Shares of Polo Ralph Lauren Corp. jumped 11.9 percent Wednesday after the luxury goods firm said fourth-quarter profits rose 41.4 percent, beating Wall Street estimates by 35 cents.
The firm intends to rev up its accessories business in fiscal 2009, but steer clear of initiating retail partnerships, such as the one it has with J.C. Penney for the American Living brand, Roger Farah, president and chief operating officer, told WWD.
Boosted by strong international sales and the American Living launch, the firm said Wednesday that profits for the quarter ended March 29 increased to $103.5 million, or $1 a diluted share, from $73.2 million, or 68 cents, in the year-ago period.
Total revenues gained 20.3 percent to $1.24 billion from $1.03 billion. Revenues included a 21.5 percent increase in wholesale and retail sales to $1.19 billion from $975.1 million, with the balance from licensing income. By operation, wholesale volume increased 24.9 percent to $785.6 million, while retail sales rose 15.5 percent to $400 million. Total comparable-store sales rose 8.9 percent, which reflected a 5.6 percent comp gain at Ralph Lauren stores, a 10 percent increase at factory stores and a 12.5 percent rise at Club Monaco stores.
For the year, income rose 4.7 percent to $419.8 million, or $3.99 a diluted share, from $400.9 million, or $3.73, in the prior year. Total revenues were up 13.6 percent to $4.89 billion from $4.3 billion.
Shares of the company closed at $69.07 in trading Wednesday on the Big Board.
Ralph Lauren, chairman and chief executive officer, commented, "It is the spirit of entrepreneurship that keeps us nimble, allowing us to develop exciting products, retail formats and even entirely new brands on a global platform."
In a phone interview, Farah said, "This is as difficult a market as I have seen," adding he was confident that strong companies will "come out just fine."
One of Polo's long-term goals is to diversify its geographic revenue mix to the point where each of the three regions represent one-third of its income stream. Currently the U.S. represents 65 percent of branded sales and Europe 17 percent, while Asia and other international fronts bring in 18 percent."It'll take some time" to achieve this balance, Farah said, "but I do believe that it will not be that far off. While the U.S. is still growing, the international markets are growing more quickly."
Polo has been able to grow its European sales to nearly $1 billion from $200 million in volume several years ago when the company first began assuming direct control of the region. Following successful flagship openings in Paris and Moscow, the company is planning to open a store in Istanbul with a licensing partner in fall 2008.
For the balance of the fiscal year, the company's in-house product development design and supply chain capability will be focused on handbags, not forming additional retail alliances.
"Having taken all the major categories back in-house, we can now begin to build our accessories with handbags, footwear and small leather goods. With Luxottica [eyewear] and Richemont [Ralph Lauren watches in spring 2009], we have the two best global partners, and we are now able to speak with one voice [in the] accessories [category]," said Farah.
In the past year, the company also saw much activity as it developed more than 40 product categories in a 575-door launch of the American Living brand at J.C. Penney. It's an initiative from the firm's Global Brand Concepts group. The company will add new American Living categories during fiscal 2009, and while the intent is to build more proprietary brands for retail partners, the firm isn't planning on tackling any new projects in the current year, Farah said.
He gave much of the credit for Polo's recent successes to the $1.9 billion it's invested over the last five years in acquisitions, retail expansion, wholesale shop-in-shops and infrastructure upgrades. These investments have aided the company's ability to push ahead with its three main goals: New merchandise and product development, expansion of direct-to-consumer business, and growth of international operations.
Polo said it continues to expect diluted earnings per share for fiscal year 2009 to be between $3.95 and $4.05.
“Azzedine has been one of the biggest influences in my life. He has always been such a strong, loving, fatherly figure to me. I call him Papa. His designs are indescribably unique, they are pieces of art. He knew how to make the female form look its loveliest. I have so many memories of him; my favorite might be during my first show with him in Paris. He liked me and he wanted to help me get more work. He called all his friends at Kenzo and Comme des Garcons, and asked them to book me. They said, ‘But she can’t walk!’ And he said, ‘but she has such a great ass!' His friendship and support has been the great privilege of my career. I can't imagine life without him. Repose en paix mon Papa.” - @stephanieseymour tells @wwd. #wwdfashion (📷: @steveeichner) #alaia #azzedinealaia
Azzedine Alaïa, flanked by two of his closest friends, models Stephanie Seymour and Naomi Campbell.
He designed Seymour’s dress for her 1995 wedding to Peter Brant, and treated Campbell (who famously called him Papa), like a daughter. For more on the legendary designer, tap the link in bio. #wwdfashion #alaia #azzedinealaia
Azzedine Alaïa's “I-did-it-my-way” ethos stood out starkly at a time when brands are experimenting with consumer-facing fashion shows, coed formats and trans-seasonal collections – anything to perk up lackluster sales of ready-to-wear in an age of Insta-everything. “It’s not creation anymore. This becomes a purely industrial approach,” the late designer told WWD in an interview last year. “But anyway, the rhythm of collections is so stupid. It’s unsustainable. There are too many collections.” Read more about the iconic designer’s life and work on wwd.com, link in bio. #wwdfashion #azzedinealaia (📷: @WWD Archive, 1986) #alaia
Sneaker reselling app @goat’s latest exhibit, "The Greatest: New York," tells the story of New York's sneaker culture. To celebrate the exhibit, an intimate crowd gathered on Thursday night at the pop-up gallery space, located at Platform in Culver City, to hear guest speaker and illustrator @esymai talk about her own rise in streetwear and women in the business. "For me I'm just someone who is creative. I like to create things," said Chang. #wwdfashion
Azzedine Alaïa, one of the most iconic couturiers of the modern era whose body-con designs defined Eighties fashion, has died in Paris. The diminutive Tunisian-born designer, known for his structured knitted dresses with fitted waists and impeccably cut, figure-hugging second skin silhouettes was deeply admired by his peers, and counted supermodel Naomi Campbell - his adoptive daughter - among his inner circle, one of a gang of glamazons including Farida Khelfa, Carla Bruni and Stephanie Seymour who became ambassadors of his style. (📷: Alexandre Guirkinger) #wwdblast