NEW YORK — Investments made to its brand and operations are paying off in a big way for Polo Ralph Lauren Corp., which delivered robust second-quarter sales and earnings on Wednesday.
Management said results were boosted by the inclusion of the women’s Lauren by Ralph Lauren line, and the successful integration of RL Childrenswear, a former licensee, into the wholesale business. A sales gain in Europe along with the repositioning of the Polo brand in select department and specialty stores also bolstered the top and bottom lines.
In turn, net income jumped 48.9 percent in the quarter ended Oct. 2 to $80.4 million, or 78 cents a diluted share, from $54 million, or 54 cents, in the same year-ago quarter. Excluding restructuring charges and currency translation gains, income was $79 million, or 76 cents a diluted share, versus $52.9 million, or 52 cents, last year. Total revenues rose 24.9 percent to $883.7 million from $707.8 million, which included a 16.6 percent decline in licensing revenue to $62.1 million and a 29.7 percent spike in sales to $821.5 million. Sales included a 49.5 percent increase in wholesale sales to $502.6 million and a 7.4 percent increase in retail sales to $319 million.
“We believe the results are a culmination of several layers of sticking to our strategy, whether it’s investment in time and energy put into our retail business or integrating the kids line or Lauren,” said Roger Farah, president and chief operating officer. “We’ve cleaned up distribution so the product is getting more scarce, giving [us] better sell-throughs, in addition to our marketing and design of the product. It is all coming together nicely even in a choppy retail environment.”
Licensing revenue declined due to the company’s buyback of its Lauren and its RL Childrenswear licenses, both of which added to the company’s wholesale volume. The company said that, despite losing $6 million in sales in hurricane-affected areas, same-store sales rose 3.7 percent overall, with a 14.2 percent rise in Ralph Lauren stores and a 4.4 percent gain at Club Monaco stores. The gain in comps was on top of an overall 8.3 percent increase in the year-ago quarter.
The company continues to flow fresh fashions into the department stores and its own freestanding stores on a regular basis, a move that’s driving a greater percentage of sales at full price. In addition, the company is in the process of implementing a new global wholesale and manufacturing system that will help it better forecast global demand and move product to where it’s needed.
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