Polo Ralph Lauren Beats by 32 Cents

This morning’s earnings report from Polo Ralph Lifshitz (RL) really caught my eye. Earnings grew by 57%. The company earned $1.21 per share which is 32 cents better than expectations. That’s a huge earnings beat. RL said that for this quarter it expects sales to grow at a high-single-digits pace, although operating margins won’t be as high.

The company saw the gradual return of luxury customers late last year. However, in May it anticipated pressure from the euro’s recent woes and rising raw-materials and labor costs. Polo in recent years has been expanding in Asia—where many high-end brands are seeking growth as North American and European markets slow—and the company recently agreed to take control of its distribution in South Korea.
Clothing retailers, especially luxury brands, were hurt last year as consumers cut spending. Polo was shielded from some of the declines because each of its brands has its own distribution channel and target customer.

The stock is currently going for less than 15 times the estimate for next fiscal year (ending March 2012).

Posted by on August 4th, 2010 at 10:30 am


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