NEW YORK — Shares of Polo Ralph Lauren Corp. on Friday jumped 8.9 percent after the company raised earnings expectations for the first quarter of fiscal year 2006, citing operating margins as trending ahead of prior guidance.
Over 3.4 million shares changed hands Friday, sending their price up $3.87 to close at $47.34 in trading on the New York Stock Exchange. The average trading volume for the company over a three-month period has been just 499,216 shares. Shares of Polo at one point rose even higher to $48.50, for a gain of 10 percent, in intraday trading.
The apparel manufacturer said operating margins for the quarter ended July 2, 2005 are now expected to increase between 500 and 550 basis points versus a year ago. Revenues are still expected to increase by more than 20 percent, as previously forecasted.
When the company announced fourth-quarter and full-year results for fiscal 2005 on June 10, Polo said that it expected "consolidated revenues to increase more than 20 percent, reflecting more than 25 percent growth in wholesale sales, 10 percent growth in retail sales including Ralph Lauren Media and a slight decrease in licensing royalty. Operating income [was] expected to increase significantly with operating margin almost doubling last year's 3.7 percent."
The New York-based firm did not provide any earnings per share range for the first quarter. The consensus among Wall Street analysts, according to Thomson Financial, is EPS of 25 cents on sales of $694 million, compared with 14 cents a share on sales of $592.8 million in the same year-ago quarter.
Polo also said that it intends to address its full-year outlook when it reports first-quarter results on Aug. 9.
"We are pleased that our multi-year business strategy is resulting in better than forecasted performance. Our retail and wholesale businesses are reporting strong revenue gains that were driven by better full-price sell-throughs. In addition, we were able to better leverage our incremental sales through improved expense management," said Roger Farah, president and chief operating officer, in a statement.
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