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Polo Ralph Lauren Corp. (NYSE:RL), one of the world's leading designer, marketer and distributor of premium lifestyle products, is scheduled to release its first-quarter 2012 financial results before the opening bell on Wednesday, August 10, 2011.The current Zacks Consensus Estimates for the quarter is earnings of $1.45 a share. For the quarter under review, revenue is expected at $1,414.0 million, according to the Zacks Consensus Estimate.

Fourth-Quarter 2011, a synopsis

Polo's fourth-quarter 2011 earnings of 74 cents per share declined 34.5% from the prior-year quarter earnings of $1.13. However, quarterly earnings were in line with the Zacks Consensus Estimate.

The decline in the year-over-year earnings was primarily attributable to higher inflationary cost pressure and increased operating expenses.

During the quarter, Polo Ralph Lauren's net revenues rose 6.7% year over year to $1,426.9 million, outpacing the Zacks Consensus Estimate of $1,389.0 million. The growth was primarily driven by an increase of 13.9% in Retail sales to $631.3 million.

The increase in retail sales was mainly attributable to a high single-digit growth in same-store sales and contribution from newly transitioned South Korean operations.

Guidance for Fiscal 2012

Polo Ralph Lauren now expects full fiscal 2012 revenues to grow in mid teen percentage. The company expects operating margin to be lower by 100 to 150 basis points in the fiscal due to higher input costs, business disruption in Japan and increased investments in strategic growth initiatives.

First-Quarter 2012 Zacks Consensus

The analyst covered by Zacks expects Polo to post first-quarter 2012 earnings of $1.45 a share, significantly higher than earnings of $1.21 delivered in the prior-year quarter. The current Zacks Consensus Estimate ranges between $1.36 and $1.51 a share.

Zacks Agreement & Magnitude

Over the last 30 days, not a single analyst has revisited their estimates for the upcoming first-quarter 2012. Therefore, the current Zacks consensus Estimate has remained constant over the last 30 days.

Mixed Earnings Surprise History

With respect to earnings surprises, Polo has topped as well as met the Zacks Consensus Estimate over the last four quarters in the range of approximately flat to positive 36%. The average remained at approximately positive 31.6%. This suggests that Polo has beaten the Zacks Consensus Estimate by an average of 31.6% in the trailing four quarters.

Our View

Polo Ralph Lauren is one of the world's leading designer, marketer and distributor of premium lifestyle products. The company possesses a strong portfolio of globally recognized brand names, such as Polo, Ralph Lauren Purple Label, Ralph Lauren Collection, Black Label, Blue Label, Lauren, RRL, RLX, Rugby, Ralph Lauren Childrenswear and American Living. This provides a competitive edge to Polo Ralph Lauren and strengthens its well-established position in the market over its competitors, such as Liz Claiborne Inc. (LIZ) and Phillips-Van Heusen Corporation (NYSE:PVH).

Moreover, the company offers lifestyle product collections in four categories – Apparel including men's, women's, and children's clothing; Home comprising bedding and bath products, furniture, fabric and wallpaper, paint, tabletop and giftware; Accessories consisting of footwear, eyewear, jewelry and leather goods; and Fragrance and skin care products that are sold under Glamorous, Romance, Polo, Lauren, Safari, and Polo Sport brands.

Furthermore, the company plans to expand and elevate its international presence, particularly in Asia. In order to effectively capitalize on opportunities in the emerging markets, such as China, South Korea and India, the company has recently took direct control of operations in Asia from its licensee. Polo Ralph Lauren is in the initial stage of a broader Asian strategy, through which the company expects to transform itself over the long term. This provides a significant upside potential to the company.

Polo Ralph holds a Zacks #3 Rank, which translates into a short-term 'Hold' recommendation. Our long-term recommendation on the stock is 'Neutral'.

Source: Polo Ralph Lauren: Earnings Preview