Insiders Are Selling Polo Ralph Lauren Stock With Three Hands

A "Polo" Bear Market

A "Polo" Bear Market

Insiders are blowing out of Polo Ralph Lauren (RL) stock as if the building itself were on fire.

Yeah, I said it.

Look, I’m a big fan of Polo Ralph Lauren as a clothing brand; my mother-in-law once called up to ask them about a discontinued line of bedding and Ralph himself took the call.  And for those who call him Ralph Lau-Ren (rhymes with hen) with the accent on the second syllable…a) it’s not his real name and b) he’s from Brooklyn, the french-accented pronunciation is a little much.

That said, Ralph Lauren (Chairman, CEO) and Roger Farah (President, COO) seem to be in a race of “who can sell RL stock the fastest?”.  They’ll claim that the dispositions and sales are for “estate planning purposes” or whatever, but I’ll give you the numbers, you decide:

Over the last 12 months, according to public filings, insiders in Polo Ralph Lauren have sold almost 700,000 shares net, in the open market.  Ralph and Roger account for the lion’s share of that as you will barely see a 2 week period go by where one, if not both of these guys exercise options and then blow out the correlating amount of shares the next day.  Assuming a median price of around $55 per share (based on the 52-week range of 31 to 82), you’re talking about $40 million dollars worth of sales in just the last year (on top of serious selling in previous years as well).

I believe these sales are even more notable when you consider the fact that RL has basically been cut in half from it’s 52-week high of 82, like most other retailers, yet they continue to liquidate.

Ralph is selling stock at an incredible rate, he is down to a little more than 500,000 shares (according to nasdaq.com).  If he maintains his current pace of sales and dispositions, he will not own any by 2012 (unless he awards himself more stock options, which of course, he will).

Equally amazing, Roger Farah, an 8 year veteran of RL, has been on a stock sale rampage.  He would probably not want to hear someone bring this up, but I vividly remember Farah’s tenure at the Venator Group prior to his joining RL.  If Venator doesn’t ring a bell, it’s the Latin word for “sportsman” but you may know the Venator Group as the former Woolworth’s 5 and Dime chain or the current Footlocker (FL).  Farah, as Chairman, was instrumental as a board member during Footlocker’s 1994-2000 near-death experience, which mercifully improved when Alfred Kingsley and Greenway Partners started filing 13D’s and demanding accountability.  Farah has been dumping RL stock like there’s no tomorrow over the past year, he sold 300,000 shares on December 4th alone.

I’m not saying they haven’t done a good job or that they shouldn’t diversify here and there, but at the rate these guys are going, they will have diversified themselves out of their entire positions pretty soon.  I’m sure Polo is not a top-priority brand for most consumers in this economy, but guys, the sun will come out again and I’m sure America will always love your pony shirts…try to hang on to at least a few shares, Ralph and Roger,  you’re making your fellow shareholders nervous.

Full Disclosure:  I am not currently long or short RL shares in personal or client accounts