Aug 4, 2010
Polo profit beats on wholesale, Club Monaco growth
Aug 4, 2010
NEW YORK, Aug 4 (Reuters) - Polo Ralph Lauren Corp (RL.N) reported better-than-expected quarterly profit and raised its sales forecast for the year, helped by a pickup in department store orders and growth at its Club Monaco chain, and its shares rose more than 2 percent.
Chief Operating Officer Roger Farah said the company, whose brands include Polo, Chaps and Club Monaco, was still investing in growing its business despite uncertainty over the strength of the global economy.
Net revenue rose 13.5 percent to $1.12 billon, slightly below the $1.14 billion forecast by analysts. Sales at stores open at least a year rose 7 percent, driven by an 8 percent increase at outlets and a 25 percent jump at its lower-priced Club Monaco chain. Same-store sales fell 2 percent at Ralph Lauren stores.
Overall, retail sales were up 16 percent.
The rise in revenues was also fueled by an 11 percent increases in wholesale sales, which reached $523 million as U.S. shipments rose, led by clothing and shoes.
Licensing revenues, which made up about 3 percent of overall revenue, were down 8 percent.
Polo's net income rose 57.3 percent to $120.8 million, or $1.21 per share, in the fiscal first quarter, ended July 3, from $76.8 million, or 76 cents per share, a year earlier.
That beat Wall Street forecasts of earnings of 89 cents per share, according to Thomson Reuters I/B/E/S.
The company's gross profit margins rose 3.1 percentage points to 61.8 percent, largely due to tighter inventory management and lower sourcing costs.
Looking forward, Polo expects sales at stores open at least a year, or same-store sales, to be up by a mid-single-digit percentage during the current quarter.
It raised its forecast for full year net revenue to an increase in the "mid-to-high single" digit percentage range, up from a previous view of a rise by a "mid-single digit percentage."
But the company said it expected its recent decision to take direct control of its South Korean business by paying $47 million to its licensee there would cost it 8 cents to 10 cents per share this fiscal year.
As of early July, the company's store network included 108 Ralph Lauren stores, 62 Club Monaco stores, 174 Polo factory stores and 11 Rugby stores.
The company's shares were up 2.3 percent at $81.13 in early trading on the New York Stock Exchange.
(Reporting by Phil Wahba; editing by Michele Gershberg, John Wallace, Dave Zimmerman)
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