Tags: Polo Ralph Lauren | RL | retail | stock

Polo Ralph Lauren Faces Down Inflation

Monday, 20 Jun 2011 12:43 PM

Inflation is taking its toll on an American fashion icon, but sales are strong and should usher in a bright 2012 for Polo Ralph Lauren (RL).

Fiscal 2011 sales increased 14 percent to $5.7 billion, while fourth-quarter sales at the upscale clothing maker increased 7 percent to $1.4 billion. Fourth-quarter revenue even outpaced some analysts’ expectations.

A 14 percent hike in retail sales, which hit $631.3 million, fueled growth during the last three months of the year. However, inflation did hurt the bottom line.

Fourth-quarter net income was down 36 percent to $73.2 million, although net income for the entire year rose 18 percent to $568 million in fiscal 2010.

That bottom-line performance disappointed analysts, but company officials are upbeat. "We reported record sales and earnings in fiscal 2011 while strengthening our foundation for powerful long-term growth," says company CEO Polo Ralph Lauren.

"Our full-year results were much better than we expected, reflecting the incredible momentum of the Polo Ralph Lauren brand around the world," says Roger Farah, the company's chief operating officer.

"Even though we face real sourcing cost pressure during the year and the impact of impending inflationary pressure on the consumer is unknown, our brands are strong and we have a culture of tremendous operational discipline."

Buy time?

Analysts tracked by Thompson/First Call have a middle recommendation of 2.5 out of 5 points (mean) and a median target of $133.50.

UBS has the stock as a buy and Morgan Keegan is at outperform.

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Inflation is taking its toll on an American fashion icon, but sales are strong and should usher in a bright 2012 for Polo Ralph Lauren (RL). Fiscal 2011 sales increased 14 percent to $5.7 billion, while fourth-quarter sales at the upscale clothing maker increased 7...
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Monday, 20 Jun 2011 12:43 PM
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