Polo: Net Soars, Belt Licensee Bought
NEW YORK – Polo Ralph Lauren Corp. on Wednesday reported sharply higher sales and revenues for the second quarter and said it’s agreed to buy its men’s and women’s belt licensee, New Campaign, from Kellwood Co.
Subject to the satisfaction of customary conditions, expected by next March, Polo will pay $9 million in cash for New Campaign, which holds licenses for men’s and women’s belts under the Ralph Lauren, Lauren and Chaps brands. The acquisition is a continuation of Polo’s policy, like that of other designer firms, of acquiring licenses and bringing them in-house, as Polo had previously done by acquiring its jeans license from Jones Apparel Group after the two apparel giants nearly wound up battling in court over rights to several Polo brands.
During the three months ended Sept. 30, Polo’s net income rose 31.5% to $137 million, or $1.28 a diluted share, from $104.2 million, or 97 cents, a year ago. Net sales were up 14.5% to $1.1 billion from $964.7 million during the prior-year period. Wholesale revenues were up 14.3%, to $659.9 million, and retail sales ahead 14.8% to $444.6 million, as same-store sales, led by a 15.9% increase at Club Monaco, picked up 9.3%. Licensing revenue fell by less than a point to $62.3 million, principally due to the loss of jeans royalties because of the Polo Jeans purchase from Jones.
The company raised its full-year earnings guidance by 25 cents, to a range of $3.50 to $3.60 a share.
Investors clearly loved the news as they sent up shares of the firm $4.55, or 6.4%, to close at $76.12 in New York Stock Exchange trading Wednesday. Shares hit a 52-week high of $76.22 earlier in the day.
“We had exceptional growth in the second quarter with all of our core businesses outperforming and our next generation of initiatives on track,” said Roger Farah,
Polo’s president and chief operating officer. “Our time, energy and money invested in our retail stores, in how we are presented at better department and specialty stores, and in global infrastructure have supported our strong growth.
“We are particularly pleased with the continuing success in our retail group that drove strong comparable store sales,” Farah added.
The retail group also led the way in operating income, which rallied 69.5% to $66.8 million.
Improvements in six-month performance even eclipsed those for the quarter. Net income was up 40.2% to $217.2 million, or $2.02 a diluted share, and sales finished just above the $2 billion milestone, rising 21%.
