US: Polo Ralph Lauren Q4 profit falls 57% on charges
Impairment and restructuring charges have weighed heavily on fourth quarter profit at Polo Ralph Lauren Corporation, but even so both adjusted and full-year earnings were better-than-expected.
Looking at the year ahead, however, the company declined to provide annual earnings per share guidance amid continuing "economic uncertainty."
But said it will continue to take control of its business in South East Asia and intensify new product development, without losing sight of its cost saving measures.
"Over the next year, we intend to leverage our financial and managerial strengths to pursue compelling global market share opportunities," said Roger Farah, president and chief operating officer.
For the three months to 28 March, net income tumbled 56.7% to $45m, or $0.44 per share, from $104m, or $1.00 per share, a year earlier.
Excluding charges linked to impairment, the loss of 500 jobs and store closures, net income was $87m or $0.86 per share, the New York based company said.
It added that the restructuring actions should lead to annual savings of $25m.
Quarterly revenues were down 1% to $1.22bn from $1.24bn, as lower same-store sales failed to offset a 3% rise in wholesale revenues as the company took control of formerly licensed children's wear and golf apparel products in Japan. This change meant licensing royalties declined 16% to $47m from $55m.
The company also said it shipped lower volumes of American Living products, its exclusive line for JC Penney.
Retail sales in the quarter dropped 8% to $366m from $400m, with same-store sales at all its retail outlets slumping 15.9%. Within this there was a 29.3% drop at Ralph Lauren stores, an 8.8% reduction at factory stores and a 20.8% fall at Club Monaco.
The company operates 326 stores, while its international licensing partners operate 90 Ralph Lauren stores and 63 Club Monaco stores.
"Fiscal 2009 was one of the most challenging economic years the world has ever faced, but our results demonstrate that we are operating from a position of strength," said Ralph Lauren, chairman and chief executive officer.
For the year, profit fell 3.3% to $406m, or $4.01 per share, from $420m, or $3.99 per share, a year earlier. Excluding charges, profit per share was $4.50, which beat the company's guidance of $3.85-$4.00.
Annual revenues grew 3% to $5.02bn from $4.88bn. Wholesale sales increased 5% to $2.89bn as the launch of American Living a year ago offset a decline in domestic shipments of core men's, women's and children's wear.
Retail sales were up 1% to $1.94bn as new stores and online growth offset a 5.2% reduction in comparable store sales. Licensing royalties were down 7% to $195m.
"The desirability of our products, complemented by the proactive measures we took during the year to protect our brands and profitability, enabled us to deliver better than expected Fiscal 2009 earnings," said Farah.
For fiscal 2010, Polo Ralph Lauren expects net revenues to decline by a high single digit rate, with wholesale revenues down by a low double digit rate and same-store sales falling by a mid-teens rate.
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