NEW YORK — Polo Ralph Lauren's momentum rolled on in the first quarter as income leaped 58 percent and revenues increased 26.8 percent for the period ended July 1.
The company accomplished this in part through raising sales per square foot in its U.S. stores to $900 from $500, tailoring assortments by region and by door, and leveraging systems and supply chain investments in its European operations. The 58 percent gain in first-quarter income was on top of an impressive 298.5 percent jump in the same quarter a year ago.
First-quarter income was $80.2 million, or 74 cents a diluted share, up from $50.7 million, or 48 cents, in the same year-ago quarter. Revenues rose to $953.6 million from $751.9 million, which included a 45.7 percent jump in wholesale sales to $491.2 million and a 15.3 percent gain in retail sales to $412.1 million. Excluding the impact of the footwear and Polo Jeans Co. acquisitions, net revenues increased 19 percent.
The increase beat Wall Street consensus estimates for earnings per share of 67 cents by 7 cents.
"One of the keys to our success is that we convey our passion and our clear point of view in all we do. That vision is represented in all of our brands and in every product category, whether it is men's wear, women's wear, children's wear, accessories or home," said Ralph Lauren, chairman and chief executive officer, in a statement. He added the company is "carrying the best of what we do to Europe and Asia."
For the year, the company is projecting EPS of $3.25 to $3.35. Polo's previous per-share guidance for fiscal year 2007 was in the range of $3 to $3.10.
"We've really had back-to-back strong results," boasted Roger Farah, president and chief operating officer, in a telephone interview. "We have a good team, a lot of talent and people all pushing in the same direction. It is not a great [retail] environment….We had a 15.7 percent operating profit in the first quarter in a retail business people at first weren't sure we should be in."
Farah told Wall Street analysts during a conference call that the company in the last four years has "raised our sales per square foot from approximately $500 to almost $900 a square foot. We are really concentrating on all formats, in improving the flow of new fashion products and how we present them to the customer. We continue to tailor our assortments by region and by door, and we are getting improved gross margin rates from better sourcing and better full-price selling."
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