NEW YORK — Polo Ralph Lauren Corp.'s income nearly doubled in the fourth quarter ended April 1, thanks to a hefty charge in the year-ago period. Profits beat Wall Street estimates by a penny.
For the three-month period, income was $62.5 million, or 58 cents a share, up from $23.4 million, or 22 cents, in the year-ago quarter. The company beat Wall Street's consensus estimate of 57 cents a share. The year-ago quarter included a charge to settle litigation with Jones Apparel Group. Excluding the charge, income in the year-ago quarter would have been $86 million.
Total revenues in the quarter rose 7.7 percent, to $971.6 million from $902.2 million, which included a 5.7 percent gain in wholesale sales to $573.8 million and a 14.9 percent increase in retail sales to $334.9 million. The increase in wholesale volume came primarily from the inclusion of Polo Jeans and footwear, the launch of Chaps for women and boys, and increased sales in Lauren and the company's full-price men's wear business. At retail, total company same-store sales rose 3 percent, reflecting an increase of 1.2 percent at Ralph Lauren stores, 10.6 percent rise at Club Monaco stores and 2.8 percent in factory stores. Revenues at Polo.com rose 73 percent. The balance in total revenues was from licensing income.
For the year, income jumped 61.8 percent to $308 million, or $2.87 a diluted share, from $190.4 million, or $1.83, a year ago. Total revenues rose 13.3 percent to $3.75 billion from $3.31 billion.
"The underlying fundamentals of our business and the ability to leverage our strengths have never been better. Looking forward, we will continue to take steps to advance our retail expansion, to further enhance the quality of distribution of our brands and to further strengthen our infrastructure. We are excited about our prospects and look forward to another strong year," said Ralph Lauren, chairman and chief executive officer, in a statement.
Roger Farah, president and chief operating officer, in a telephone interview attributed the quarter's results to "fabulous product" across all brands under the Polo Ralph Lauren umbrella. He explained that product line from one business is creating demand in another, sibling operation.
Other boosts to the company's bottom line were the ability of the retail operation to support the company's wholesale component and the consistent messages to consumers via advertising at Polo.com and through print media. Farah noted the company's best customers are cross-shoppers, buying across different product lines and at multiple points of distribution.The company this week said it would shut the U.S. operation of the Polo Jeans Co. brand in spring 2007. Polo bought back the U.S. business in February from Jones Apparel Group for $255 million. The international Polo Jeans business, which already targets a higher-end market, will be unaffected.
The decision to stop Polo Jeans distribution in the U.S. is part of the company's overall global strategy for the denim business. A high-end premium denim line will be introduced for men through Polo Ralph Lauren and for women though the Lauren brand.
The company will continue to expand its denim products in other lines via a tiered approach. "Beginning in spring 2007, we will increase our Double RL denim products at our highest price points...In addition, we will increase our denim offering in our Rugby brand as well as our Chaps brand for men's, women's and children's," said Farah during a conference call to Wall Street.
He noted during the telephone interview that at Double RL, a pair of jeans could run as high as $400; merchandise at various price points below that is expected to be "very successful." In comparison, denim merchandise under the Black Label brand starts at $325 and can go to over $1,000. Double RL as a retail concept is still in its infancy, and Farah acknowledged there are plans to expand the store base, but declined to elaborate other than to say the company is "looking at some sites."
The company expects to expand its accessories business, which has a higher margin opportunity. In Lauren, which already has handbags and footwear, category possibilities are belts and scarves.
Men's wear sales appear to be getting stronger, and the factory store business has been helped by shrinkage in off-price distribution and the reduction of underperforming doors.
The company affirmed its previous earnings per share forecast of $3 to $3.10 for fiscal year 2007.
“These collections continue to build on that vision, empowering differently abled adults to express themselves through fashion,” said @tommyhilfiger of his line of adaptive apparel, which launches today. The line consists of 37 men’s and 34 women’s styles based upon the pieces from the spring Tommy Hilfiger sportswear collection. #wwdnews
“Stranger Things” is getting a new cast member for season 2. Meet @sadiesink_, the 15-year-old who will be joining the Netflix series for its new season. You may recognize her from “The Glass Castle” with Brie Larson and Woody Harrelson, but the Texas native’s next role goes in an entirely different direction. She describes her character, Max, as “a rough and tumble skater girl [who] becomes friends with the boys at school.” The second season debuts on October 27. (📷: @jgreenery) #wwdeye
Amid the Harvey Weinstein controversy, there’s another sector that’s being put under the spotlight for sexual abuse: the modeling industry. While rumors about abuse and sexual harassment of female and male models — and the photographers, agents and others who perpetrated it — have circulated within the fashion world for years, model @cameronrussell started posting stories from models on Instagram last week about abusive situations they’ve encountered — from sexual harassment and molestation to attempted rape. Over 75 have weighed in so far. Read more on WWD.com. Link in bio. #wwdnews
To celebrate its 16th anniversary, @dylanscandybar tapped designers and celebrities to create mosaics out of candy. The mosaics will be auctioned off to support the philanthropic cause of each participant’s choice. Pictured here is the mural created by @aliceandolivia's Stacey Bendet. For a first look at some of the other artwork being unveiled tonight, go to WWD.com. #wwdeye
The annual Veuve Clicquot Polo Classic in Pacific Palisades this weekend drew Kate Hudson, Tracee Ellis Ross, Laura Dern and more. See pictures of the star-studded event on WWD.com. (📷: @chelsealaurenla) #wwdeye
In his new book “Hollywood Royale,” Andy Warhol’s Protégé Matthew Rolston celebrates the Eighties revival of Hollywood glamour. Featuring more than 100 portraits taken by Rolston from 1977 to 1993, the book contains photos of icons like Michael Jackson, Cyndi Lauper, and @drewbarrymore, pictured here in 1991. “Hollywood Royale,” out today, will be accompanied by an exhibition opening at Los Angeles’ Fahey/Klein Gallery on March 1. #wwdeye
"Nowadays when life is not so happy with everything going on in the world, I think people come to me for a little bit of whimsy and color and fun." - Designer Rebecca De Ravenel on her cult-favorite jewelry line. (📸 : @vsteves) #wwd40
“Everyone is talking about how the retail industry is struggling, but I think it’s an incredible time because brands who are doing something different and innovative are setting themselves up for the future,” said @adamgoldston, who founded the luxury athletic brand @apl with his brother @ryangoldsten. The Goldston’s are part of WWD’s 40 under 40: a group of industry notables. See the rest of the list on WWD.com. (📷: @vsteves) #wwd40
@eyeswoon blogger Athena Calderone debuted her first-ever cookbook, “Cook Beautiful,” which is heavily centered on the presentation and visual expression of food. Pictured here are her miso glazed carrots from the book. Get the recipe on WWD.com. (📷: @johnny_miller_) #wwdeye