Polo Ralph Lauren Corp. (RL) Misses Q3 EPS by 9c; Raises Dividend 11%

Polo Ralph Lauren Corp. (NYSE: RL) reported Q3 EPS of $2.41, $0.09 worse than the analyst estimate of $2.50. Revenue for the quarter came in at $2 billion versus the consensus estimate of $2.09 billion.

The Company also announced that its Board of Directors declared an 11% increase in the regular quarterly cash dividend on the Company's Common Stock. The new quarterly cash dividend is $0.50 per share. Over the next year, the new annual dividend amount will be $2.00 per share. The next quarterly dividend is payable on April 10, 2015 to shareholders of record at the close of business on March 27, 2015.

“Our year-to-date results reflect continued focus on our long-term strategic growth initiatives,” said Ralph Lauren, Chairman and Chief Executive Officer. “We opened several new stores around the world; we invested in advertising and marketing to support substantial product innovation, including the launch of Polo for women; and we made important upgrades to our infrastructure. Our long-range goals remain unchanged, and we have a clear roadmap to achieve them. As we work to realize these goals and maximize our investments in an increasingly complex global environment, we are making the right organizational changes to ensure a strong and healthy future for the Company. The Board’s decision to raise our quarterly dividend demonstrates its conviction in the Company’s growth objectives and an ongoing commitment to returning cash to our shareholders.”

“The resilience of the third quarter’s operating profitability is a testament to the strong, consistent operational discipline of our global teams,” said Jacki Nemerov, President and Chief Operating Officer. “Although our sales were below the expectations we had set, we navigated through the volatile global marketplace by controlling the controllable and delivered an operating margin at the high end of our outlook. Foreign exchange and global consumer spending remain unpredictable, and we are planning our business accordingly. While we are cautious with our outlook, we are bold with our actions to offset some of these ongoing external pressures. Over the next several months, we will implement a new, carefully considered, global brand management structure that we are confident will enable us to operate in a more customer-centric way and provide substantial operating efficiencies."

Fiscal 2015 Outlook

In the fourth quarter of Fiscal 2015, the Company expects consolidated net revenues to increase at a mid-single digit rate in constant currency. Based on current rates, the net negative impact from foreign currency translation is estimated at approximately 550 basis points. Operating margin for the fourth quarter of Fiscal 2015 is expected to be 250-300 basis points below the comparable prior year period, reflecting relatively equal pressure from the gross margin and operating expenses. The fourth quarter tax rate is estimated at 31%-32%.

Based on the third quarter results and incrementally unfavorable foreign currency movements, the Company is adjusting its outlook for Fiscal 2015. The Company now expects consolidated net revenues for Fiscal 2015 to increase by approximately 4% in constant currency. Based on current rates, the net negative impact from foreign currency translation is estimated at approximately 200 basis points. The revised revenue outlook compares to the Company’s previous expectation of 5%-7% growth. The Fiscal 2015 operating margin is now estimated to be approximately 170-190 basis points below Fiscal 2014’s level, which compares to a prior expectation of a 100-125 basis point decline. The full year Fiscal 2015 tax rate continues to be estimated at 30%. Based on current rates, foreign exchange is expected to have a negative impact on the Company’s sales and profits in Fiscal 2016

For earnings history and earnings-related data on Polo Ralph Lauren Corp. (RL) click here.

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