Ralph Lauren Q4 Profit Rises, But Outlook Weak; Shares Down

(RTTNews) - Apparel maker Ralph Lauren Corp. (RL) Friday reported higher fourth-quarter profit, as revenues climbed 14 percent on strong wholesale segment growth and expansion in retail segment. The company forecast rise in revenues for the first quarter and fiscal 2015, but sees pressure on margins. The shares fell about 6 percent in the morning trade.

For the fourth quarter, earnings increased to $153 million or $1.68 per share from $127 million or $1.37 per share in the previous year.

On average, 21 analysts polled by Thomson Reuters expected the company to earn $1.63 per share. Analysts' estimates typically exclude special items.

Net revenues for the quarter climbed 14 percent to $1.87 billion from $1.64 billion reported last year. Wall Street expected revenues of $1.83 billion.

Wholesale segment sales climbed 24 percent from last year, and Retail sales were up 5 percent. Americas, Europe and Asia saw double-digit growth in revenues.

Looking ahead to the first quarter, the company expects consolidated net revenues to increase by 3 to 5 percent, led by retail segment growth. In the prior year, the company had posted net revenues of $1.65 billion. Analysts expect revenues of $1.81 billion for period.

Operating margin is anticipated to be about 300 to 350 basis points below the prior-year period, mainly due to timing of investments to support the firm's strategic growth objectives.

For fiscal 2015, Ralph Lauren expects consolidated net revenues to rise by 6 to 8 percent. For fiscal 2014, it was $7.4 billion. Analysts expect revenues of $8.04 billion for the year.

Citing continued investment in global retail development and infrastructure, in addition to increased advertising and marketing expense, fiscal operating margin is expected to be 75 to 125 basis points below last year level.

The company ended the fourth quarter with 433 directly operated stores, comprised of 138 Ralph Lauren stores, 60 Club Monaco stores and 235 Polo factory stores. It also operated 503 concession shop locations worldwide.

Separately, Ralph Lauren announced that Roger Farah, executive vice chairman, will retire from the company at the end of May. Farah will remain on the board until expiration of his term on the date of the Annual General Meeting in August. RL is currently trading at $143.51, down $8.48 or 5.58 percent on the NYSE.