Tags: Ralph | Lauren | Forecast | earnings

Ralph Lauren Lifts Forecast as Results Beat Street

Wednesday, 08 February 2012 09:52 AM

Ralph Lauren Corp. reported better-than-expected results for the holiday quarter, helped by growth at its own stores and increased sales to department stores, and the clothing maker raised its margin forecast, sending its shares up 10 percent in early trading Wednesday.

Ralph Lauren , with brands ranging from mid-tier basics to high-end luxury labels like Polo, Club Monaco and Chaps, said revenue rose 17.2 percent in its fiscal third quarter ended Dec. 31, to $1.81 billion, topping analysts' average forecast of $1.75 billion, according to Thomson Reuters I/B/E/S.

The sales charge was led by a 12 percent gain at its stores open at least a year, with sales at Club Monaco stores rising the most. Ralph Lauren also got a lift from department stores such as Macy's Inc, which enjoyed a stellar holiday season. Wholesale sales were up 11 percent during the quarter.

"Investors are focusing on sales growth in this environment," said independent retail analyst Marie Driscoll, noting that Wall Street was impressed by "across the board" increases at all of Ralph Lauren's divisions.

The company now expects sales for the full fiscal year ending next month to be up 20 percent, compared with a prior forecast of a rise in the high teens or low 20-percent range.

So-called affordable luxury continued to do well over the holidays, as illustrated by Ralph Lauren's results and those of Coach Inc, which reported last month.

Also on Wednesday, shoe and clothing maker and retailer Jones Group said results got a lift from its higher-end shoe brands like Kurt Geiger and Stuart Weitzman, which helped its gross margin rise despite weaker sales of its more basic items.

Despite the strong sales, Ralph Lauren's quarterly net income rose just 0.4 percent to $169 million, or $1.78 per share, hurt by higher product costs. But that was enough to beat Wall Street expectations of $1.67 per share.

Gross margin continued to be under pressure from higher costs, falling 1.5 percentage points to 57.1 percent of sales.

Still, the rising sales led Ralph Lauren to say it now expects operating margin to be on a par with or just below last year's, compared with its previous forecast for a fall of 0.5 percentage point.

The company's shares were up 10 percent to $173.28 in premarket trading.

© 2018 Thomson/Reuters. All rights reserved.

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Wednesday, 08 February 2012 09:52 AM
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