Despite an 11% rise in second quarter sales, clothing and accessories dsigner Polo Ralph Lauren Corporation today (7 November) posted a 16% decline in second quarter profit as operating expenses at newly acquired businesses and start-up costs of new products launching later this year took their toll.
 
Reporting net income down to $115m, or $1.09 per share, from $137m, or $1.28 per share, in the same period last time, the New York based firm also lowered its projections for the rest of the year.

Net revenues for the quarter rose to $1.30bn from $1.17bn, helped by the acquisition of former Japanese sub-licensee Impact 21 and New Campaign Inc, the company's former small leathergoods licensee in the US.
 
"The global desirability of the Ralph Lauren brand continues to expand at a strong rate across all product categories," said Ralph Lauren, chairman and chief executive officer.

"At the same time, we have an exciting portfolio of new and emerging businesses and product categories that are being developed to support our longer-term growth prospects.

"We are investing in this high level of innovation with the goal of leveraging our expertise on a worldwide basis, something we are able to do today unlike ever before."

Wholesale sales were up 17% to $772m from $660m in last year's quarter, helped by strong growth in Europe, men's wear products worldwide and the Chaps brand.

Retail sales rose 7% to $474m from $445m. Comparable store sales were up 4.5%, increasing 5.0% at Ralph Lauren stores, 4.2% at factory stores and 5.5% at Club Monaco stores. Online sales at RalphLauren.com rose 28%.
 
Licensing royalties fell 14% to $53m compared to $62m last year.
 
Gross profit for the second quarter increased 10% to $695m from $633m, and operating expenses were up 20% to $503m from $418m.

For the six month period, profit fell 6% to $204m from $217m, while revenues were up 12% to $2.37bn from $2.12bn.

Roger Farah, president and chief operating officer, said the company's outlook for the second half of the year takes "a more conservative view of discretionary spending among US consumers."

Full year earnings per share are now expected to be in the range of $3.50 to $3.60 - lower than the $3.64 to $3.74 forecast previously - on revenues increasing by a low-teen percentage.

The company operates 302 stores, including 77 Ralph Lauren stores, 65 Club Monaco stores, 151 Polo factory stores and 9 Rugby stores. International licensing partners operate a further 91 Ralph Lauren stores and 36 Club Monaco stores and dedicated shops.