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Ralph Lauren looking lively

Gary Evans, Don Hogsett -- Home Textiles Today, November 10, 2003

Fueled by double-digit gains from licensing revenues and in its tony retail stores, second-quarter profits at Polo Ralph Lauren Corp. rose by 4.4 percent, to $54.0 million from $51.7 million last year.

Overall sales jumped up by 10.2 percent, to $633.2 million from $574.6 million. Licensing revenues, including those from the Ralph Lauren Home unit of WestPoint Stevens, climbed by 12.4 percent, to $74.5 million from $66.3 million last year. Sales in Lauren stores ran up even faster, by 12.6 percent, to $297.1 million from $263.8 million. Same-store sales in Lauren flagship stores shot up a heady 8.3 percent. Rounding out the top line, wholesale sales to Lauren-branded products to other retailers increased by 8.2 percent, to $336.1 million from $310.7 million last year, and accounted for almost half of total company sales.

Virtually all of the increase in profits stemmed from higher sales, offsetting margin erosion and sharply higher costs. Acting as a drag and capping operating profits, average gross margin narrowed by 60 basis points, or six-tenths of a percentage point, to 49.5 percent from 50.1 percent a year ago. Margins, the company said, were hampered by "softness in the European wholesale business and the promotional environment at department stores in men's wholesale, partially offset by strong increases in retailer merchandise margins."

Costs climbed higher by one full percentage point, to $248.6 million from $218.6 million, driven by a change in business mix from increased retail sales, the start-up costs of the Lauren line and the consolidation of expenses of the Japanese master

Ralph Lauren Corp.

Qtr. 9/27 (x000) 2003 2002 % chg
a-Second-quarter results include a $1.8 million gain on foreign currency exchange, compared with a year-before loss of $221,000; and $1.6 million in miscellaneous investment income. Six-month results include a $4.1 million gain on foreign currency exchange vs. a prior-year loss of $3.8 million; and $3.5 million in miscellaneous investment income.
Sales $707,777 $640,839 10.4
Oper. income (EBIT) 102,012 102,632 -0.6
Net income 54,010a 51,744a 4.4
Per share (diluted) 0.54 0.52 3.8
Average gross margin 49.5% 50.1%
SG&A expenses 35.1% 34.1%
Six months 2003 2002 % chg
Sales 1,185,000 1,107,839 7.0
Oper. income (EBIT) 128,980 138,782 -7.1
Net income 59,065a 58,204a 1.5
Per share (diluted) 0.59 0.59 0.0
Average gross margin 50.6% 50.0%
SG&A expenses 39.7% 37.5%


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