Polo Ralph Lauren Posts Q1 Profit Surge on Sales Jump

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Ralph Lauren Fall 2011 ad campaign

New York–Polo Ralph Lauren Corp. posted today a first quarter profit 52% higher than last year, as sales climbed 32% boosted by higher retail and wholesale sales.

The better-than-expected results prompted the company to lifts its fiscal 2012 forecast.

For the quarter ended July 2, the company reported its net income increased 52% to $184.1 million, or $1.90 a share, from $120.8 million or $1.21 a share in the prior-year quarter. Polo Ralph Lauren posted income of $73.2 million or $0.74 per share, in its previous quarter.

Net revenues 33% rose to $1.53 billion from $1.15 billion in the prior year quarter and were higher than $1.43 billion generated in the prior quarter.

The companies results handily beat analysts’ average estimates that expected first quarter profit of $1.45 a share on sales of $1.43 billion.

Double-digit gains in both the company’s wholesale and retail division sales and favorable foreign currency effects helped to boost figures.

The wholesale division’s sales rose 29% to $673 million from $523 in the prior year period. Showing particular strength were global shipments of core men’s, women’s and children’s apparel merchandise as well as accessories in the United States.

Wholesale, Retail Sales Both Post Double-Digit Increases

Its retail segment reported sales increased 37% to $814 million, supported by comparable stores sales growth of 19%, reflecting a 14% growth at Ralph Lauren stores, a 20% increase at factory stores and 16% growth at Club Monaco. RalphLauren.com continues to growth at a double digit rate, the company said, with its online revenue increasing 28%.

Gross profit increased 35% to $962 million from $712 million in the first quarter of Fiscal 2011, and the gross profit rate expanded 120 basis points to a record high of 63.0%. “The higher gross profit rate reflects favorable channel and geographic mix that was partially offset by cost of goods inflation,” the company said.

While the company revised upward its annual forecast, Roger Farah, president and chief operating officer, cautioned about the second half. “We enter the Fall and Holiday selling seasons concerned about macroeconomic uncertainty and cost of goods inflation, but we are confident in the strength of our brands, the appeal of our products and the operational discipline of our organization as we navigate through these near-term challenges,” Farah said.

Looking ahead to the second quarter, the company expects revenues to increase at a high-teens-to-low 20% rate. Analysts’ average estimates predict $1.78 billion in sales during the second quarter.

For fiscal 2012, the company now expects net revenues to increase at a mid-to-high teens rate, up from previous forecasts mid-teens growth. Analayst’ average estimate expects $6.54 billion in revenues for 2012.

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