Ralph Lauren Q3 Profit Tops View, But Revenues Miss; Raises 2014 Revenue Outlook

(RTTNews) - Apparel maker Ralph Lauren Corp. (RL) reported Wednesday a profit for the third quarter that grew 10 percent from last year, reflecting lower expenses and revenue growth. Earnings per share for the quarter topped analysts' expectations, while quarterly revenues missed their estimates by a whisker.

The company also said it now expects revenue growth for the full-year 2014 to be at the high end of the previous forecast range.

"We set aggressive goals for the third quarter and we are proud to have achieved them in the context of such a challenging operating environment. Strong international and e-commerce growth is a clear demonstration that our sustained investment in the business is paying off," 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 $237 million or $2.57 per share for the third quarter, higher than $216 million or $2.31 per share in the prior-year quarter, which included charges.

On average, 19 analysts polled by Thomson Reuters expected the company to report earnings of $2.51 per share for the quarter. Analysts' estimates typically exclude special items.

Net revenues for the quarter grew 9.1 percent or 9.9 percent in constant currency, to $2.02 billion from $1.85 billion in the same quarter last year, but missed fourteen Wall Street analysts' consensus estimate of $2.03 billion by a whisker.

Excluding the net negative impact from foreign currency translation and discontinued businesses, net revenues increased about 11 percent.

The company noted that revenue growth was broad-based, with the Americas, Europe and Asia all reporting high-single-digit increases or better in constant currency.

Net sales grew 9.7 percent or 10.5 percent in constant currency, to $1.97 billion from last year. Consolidated comparable-store sales increased 1 percent or 2 percent on a constant currency basis.

Wholesale net sales grew 14.5 percent or 14.4 percent in constant currency, to $840 million, and retail net sales increased 6.4 percent or 7.8 percent in constant currency, to $1.13 billion from the year-ago quarter. Meanwhile. licensing revenues declined 11.9 percent to $45 million from last year.

Operating margin for the quarter expanded 10 basis points to 16.6 percent, primarily due to a 120 basis points decline in operating expense as a percentage of revenues, partially offset by a 110 basis points contraction in gross profit margin to 58.2 percent from last year.

Looking ahead, the company expects consolidated net revenues for the fourth quarter to increase 10 to 12 percent. The company also said it raised its full-year 2014 revenue growth outlook to 7 percent, which is the high end of the previous forecast range of 5 to 7 percent.

Street is currently looking for fourth-quarter revenues to grow 10.1 percent to $1.81 billion and full-year 2014 revenues to grow 6.4 percent to $7.39 billion.

Additionally, the company's board of directors authorized an additional $500 million stock repurchase program, in addition to the $230 million available at the end of the third quarter as part of a previously authorized stock repurchase program, bringing the total current authorizations to $730 million.

RL closed Tuesday's regular trading session at $154.18, down $0.12 on a volume of 1.89 million shares. In the past 52-week period, the stock has been trading in a range of $152.79 to $192.03.