The Associated Press September 20, 2011, 11:12AM ET

Polo hits all-time high on strong overseas growth

Polo Ralph Lauren Corp. is on a roll because of international expansion and strong sales of its higher-priced items, an analyst said Tuesday., helping drive the preppy fashion house's stock to an all-time high.

The company, whose brands include Ralph Lauren Collection, Black Label, Chaps and Club Monaco, has international pricing power not reflected in its current stock price, Cowen and Co. analyst John Kernan said in a note to investors, even though the New York-based company's stock is up about 37 percent since the beginning of the year.

He upgraded the stock to "Outperform" because of "the company's massive international distribution growth ramp, and consensus estimates for Ralph Lauren that in our opinion imply a pullback in full-price sell-throughs and luxury spending trends that has yet to materialize given recent industry data and our checks."

He estimates that 60 percent of Polo Ralph Lauren's revenue growth over the next four years is likely to come from Asia and Europe as the company adds new wholesale partners and retail locations.

"We also expect continued product margin expansion given the brand's international distribution growth and favorable product cycle of growth in higher margin categories," he added.

The upgrade comes a little more than a month after the company reported its fiscal first-quarter net income rose 52 percent on better-than-expected sales overseas and at its retail stores and raised its guidance

The company's stock rose $3.21, or 2.1 percent, to $153.73. The stock hit its 52-week low of $85.81 nearly a year ago.


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