High in the Saddle: Polo’s Luxury Slant Helps Net Leap 52.5%

Polo Ralph Lauren’s first-quarter income skyrocketed 52.5 percent, boosted by its luxury slant.

NEW YORK — Getting a big boost from its leanings toward luxury, Polo Ralph Lauren Corp. generated substantial top- and bottom-line growth in its fourth quarter and even initiated a stock dividend.

Yet, Wall Street hardly noticed. Shares fell 34 cents, or 1.5 percent, to end the day at $23.01 in New York Stock Exchange trading Wednesday.

In addition to a 52.5 percent gain in fourth-quarter net income, Polo also reported that it will exert greater control of its distribution through a reduction in department store doors, as well as the introduction this fall of microchip-laden labels to better monitor the authenticity, origin and intended destination of its merchandise.

For the three months ended March 29, income jumped to $73.2 million, or 74 cents a diluted share, from $48 million, or $48 cents, in the year-ago quarter. The current year included a pre-tax $6.4 million restructuring charge for the firm’s European consolidation, while the year-ago results included a $16 million pre-tax real estate restructuring charge. Excluding the charge and gains on foreign currency translations, earnings per share would have been 77 cents on income of $76.1 million, or 1 cent above consensus estimates of 76 cents.

Total revenues in the quarter were up 9.4 percent to $692.3 million from $633.1 million. The top line was boosted by a 23.9 percent spike in licensing income to $74.7 million from $60.3 million. Wholesale sales rose 7.4 percent to $421.7 million from $392.5 million, while retail sales rose 8.7 percent to $195.9 million from $180.3 million. Comparable-store sales were up 5.8 percent, driven by positive same-store sales in each of its retail formats — full-priced, outlet and the Club Monaco nameplate.

Ralph Lauren, chairman and chief executive officer, said in a statement, “Strong customer demand and a balanced growth strategy delivered another record year of results, despite ongoing challenges in the marketplace.” The designer also noted the company’s ability to drive profitable long-term growth because of its flexible business model and proven ability to “produce strong results from multiple channels and in multiple geographies.”

Separately, the company said its board initiated a regular quarterly cash dividend of 5 cents per share, or 20 cents on an annual basis. The dividend is payable on July 11 to shareholders of record at the close of business on June 27. Based on the number of shares outstanding, the annualized payout is expected to be $20 million.
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