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Polo Ralph Q1 revenues up by 4% to $1.11 bn

06 Aug '08
5 min read

Gross Profit. Gross profit for the first quarter increased 8% to $638 million, compared to $592 million in the first quarter of Fiscal 2008. The gross profit rate increased 200 basis points to 57.3%, compared to 55.3% during the same period last year.

The growth in gross profit and the expansion in the gross profit rate reflect the growth in sales mentioned previously as well as the benefit of strong international sales. In addition, the prior year's first quarter gross profit rate was negatively impacted by the purchase accounting associated with acquisitions (specifically, RL Media and Small Leathergoods).

Operating Expenses. Operating expenses increased 10% in the first quarter to $492 million, compared to $446 million in the first quarter of Fiscal 2008. Operating expenses as a percent of revenues were 44.2%, 250 basis points higher than last year, primarily as a result of operating expenses at newly acquired and emerging businesses and occupancy costs for unopened stores.

Operating Income. Operating income for the first quarter of Fiscal 2009 was $147 million, approximately equal to the prior year period. The operating margin was 13.2%, 40 basis points below the year earlier period. The decline in the operating margin rate reflects higher operating expenses associated with business expansion that were partially offset by the higher gross margin rate discussed above.

• Wholesale Operating Income. Wholesale operating income was $107 million in the first quarter, roughly flat with the prior year period. The wholesale operating margin was 18.7% in the first quarter, 10 basis points below the prior year. Higher expenses associated with new business initiatives were partially offset by the benefit of strong European sales.

• Retail Operating Income. Retail operating income was $67 million, 6% higher than the $64 million achieved in the first quarter of Fiscal 2008, and retail operating margin was 13.6% compared to 14.1% in the prior year period. The growth in retail operating income was a result of strong top-line growth, although the decline in retail operating margin primarily reflects higher occupancy costs associated with future store openings.

• Licensing Operating Income. Licensing operating income increased 11% to $24 million compared to $22 million in the first quarter of Fiscal 2008. The growth in licensing operating income was due to higher domestic licensing royalties that were partially offset by a decline in home licensing royalties.

Net Income and Diluted EPS. Net income for the first quarter of Fiscal 2009 increased 8% to $95 million, compared to $88 million in the comparable period of Fiscal 2008, and net income per diluted share increased 13% to $0.93 per share from $0.82 last year.

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Polo Ralph Lauren Corporation

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