Polo Ralph Lauren Corp. (RL) is scheduled to release its fourth-quarter 2011 results on Wednesday, May 25, 2011.
The Zacks Consensus Estimate for the quarter is pegged at 76 cents a share, representing an estimated year-over-year decline rate of 32.7%.
Third Quarter Performance
Polo Ralph Lauren Corp.'s fiscal 2011 third-quarter earnings surged $1.72 per share from $1.10 in the year-ago period, as higher sales and strong gross margin drove performance. Quarterly earnings also surpassed the Zacks Consensus Estimate of $1.28.
During the quarter, Polo Ralph Lauren's net revenues rose 24% year over year to $1,548.0 million, outpacing the Zacks Consensus Estimate of $1,454.0 million. The growth was primarily driven by an increase of 29% in Retail sales to $821.6 million. The increase was mainly attributable to a surge of 15% in same-store sales and contribution from newly-assumed Asian operations.
Overall revenue growth was also aided by an increase of 20.7% in Wholesale revenues to $676.3 million, resulting from increased shipments in both the US and Europe.
Agreement of Analysts
Over the past 30 days, none of the analysts covering Polo Ralph have revised their earnings estimates in either direction for the fourth quarter of fiscal 2011 and for fiscal 2011.
Magnitude of Estimate Revisions
Given the complete lack of activity in estimate revisionsover the past one month, the Zacks Consensus Estimates for the fourth quarter and fiscal 2011 have hit a plateau at 76 cents and $5.78 per share, respectively.
Surprise History
With respect to earnings surprises, Polo Ralph showed a favorable trend in the last four quarters. The company has recorded positive surprises in the trailing four quarters with a low of 24.4% and a high of 79.4%. On an average, the earnings surprise was a positive 43.5%. Based on the current flow, we expect the company to come up with healthy results in the upcoming quarter.
Our Recommendation
Polo Ralph Lauren is one of the world's leading designer, marketer and distributor of premium lifestyle products. The company possesses a strong portfolio of globally recognized brand names, such as Polo, Ralph Lauren Purple Label, Ralph Lauren Collection, Black Label, Blue Label, Lauren, RRL, RLX, Rugby, Ralph Lauren Childrenswear and American Living. This provides a competitive edge to Polo Ralph Lauren and strengthens its well-established position in the market over its competitors such as Liz Claiborne Inc. (LIZ) and Phillips-Van Heusen Corporation (PVH).
Moreover, the company offers lifestyle product collections in four categories – Apparel including men's, women's, and children's clothing; Home comprising bedding and bath products, furniture, fabric and wallpaper, paint, tabletop and giftware; Accessories consisting of footwear, eyewear, jewelry and leather goods; and Fragrance and skin care products that are sold under Glamorous, Romance, Polo, Lauren, Safari, and Polo Sport brands.
Furthermore, the company plans to expand and elevate its international presence, particularly in Asia. In order to effectively capitalize on opportunities in the emerging markets, such as China, South Korea and India, the company has recently took direct control of operations in Asia from its licensee. Polo Ralph Lauren is in the initial stage of a broader Asian strategy, through which the company expects to transform itself over the long term. This provides a significant upside potential for the company.
Polo Ralph holds a Zacks #2 Rank, which translates into a short-term 'Buy' recommendation. Our long-term recommendation on the stock is Outperform.
LIZ CLAIBORNE (LIZ): Free Stock Analysis Report
PHILLIPS VAN HE (PVH): Free Stock Analysis Report
Be the first to comment