Feb 6, 2013
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Ralph Lauren profit rises in holiday quarter

Feb 6, 2013

Ralph Lauren Corp on Wednesday reported holiday quarter sales and profits that showed renewed momentum after a rough patch earlier in the year, helped by steady business in the Americas and improvement in Europe.

The fashion company and retailer, whose portfolio also includes brands such as Club Monaco and Chaps, said its gross profit margin rose 2.2 points to 59.3 percent during the quarter that ended December 29, helped lower product costs and a bigger percentage of sales coming from more profitable items.

(photo: Ralph Lauren)

Ralph Lauren now expects a bigger improvement in its operating profit margin for the year than initially projected, and shares were up 6.7 percent in premarket trading.

Revenue in the quarter rose 2.2 percent to $1.85 billion.

The company forecast company wide revenues would rise by a "mid-single-digit" percentage in the current fourth quarter.

Sales at Ralph Lauren have suffered from its decision to phase out stores and boutiques operated by local partners in China and replace them over time with company-run shops in better spots.

And the discontinuation of the American Living brand, which was dropped by low-price department store J.C. Penney Co Inc (JCP.N) last year, also hurt.

Excluding the impact of its China store closings and the American Living brand, revenue rose 5 percent in the quarter.

Wholesale revenues, which come from sales to department stores and others that carry its brands, were down 2 percent, a much gentler drop than in the previous quarter.

At Ralph Lauren's own stores, revenue was up 6 percent, also a better performance than last quarter.

Chief Operating Officer Roger Farah credited "continued momentum in the Americas and improved trends in Europe," a market that has been a drag on the company growth this year.

Net income rose 27.6 percent to $215.7 million, or $2.31 per share, in the third quarter ended December 29, from $169.0 million, or $1.78 per share, a year earlier.

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