POLO LOWERS 2ND-QUARTER EXPECTATIONS

Byline: Evan Clark

NEW YORK — Polo Ralph Lauren Corp. backed off its second-quarter profit expectations, lowering them to 50 to 54 cents a share and synchronizing them with Wall Street’s consensus of 52 cents.
Prior to Sept. 11, Polo was on track to meet its previous earnings-per-share estimates of 54 to 58 cents.
The firm, based here, anticipates overall sales for fiscal 2002 to grow by 2 to 3 percent with EPS in the $1.65 to $1.75 range. Analysts had profits of $1.80 penciled in for the fiscal year ending March 30.
In a statement, chairman and chief executive officer Ralph Lauren attributed the retrenching to “much more guarded discretionary spending” by the American consumer. “In light of our customers’ restraint, we must adjust our expectations to better reflect both their current and foreseeable spending.”
President and chief operating officer Roger Farah added that the firm had “already implemented initiatives to help offset a more modest sales forecast and ongoing gross margin pressures.” Among these were tighter inventories, adjustments in expense management and a tax strategy, which shaves 1 percent off the company’s rate.
J.P. Morgan Securities analyst Noelle Grainger said the adjustment is about on par or slightly less than corrections by Polo’s peers.
“They are going to be working aggressively to move product though the channels over the next quarter or two and will be utilizing their outlet [stores] to do that,” which will pressure the profit margins, especially in the third quarter, she said. “They want to end the year with pretty clean inventories.”