NEW YORK — Polo Ralph Lauren’s third-quarter earnings beat expectations, but markdown pressures and declines in its men’s wholesale and retail businesses held profits below year-ago levels.

For the three months ended Dec. 29, income was down 9.8 percent, to $45.6 million, or 46 cents a diluted share, from $50.1 million, or 52 cents, in the year-ago quarter. Wall Street expected 44 cents a share. Revenues rose 0.6 percent, to $617.1 million from $613.7 million. Wholesale sales in the quarter were up 4 percent, to $280 million from $269.5 million, while retail sales dipped 2 percent, to $280.3 million from $286.2 million. Royalty income was down 2.3 percent, to $56.8 million from $58.1 million.

The revenue gain in the quarter was driven by double-digit growth in Europe. Overall women’s wholesale volume increased while the men’s business declined.

Both wholesale segments were negatively affected by retail pressures to help clear inventory excesses.

The company provided fiscal 2002 earnings-per-share guidance of between $1.65 and $1.75, driven by low-single-digit revenue growth. Shares of Polo on Wednesday picked up some ground, adding 48 cents, to close at $26.07 in trading on the New York Stock Exchange.

Roger Farah, president and chief operating officer, boasted on a conference call that emphasis on inventory and financial management will allow the company to invest in growth in the future, including new stores, better infrastructure and possibly acquisitions. The firm’s total debt at quarter’s end, net of cash on hand and marketable securities, fell 70 percent, to $77.4 million, compared with $256.3 million last year.

In Europe, Farah said, the firm is “far exceeding our own expectations. The margins in Europe will continue to run in excess of anything we run in the U.S.”

In the quarter, the company bought a Ralph Lauren licensed store in Brussels, and is eyeing similar moves in nine European locations. The strategy, one the company used with its original U.S. sites, gives the fashion firm more creative control over its retail business.

In a statement, Ralph Lauren, chairman and chief executive officer, said: “I believe our company is in the strongest position ever. With a strong organization in place to support our vision, I believe we now are capable of growing our company to a larger global scale in 2002 and beyond.”

Farah was asked about the Chaps license, run by bankrupt The Warnaco Group. “As long as they are current and continue to pay their royalties, Warnaco is going to run that business,” he said, adding that Polo has been actively involved in steering the brand’s distribution, including the elimination of some accounts. In addition, sales in the Chaps business appear to have bottomed.

“The Chaps story will continue to unfold over the next six months and we’ll keep you updated on that,” he said.

Rolling out today will be a series of television commercials — 30-second spots — that will run during the Olympics, reflecting’s partnership with NBC and representing $50 million in prime-time advertising. On a separate media front, the company has changed how it spends the money allocated to co-op advertising, repositioning its focus toward micromarketing to drive consumers to buy more at full price.

Farah expects that the return to more serious dressing will help its Purple Label line, a plus for the men’s business. In addition, the company plans to add more accessories and footwear selections in the fall to broaden its luxury offerings. Separately, the Blue Label men’s and women’s lines will be distributed vertically through Polo’s own Polo retail stores, with delivery for the first time in the fall.

Retail sales dipped slightly, with over 30 percent of sales from Club Monaco stores, which continue to be affected by the aftermath of the Sept. 11 attacks. The company ended the quarter with 30 Polo Ralph Lauren stores, nine Polo Concept stores, 54 Club Monaco stores, 95 full-line Polo outlet stores, 24 Polo Jeans Co. outlet stores, 12 European Polo outlet stores and 10 Club Monaco outlet stores.

For the year-to-date, income was $124.5 million, or $1.26 a diluted share, from $11.8 million, or 12 cents. The 958 percent gain was due, in part, to a $111.6 million restructuring charge last year. Revenues were up 2.6 percent, to $1.73 billion from $1.69 billion in the first nine months of last year.

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