EmailPolo Ralph Lauren (RL $156.33 +10.03) reported first quarter earnings of $0.99 per share, $0.14 better than the Capital IQ Consensus Estimate of $0.85, while revenues rose 13.7% year/year to $1.62 billion versus the $1.6 billion consensus. Gross profit rate was 57.1%, 30 basis points above the prior year level. The improvement in gross profit rate primarily reflects the favorable impact of channel and product mix that was partially offset by the net impact of higher cost of goods. The company also doubles its quarterly dividend to $0.40... Outlook: The co currently expects consolidated net revenues for FY13 to increase by a mid-single-digit percentage (consensus near 10.5%), reflecting the net impact of a low single-digit decline in wholesale sales and a low double-digit increase in retail sales. Strategic decisions regarding certain operations, including reduced distribution in Greater China and for American Living, combined with unfavorable foreign currency effects, are estimated to mitigate consolidated net revenue growth by ~400-500 basis points for the full year period.
Operating margin from continuing operations for Fiscal 2013 is currently expected to be modestly above the prior year period as anticipated gross profit margin expansion is largely offset by continued investment in the Company's long-term growth initiatives and the impact of overall channel mix... In Q1, the co expects consolidated net revenues to increase by a low single-digit percentage (consensus +9.8%). Wholesale sales are expected to be flat to slightly below the prior year period, as strength in North America is offset by a decline in Europe, the continued transition of certain Japanese wholesale operations to directly operated concessions and the closure of certain wholesale operations in Greater China. Retail sales are expected to increase by a high single-digit percentage, reflecting broad-based momentum worldwide. Foreign currency effects are estimated to negatively impact net revenue growth by approximately 200-300 basis points in the first quarter. Operating margin from continuing operations for the first quarter of Fiscal 2013 is expected to be approximately 250-300 bps below the comparable prior year period due to the timing of investments to support the co's strategic growth objectives and the impact of overall channel mix.
