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23 años hace
Polo Profit Flat, Shares Sink on Outlook
By Ellis Mnyandu
NEW YORK (Reuters) - Polo Ralph Lauren Corp. (NYSE:RL - News) on Wednesday posted a quarterly profit that was unchanged from a year ago, but its shares fell 7.6 percent on concerns that the earnings outlook for the upscale clothing designer and retailer is too dependent on a rebound in the second half of the year.
Polo, which markets several variations of the Polo and Ralph Lauren brands and operates the Club Monaco retail chain, said net income for the fourth quarter ended March 30 was $48.0 million, or 48 cents per share, compared to $47.5 million, or 48 cents a share, in the prior year quarter.
Sales for the quarter rose 3.3 percent to $556.3 million from $538.5 million.
The company, which operates 236 stores mainly in the U.S., said it is cautious about its near-term business outlook but expects stronger results during the second half of its new fiscal year.
Polo said it anticipates the latter part of its fiscal year to benefit from a more vigorous retail environment compared to the post Sept. 11 period, a stronger wholesale demand for spring, and the launch of a new women's fall apparel line called Blue Label.
But one analyst, who declined to be identified, said pinning an earnings rebound on the back half of the year could threaten the full-year profit forecasts as the company would miss the benefit of the Easter selling seasons. Easter this year fell in March, and in 2003 it reverts back to April.
"I don't think most people expected that much degree of back-half acceleration," the analyst said.
"The first half is down dramatically year over year, and that's surprising people," said Merrill Lynch analyst Virginia Syer-Genereux.
Polo's stock closed down 7.57 percent, or $2.18, to $26.63. The stock, which on the year is off almost 1 percent, was among the top percentage losers on the New York Stock Exchange. It earlier slipped as low as $26.22, a three-month low.
The company repeated its forecast for fiscal 2003 earnings between $1.80 and $1.90 a share. For the first-quarter, Polo forecast profit between 2 cents and 7 cents a share, down from 14 cents a year-ago, and for the second-quarter it estimated profits between 48 cents and 53 cents a share, compared to 71 cents in the prior year.
Polo said it sees its 2003 earnings outlook -- first provided last month -- driven by mid-single digit revenue growth on adjusted net revenue and improvements in operating margins and ongoing inventory controls. First Call 2003 profit estimates range from $1.85 to $1.90 a share, with a mean of $1.87.
For the 2002 fourth quarter, excluding the effect of the change in timing for the consolidation of the company's European operations, a real estate reserve charge and foreign currency gains, Polo reported income of $44.2 million, or 45 cents per share, compared with $43.1 million, or 44 cents a share, a year ago.
Analysts' estimates ranged from 43 cents to 44 cents per share, with a mean of 44 cents, according to earnings-tracking firm Thomson First Call.
Excluding the adjustment for the effect of the change in the timing for the European unit consolidation, sales rose to $633.1 million from $538.5 million.
Polo said gross margins in the fourth quarter fell due to price cuts at U.S. department stores, offsetting higher sales from its European units.
EUROPE IN THE SPOTLIGHT
Polo said it will push wholesale sales abroad given the persistent uncertainty in the U.S. domestic market.
Chief Operating Officer Roger Farah said that while Europe was "catching the cold" from sluggish U.S. economic growth, the company's European operations were still unaffected. "Europe is going to go through a milder slowdown than that which the U.S. has experienced," Farah said in conference call with analysts.
Polo said it plans capital expenditures of $100 million for the 2003 fiscal year vs. $88 million in the year just passed. The company said 60 percent of the new money would be spent on building new stores in Europe. Polo runs 3 stores in Europe, based in London, Paris, and Brussels.
"Europe does have some very good opportunities (for Polo), but it's a different ball game," said David Lamer, an analyst at Ferris, Baker Watts Inc. "In Europe you're dealing with small boutiques to sell your product, which just don't have the presentations that you find in a major department store channel like here in the Unites States."
U.S. specialty retailers -- who have been losing market share for about 20 years -- are under intense pressure from one-stop mass merchants like discounter Wal-Mart Stores Inc. (NYSE:WMT - News), since a weak domestic economy is making consumers reluctant to spend heavily on new clothes.
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