Ralph Lauren Corp.
) posted fourth-quarter 2013 adjusted earnings of $1.41 per
share, jumping 42.4% from the comparable year-ago quarter and
surpassing the Zacks Consensus Estimate of $1.30 per share. The
year-over-year increase was primarily driven by a rise in sales,
improved margins and a lower tax rate.
Polo Ralph Lauren's total revenues inched up 1% year over year
to $1,643.3 million. Per the company, the year-over-year increase
resulted from improved retail segment results, partially offset
by its planned strategy to reduce wholesale shipments. However,
revenue lagged the Zacks Consensus Estimate of $1,724.0
Ralph Lauren's gross profit in the quarter grew 5% year over
year to $974.0 million, while the gross margin expanded 220 basis
points (bps) to 59.3% due to lower input costs and benefits from
better product mix and operational efficiency.
Total operating expenses remained flat year over year at
$792.0 million, while as a percentage of sales it contracted 50
basis points (bps) to 48.2%. The year-over-year improvement in
operating expenses was mainly due to disciplined cost management
despite higher costs related to overall business expansion,
increased marketing and advertising expenses as well as
incremental investments in growth initiatives and
Ralph Lauren's operating profit increased 33% to $182 million.
Moreover, its operating margin improved 270 bps to 11.1%,
reflecting gross margin expansion and lower operating expenses as
a percentage of sales.
Overall, in the fourth quarter,
revenue increased 7% to $804 million, primarily due to an
improvement in comparable store sales, increased e-Commerce
business and contribution from new stores.
Driven by improved revenue along with efficient cost
management, the segment's operating income increased 73% to $74
million primarily driven by effective cost management, which
resulted in improved profitability in all major categories.
Consequently, operating margin expanded 350 bps to 9.2%.
Due to the company's planned strategy of reducing wholesale
shipments and the negative impact from discontinuing American
Living operations, its
segment's revenue declined 4% to $796 million. However, operating
income increased 16% to $175 million while operating margin
improved 380 bps to 22.0%, primarily driven by higher gross
margin, favorable product mix and better cost efficiency.
revenue was flat year over year at $43 million. However,
operating income decreased 3% to $29 million during the
Polo Ralph Lauren exited fiscal 2013 with cash and investments
of $1.4 billion compared with $1.3 billion in fiscal 2012. During
the fiscal, the company deployed $276.0 million and $500.0
million toward capital expenditure and share repurchases,
respectively. Moreover, inventory levels increased 6% at the end
of fiscal to $896.0 million compared with $842.0 million in
Polo Ralph Lauren expects net revenue in the first quarter of
fiscal 2014 to increase by low-single-digit percentage points,
while anticipating wholesale sales to grow at a faster rate than
the retail sales segment. Moreover, the company expects operating
margin to expand in the range of 200-250 bps.
For fiscal 2014, the company expects net revenue to increase
in the range of 4%-7%. Operating margin is anticipated to grow in
the range 25-75 bps. Moreover, the company intends to make
capital expenditure between $350 million and $450 million in
Other Stocks to Consider
Ralph Lauren currently holds a Zacks Rank #2 (Buy). Other
stocks in the same industry that are worth considering include
Joe's Jeans Inc.
). Hanesbrands holds a Zacks Rank #1 (Strong Buy), while V.F.
Corp. and Joe's Jeans have a Zacks Rank #2 (Buy).
HANESBRANDS INC (HBI): Free Stock Analysis
JOES JEANS INC (JOEZ): Free Stock Analysis
RALPH LAUREN CP (RL): Free Stock Analysis
V F CORP (VFC): Free Stock Analysis Report
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