Ralph Lauren Surges on 2012 Sales Outlook: New York Mover
February 08, 2012, 7:33 PM ESTBy Cotten Timberlake
Feb. 8 (Bloomberg) -- Ralph Lauren Corp., the retailer of its namesake brand clothing, rose the most in more than three years after saying revenue in the current fiscal year may gain more than it previously expected.
Ralph Lauren surged 12 percent to $175.87 at 10:11 a.m. in New York, after earlier advancing as much as 14 percent for the biggest intraday gain since Nov. 24, 2008. The shares increased 24 percent last year.
Revenue for fiscal 2012 will jump 20 percent, up from a previous projection of a high-teens to low 20 percent gain, the New York-based company said today in a statement. Ralph Lauren cited its “stronger-than-expected third-quarter performance” in raising the forecast.
Net income in the third quarter rose 0.4 percent to $169 million, or $1.78 a share, from $168.4 million, or $1.72, a year earlier, the company said. Analysts projected $1.68 a share, the average of estimates. Sales advanced 17 percent to $1.81 billion. Operating margin narrowed to 15 percent from 15.9 percent a year earlier.
“The operating margin resilience in the face of the full brunt of cost inflation was impressive,” Adrianne Shapira, an analyst with Goldman Sachs Group Inc. in New York, wrote in a note to clients today. She rates the shares “neutral.”
Cost Inflation
Sales at its own stores jumped 22 percent, helped by the contribution of new locations, Ralph Lauren said. Sales to department stores increased 11 percent, boosted by strong demand for men’s and children’s apparel.
Gross margin -- the percentage of sales left after subtracting the cost of goods sold -- shrank to 57.1 percent from 58.6 percent.
Ralph Lauren made some selective price increases to compensate for higher costs to make products, Jackwyn Nemerov, executive vice president, said on a conference call with analysts today. Inflation pressures will ease, she predicted.
“We do expect to see some relief with fall shipments,” Nemerov said.
--Editors: James Callan, Kevin Orland
To contact the reporter on this story: Cotten Timberlake in Washington at ctimberlake@bloomberg.net
To contact the editor responsible for this story: Robin Ajello at rajello@bloomberg.net.
