US: Polo Ralph Lauren Q4 profit soars 17%
Premium lifestyle brand Polo Ralph Lauren Corporation today (30 May) reported a 17% increase in both fourth quarter profit and earnings per share, helped by strong wholesale sales following the Polo Jeans acquisition, and better sales in Europe.
But the company cautioned recent acquisitions, including the Polo Ralph Lauren Leathergoods business, its Japanese sub licensee Impact 21 and the remaining 50% of New Polo Japan, would lower 2008 earnings.
Net income was $73m, or $0.68 per diluted share, for the three month period, compared to $63m, or $0.58 per diluted share, for the same period last year.
Net revenues for the fourth quarter increased 6% year-on-year to $1.03bn, from $972m.
The gains were driven by a 10% increase in wholesale sales to $629m and a 3% increase in retail sales, but were partially offset by an 11% decrease in licensing revenues due to the loss of royalties from Polo Jeans which is now owned by the company.
Wholesale operating margin was 22.1%, flat to last year as improvements in men's, women's and Europe were offset by realignments in the footwear and jeans businesses.
Retail sales were up 3% to $346m in the fourth quarter, compared to $335m in the same period last year. Comparable store sales increased 6.3%, reflecting an increase of 6.7% at Ralph Lauren stores, 6.3% in the factory stores and 5.3% at Club Monaco stores. Polo.com sales were down 32%.
Licensing royalties fell 11% to $56m from $63m last year, with increased royalties from the Asia/Pacific region being offset by the elimination of Polo Jeans royalty in this year's results.
"This has been a tremendous year with our sales and profits growing at record rates," said Ralph Lauren, chairman and chief executive officer.
"We have made significant progress on all fronts - from opening new luxury stores to initiating steps to expand our accessories business in new categories such as watches and fine jewellery, to taking direct control of our Japanese business and our internet business.
"We are creating new businesses with Global Brand Concepts and its first initiative, American Living, which will be a completely new lifestyle brand for men, women, and children."
For the fiscal year, profit grew to $401m, or $3.73 per share, from $308m or $2.87 per share - a 30% increase in both.
Full year net revenues rose 15% to $4.30bn from $3.75bn, driven by a 19% increase in wholesale sales as a result of the Polo Jeans acquisition, increased sales in Europe, and domestic sales gains in Lauren, Chaps for women and children, and in the men's business.
The full year sales increase was also driven by a 12% rise in the retail segment as a result of 7.9% comp store sales and a 29% increase in sales at Polo.com.
For fiscal 2007, wholesale sales were up 19% to $2.32bn from $1.94bn. Wholesale operating margin was 20.6% in the full year, compared to 20.5% last year as growth in sales and an improved gross profit rate were partially offset by increases in SG&A expenses to support new product lines.
Retail sales for the full year were up 12% to $1.74bn from $1.56bn last year. Total same store sales increased 7.9%, rising 10.9% at Club Monaco stores, 8.1% in the factory stores and 6.6% at Ralph Lauren stores. Polo.com sales grew 29% over the prior year.
Licensing royalties for the year were down 4% to $236m from $245m.
The company's full year 2008 guidance is for diluted full-year earnings per share of $3.95 to $4.05.
The Polo Ralph Lauren retail group consists of 74 Ralph Lauren stores, 64 Club Monaco stores, 145 Polo factory stores and nine Rugby stores.
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