Polo Q1 earnings surge

Polo Ralph Lauren reported a surge in first quarter earnings of 58 percent to $80.2 million (£42.0 million). Revenues jumped 26.8 percent for the three months ended 1 July to $491.2 million, including a 45.7 percent gain in wholesale sales to $751.9 million and a 15.3 percent jump in retail sales to $412.1 million. Net revenues - which do not include the effect of the footwear and Polo Jeans Co acquisitions - rose 19 percent. Increased sales per square foot in the US stores, regionally adapted assortments and supply chain investments in its European operations helped boost results.

"One of the keys to our success is that we convey our passion and our clear point of view in all we do," chairman and chief executive Ralph Lauren said in a statement. "That vision is represented in all of our brands and in every product category, whether it is men's wear, women's wear, children's wear, accessories or home." Roger Farah, president and chief operation officer, told WWD: "We've really had back-to-back strong results," and added, "It is not a great (retail) environment...We had a 15.7 percent operating profit in the first quarter in a retail business people at first weren't sure we should be in." He told analysts that Polo is "leveraging (its) growing scale for efficiencies in transportation and logistics, where we are seeing real savings and speed to market despite the growing gas price. Obviously, that is leading to better sell-throughs, faster inventory turns and improved results." He also said that micromanaging the business by store and location, both in the US and abroad, had "paid big" dividends for the company. All Polo's European operations, with the exception of Spain, had enjoyed a "powerful" quarter, both in terms of retail and wholesale, Farah said.

With Europe coasting along, the company is turning its attention to its Asian businesses. Farah said that Polo has already started working with local licensing partners in an effort to become more directly involved in assortment and marketing plans. It believes that these improvements will deliver visible results for fiscal 2008 and 2009. Ultimately, the goal for the entire business is to deliver fresh products and never have too much merchandise on hand. "Our loyal customer is in our store often looking for what's new. We look at the flow of new receipts gotten in the last 30 days that can drive the business over the next 30 days," said Farah.