Polo Ralph Lauren Corp.
) reported its first-quarter fiscal 2013 earnings per share of
$2.03, beating the Zacks Consensus Estimate of $1.79 per share.
Quarterly earnings also witnessed a 6.8% growth from $1.90 earned
in the year-ago period.
The better-than-expected bottom-line performance was primarily
driven by top-line growth, lower tax rate and reduced number of
During the quarter, Polo Ralph Lauren's net revenues increased
4.4% year over year to $1,593.4 million, beating the Zacks
Consensus Estimate of $1,582 million. The year-over-year growth was
primarily driven by improved performance across the company's all
Overall, in the first quarter, retail revenue increased 3.1% to
$694.1 million and wholesale revenue hiked 5.3% to $857.3 million,
while licensing revenue grew 5.3% to $42 million.
Revenue growth at retail division was the result of an
improvement in comparable store sales, increased e-commerce
business and contribution from new stores. The increase in
wholesale revenue was primarily supported by growth in the United
States partially offset by decline in Europe due to lower
Ralph Lauren's gross profit in the quarter grew 3.2% year over
year to $992.1 million. On the contrary, gross margin contracted 70
basis points to 62.3% due to increased raw material costs.
Total operating expenses elevated 3% year over year to $700.1
million, mainly due to overall business expansion, strong retail
segment growth as well as incremental investments in growth
initiatives and infrastructure. However, operating expenses, as a
percentage of sales, contracted 60 basis points to 43.9% due to
better cost management and shift in timing of certain expenses.
Polo Ralph Lauren's operating profit surged 3.5% to $292 million
from $282.1 million in the year-ago quarter, while operating margin
shrunk 20 basis points compared with the prior-year quarter to
18.3%, reflecting gross margin contraction, partially offset by
improved operating expenses as a percentage of sales.
Exiting the quarter, Polo Ralph Lauren operated 379 directly
operated stores and 478 concession shops across the globe.
Additionally, Ralph Lauren's global licensing partners operated 55
Ralph Lauren stores and 27 dedicated concession shops as well as 60
Club Monaco stores and dedicated shops.
Polo Ralph Lauren exited the quarter with cash and investments
of $1.1 billion compared with $981 million in the previous-year
quarter. During the period, the company deployed $62 million toward
capital expenditure and $300 million toward repurchasing 2 million
shares. Moreover, inventory levels improved 7.6% in the quarter to
$964 million compared with $896 million in the same period last
Polo Ralph Lauren continues to expect net revenue in fiscal 2013
to increase by mid-single-digit percentage while anticipating a
low-single-digit decline in wholesale sales and low-double-digit
growth in retail sales segment. Moreover, the company expects
moderate operating margin expansion mainly due to 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
For the second quarter of fiscal 2013, the company expects net
revenue to decrease by mid-single-digit percentage. Moreover,
operating margin is expected to be lower by 175-225 basis points
from the prior-period level.
Ralph Lauren, which competes withThe Jones Group
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.
JONES GROUP INC (JNY): Free Stock Analysis
PVH CORP (PVH): Free Stock Analysis Report
RALPH LAUREN CP (RL): Free Stock Analysis
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