Originally Posted by chorse123
Me too. I call BS on this. I can't imagine they cost $300-$500. That could be excluding material costs, maybe, but those are significant.
I think you are a bit confused here. The question posted to the forum was how much Ralph Lauren paid for these suits/clothing, NOT how much a retailer (i.e. Bloomingdales, Saks, etc) paid for these items.
It is true the traditional markup in the retailer business is ~2.5. Allow me to illustrate with an example:
A Ralph Lauren Blue Lable suit, selling for $1,000 at full retail price, using the rule of 2.5, we know the retailer paid ~$400 for this suit. The cost to Ralph Lauren will have to be far less than $400 for Ralph to make any money. As I claimed earlier in the post, Ralph paid approximately $100 - $150 for the suit. In addition to paying for the suit, he has to pay for transporting the suits, storing the suits at a warehouse, creating showroom for retailers to visit, shipping the suits to the retailers, advertising costs, runway shows, office rental and of course workers' salary. When you add all these up costs (General Selling Expenses), the suit would cost Ralph Lauren ~$300. In order to make a profit (he should, that is the only reason he is still in the business), Ralph Lauren turns around and sell the suit for $400 to a full price retailer.
As I stated in my prior post, I saw the cost sheet with my own eyes. These pricing structures are fairly common in the high end fashion industry. It is not a Ralph Lauren thing.