Ralph Lauren Q1 Profit Tops View, But Revenues Miss

(RTTNews) - Apparel maker Ralph Lauren Corp. (RL) reported Wednesday a profit for the first quarter of fiscal 2015 that declined 10 percent from last year, despite revenue growth, reflecting higher operating expenses.

Earnings per share for the quarter topped analysts' expectations, while quarterly revenues missed their estimates by a whisker. The company also reaffirmed its revenue growth forecast for the full-year 2015.

"Our better-than-expected first quarter profitability reflects excellent progress on our strategic initiatives, including double-digit revenue growth for our international and global e-commerce operations," President and Chief Operating Officer Jacki Nemerov said in a statement.

The New York-based fashion company, whose brands include Polo, American Living, Chaps and Club Monaco, reported net income of $162 million or $1.80 per share for the first quarter, lower than $181 million or $1.94 per share in the prior-year quarter.

On average, 21 analysts polled by Thomson Reuters expected the company to report earnings of $1.76 per share for the quarter. Analysts' estimates typically exclude special items.

Net revenues for the quarter grew 3.4 percent or 2.4 percent in constant currency, to $1.71 billion from $1.65 billion in the same quarter last year, but missed eighteen Wall Street analysts' consensus estimate of $1.73 billion by a whisker.

The company noted that revenue growth was broad-based, led by strong retail segment sales growth and double-digit expansion in international markets.

Net sales grew 3.3 percent or 2.4 percent in constant currency, to $1.67 billion from last year. Consolidated comparable-store sales increased 3 percent or 1 percent on a constant currency basis.

Wholesale net sales declined 3.7 percent or 4.1 percent in constant currency, to $708 million, and retail net sales increased 9.2 percent or 7.8 percent in constant currency, to $960 million from the year-ago quarter.

Meanwhile. licensing revenues grew 3.8 percent or 3.7 percent in constant currency, to $40 million from last year's $39 million.

Operating margin for the quarter contracted 240 basis points to 14.3 percent, primarily due to a higher operating expenses, partially offset by a 30 basis points improvement in gross profit margin to 61.0 percent from last year.

Looking ahead, the company expects consolidated net revenues for the second quarter to increase 4 to 6 percent. The company also said it continues to project revenue growth of 6 to 8 percent for fiscal 2015.

Street is currently looking for second-quarter revenues to grow 7.9 percent to $2.07 billion and full-year 2015 revenues to grow 7.1 percent to $7.98 billion.

"Our first quarter results demonstrate that we are making the right strategic decisions and investments to support our long-term growth objectives. Later this month, we'll mark an important milestone for the Polo brand with the introduction of Polo for women," Chairman and CEO Ralph Lauren stated.

Lauren added that the company will also open its first Polo flagship store in New York City later in the month and open a 20,000-square-foot Ralph Lauren luxury flagship store in Greater China this fall.

RL closed Tuesday's regular trading session at $156.57, up $1.92 on a volume of 1.45 million shares. In the past 52-week period, the stock has been trading in a range of $141.93 to $181.07.