Polo Ralph Lauren Trading Lower on Weak Guidance Despite Earnings Beat

Polo Ralph Lauren reported fiscal Q4 net income increased 17% to $73.2 million, or $0.68/share, on sales growth of 6% to $1.03b. Analysts were expecting $0.62/share on sales of $1.03b. Shares of Polo gained 1.15% to $93.28 during normal trading Tuesday and gained 1.31% to $94.50 in very thin after-hours trading. However, in pre-market activity Wednesday, it was last trading down 3.52% to $90.00, also on very thin volume. Polo forecast revised full year fiscal 2008 EPS of $3.70 - $3.80, including a -$0.27 impact from acquisitions. Analysts polled by Thomson expect $4.13/share. Q1 consolidated revenues are expected to increase in the mid-teens. Polo said Q4 wholesale revenues increased 10% to $629m, while operating income rose $10% to $139m; operating margin was flat at 22.1%. Retail sales rose 3% to $346m, as overall same-store-sales were up 6.3%, but an operating loss of $2m was reported (compared to last year's profit of $1m).

Sources: Press release, Bloomberg, MarketWatch
Commentary: Polo Ralph Lauren Spends $370 Million to Take Control of Its Japan Operations • Polo Ralph Lauren Corp.: Expanding the Brand • Jim Cramer's Take on Ralph Lauren
Stocks/ETFs to watch: Polo Ralph Lauren Corp. (RL). Competitors: Jones Apparel Group Inc. (JNY), Liz Claiborne Inc. (LIZ). ETFs: PowerShares Dynamic Consumer Discretionary (PEZ), PowerShares Dynamic Mid Cap Growth (PWJ)

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