'We continue to navigate well through uncertain times' – Polo Ralph

10 Aug '09

5 min read

Polo Ralph Lauren Corporation reported net income of $77 million, or $0.76 per diluted share, for the first quarter of Fiscal 2010, compared to net income of $95 million, or $0.93 per diluted share, for the first quarter of Fiscal 2009.

“We continue to navigate well through uncertain times,” said Ralph Lauren, Chairman and Chief Executive Officer. “Each of our brands has a unique channel of distribution and is focused on a specific customer, enabling us to gain market share. Regardless of the near-term economic challenges, we continue to have a clear, compelling growth trajectory ahead of us and our Company has a longstanding track record of success,” Mr. Lauren added.

“The resilience of our first quarter profit margins demonstrates that we are executing sharply on matters within our control. We planned our business carefully and we maintain a disciplined approach to managing our operations around the world,” said Roger Farah, President and Chief Operating Officer. “The outlook for global consumer spending remains unpredictable and we are planning our business accordingly. While we remain cautious with our outlook, our brands are highly desired, we are in excellent financial condition and we remain committed to investing in our strategic growth objectives to support the long-term success of our Company.”

First Quarter Fiscal 2010 Income Statement Review
Net Revenues. Net revenues for the first quarter of Fiscal 2010 were $1.0 billion, 8% below net revenues for the comparable period last year. The decline in net revenues primarily reflects lower domestic wholesale sales, a reduction in same-store sales at the Company's retail segment and an approximate 2% net unfavorable effect of foreign currency translation that more than offset the wholesale contribution of formerly licensed childrenswear and golf apparel products in Japan and high single digit constant currency growth in Europe.

• Wholesale Sales. Wholesale sales of $520 million were 10% below the prior year period. Lower domestic shipment volumes and the net unfavorable effect of foreign currency translation more than offset the incremental benefit of formerly licensed childrenswear and golf apparel products in Japan.

• Retail Sales. Retail sales declined 6% to $463 million, compared to $492 million in the first quarter of Fiscal 2009, reflecting a net reduction in comparable store sales and the net unfavorable effect of foreign currency translation. Comparable store sales, which now include RalphLauren.com, declined 9%, reflecting reductions of 25% at Ralph Lauren stores, 4% at factory stores and 15% at Club Monaco stores. RalphLauren.com sales increased 14% in the first quarter of Fiscal 2010.

• Licensing. First quarter licensing royalties were $41 million, 12% below the comparable period in Fiscal 2009. A decline in Japanese product licensing revenues associated with the Company assuming direct control of childrenswear and golf apparel in Japan and lower fragrance licensing revenues were the primary causes of the year-over-year decline in licensing revenues.

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