By  on February 8, 2006

NEW YORK — Polo Ralph Lauren kept a brisk gallop in the third quarter, but warned its pace may slow slightly for the fiscal year.

The company posted third-quarter profits that leapt 20.9 percent — bolstered by strong sales of its luxury goods. For the full year, though, Polo Ralph Lauren scaled back its profit outlook as it expects to take charges relating to the reacquisition of Polo Jeans as well as store closures. Investors retreated on the news, and the stock closed Tuesday down 5.7 percent to $54.17.

Still, the firm remains optimistic in its growth plans, saying it wants to expand its luxury accessories offerings, build a global denim business, grow its Asian operations and open more Club Monaco stores over the next year.

"This is an exciting time for our company as we continue to introduce new product categories and take more direct control of our brand. The Ralph Lauren brand has never been stronger as the demand for our luxury products around the world is accelerating," said Ralph Lauren, chairman and chief executive officer, in a statement.

For the three months ended Dec. 31, net income was $90.7 million, or 84 cents a diluted share, compared with $75 million, or 72 cents, in the same year-ago quarter. Analysts polled by Thomson First Call were expecting EPS of 76 cents. Total revenues rose 10.4 percent to $995.5 million from $901.6 million, which included sales of $933.2 million, up 10.6 percent from $843.6 million, and $62.3 million in licensing royalties. The sales figure includes a 6.2 percent increase in wholesale sales to $454 million from $427.4 million, and a 15.1 percent jump in retail sales to $479.2 million from $416.2 million. Total retail same-store sales rose 7.4 percent, which reflected a 10.2 percent increase at Ralph Lauren stores, a 7.1 percent rise at Club Monaco stores and a 6.3 percent gain at factory stores.

In the nine months, net income rose 47 percent to $245.6 million, or $2.30 a diluted share, from $167 million, or $1.61, in the year-ago period. Total revenues were up by 15.5 percent to $2.77 billion from $2.4 billion.

Roger Farah, president and chief operating officer, said during a conference call to analysts and investors that the company will cut back distribution of Polo Jeans from $300 million to $200 million in sales, an effort to get out of the off-price channel to improve the brand. "Another exciting part of the acquisition [of Polo Jeans] is it allows us to really enhance our denim business through multiple brands. Based on contractual issues in the past, that growth was limited. We expect the denim category to be accretive in fiscal 2008," he told analysts.

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