Polo Ralph Lauren Corp.
) reported fourth-quarter fiscal 2012 earnings per share of 99
cents, beating the Zacks Consensus Estimate of 85 cents per share.
Quarterly earnings also witnessed a 33.8% growth from 74 cents
earned in the year-ago period. The robust bottom-line performance
was primarily driven by solid top-line growth, a lower tax rate and
reduced number of shares outstanding.
During the quarter, Polo Ralph Lauren's net revenues climbed
13.7% year over year to $1,622.9 million, beating the Zacks
Consensus Estimate of $1,603 million. The year-over-year growth was
primarily driven by a global double-digit increase in retail sales
and wholesale revenue growth in the United States and Europe.
Overall, in the fourth quarter, retail revenue increased 10.2%
to $828 million and wholesale revenue rose 19% to $751.5 million,
while licensing revenue inched down 1.9% to $43.4 million.
The robust performance in the retail division was mainly
attributable to the comparable store sales growth and contribution
from new stores. The increase in wholesale revenue was primarily
supported by growth in the United States and Europe, coupled with a
solid growth in global shipments of core apparel and increased
distribution of accessories.
Ralph Lauren's gross profit in the quarter grew 14.3% year over
year to $926.4 million, while gross margin expanded 30 basis points
to 57.1%, mainly driven by better channel and product mix,
partially offset by increased cost of goods sold.
Total operating expenses rose 14% year over year to $790
million, mainly due to overall business expansion, including strong
retail segment growth, as well as incremental costs associated with
the transition of certain formerly licensed operations.
Consequently, operating expenses, as a percentage of sales,
expanded 10 basis points to 43.1%.
Polo Ralph Lauren's operating profit surged 16.4% to $136.4
million from $117.2 million in the year-ago quarter, while
operating margin expanded 20 basis points compared with the
prior-year quarter to 8.4%, reflecting gross margin expansion,
partially offset by increased operating expenses as a percentage of
Exiting the quarter, Polo operated 379 directly operated stores
and 474 concession shops across the globe. Additionally, Ralph
Lauren's global licensing partners operated 59 Ralph Lauren stores
and 27 dedicated concession shops as well as 58 Club Monaco stores
and dedicated shops.
Fiscal 2012 summary
Driven by double-digit top line growth along with improved
operating margin, Polo Ralph Lauren's fiscal 2012 earnings of $7.13
per share increased 24% from the previous fiscal earnings of $5.75.
Moreover, earnings also beat the Zacks Consensus Estimate of $7.09
Total revenue for the fiscal surged 21.2% to $6,859.5 million
compared with net revenue of $5,660.3 million in fiscal 2011. The
increase in revenue was primarily driven by robust performance at
the company's retail and wholesale segments resulting from mid-teen
comparable-store sales growth and favorable foreign currency
translation effect. Moreover, total revenue also beat the Zacks
Consensus Estimate of $6,838 million.
Polo Ralph Lauren exited the fiscal year with cash and
investments of $1.3 billion, compared with $1.1 billion in the
previous year. During the period, the company deployed $272 million
toward capital expenditure and $395 million toward repurchasing 3.2
Moreover, inventory levels improved 20% in the quarter to $842
million compared with $702 million in the same period last year.
The increase was driven by an investment to support probable sales
growth, new operations and new merchandise categories, and the
inflationary and foreign exchange impact on cost of goods.
Anticipating a low-single-digit decline in wholesale sales and
low-double-digit growth in retail sales segment, Polo Ralph Lauren
expects net revenue in fiscal 2013 to increase by mid-single-digit
Moreover, the company expects moderate operating margin
expansion to be driven mainly from gross margin expansion,
partially offset by negative impact from continued investment in
long-term growth initiatives and overall channel mix. Further, the
company anticipates deploying $360 million toward capital
For the first quarter of fiscal 2013, the company anticipates
net revenue to increase by low-single-digit percentage. Moreover,
operating margin is expected to be lower by 250-300 basis points
from the prior-period level.
Ralph Lauren, which competes with
Phillips-Van Heusen Corporation
), currently holds a Zacks #3 Rank, implying a short-term Hold
rating on the stock. Currently, we retain a long-term Neutral
recommendation on the stock.
PVH CORP (PVH): Free Stock Analysis Report
RALPH LAUREN CP (RL): Free Stock Analysis
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