DOW JONES NEWSWIRES
Polo Ralph Lauren Corp.'s (RL) fiscal second-quarter profit rose a bigger-than-expected 10% as the company capitalized on a lower tax rate. But revenue declined.
Polo Ralph Lauren also said that because of better-than-expected revenue performance in the first half of the fiscal year, it sees full-year revenue down by the mid-single digits on a percentage basis, not the high-single-digit fall previously projected.
The company said it expects third-quarter sales to decline at a low single-digit rate, including flat- to low-single-digit comparable-store sales growth in the retail segment. Analysts were projecting a 4% overall drop to $1.2 billion, according to analysts surveyed by Thomson Reuters.
At the end of September, Goldman Sachs said that although the retail environment is still uncertain, Polo Ralph Lauren should see 5% year-on-year growth in same-store sales for the fourth quarter, which ends in March.
For the period ended Sept. 26, Polo Ralph Lauren reported earnings of $177.5 million, or $1.75 a share, up from $161 million, or $1.58, a year earlier. Revenue fell 3.8% to $1.37 billion because of lower domestic wholesale sales, lower same-store sales in the retail segment and currency-exchange impacts.
Analysts polled by Thomson Reuters had most recently forecast earnings of $1.31 on $1.31 billion in sales.
Gross margin rose to 57.1% from 55.1%.
The company said its lower tax rate was because of "the resolution of certain discrete tax items and a more favorable geographic income mix."
Wholesale sales, which consist of sales to department stores and other retailers, fell 3.7%. Retail sales fell 3.4%. Same-store sales slid 18% at Ralph Lauren stores and 4% at factory stores. Total company same-store sales declined 6%, or 5% in constant currency.
Shares closed at $76.71 Monday and were inactive premarket. They are up 69% this year.
-By Nathan Becker, Dow Jones Newswires; 212-416-2855; nathan.becker@dowjones.com;