the licensing arrangements give him greater freedom to concentrate...