Apparel maker Ralph Lauren Corp. (RL) reported Thursday a profit for the fourth quarter that grew 35 percent from last year, reflecting improved margins and revenue growth. Adjusted earnings per share for the quarter topped analysts' expectations, while quarterly revenues missed their estimates.
The company also provided revenue growth guidance for the first quarter and full-year 2014, both below Street view.
"Our better-than-expected profitability in the fourth quarter and full year Fiscal 2013 periods is a direct result of the strong operational management of our global teams," President and COO Roger Farah said in a statement.
The New York-based fashion company, whose brands include Ralph Lauren, Polo, and Club Monaco, reported net income of $127.2 million or $1.37 per share for the fourth quarter, higher than $94.4 million or $0.99 per share in the prior-year quarter.
Excluding rugby-related impairment and restructuring charges, adjusted net income for the latest quarter was $130.9 million or $1.41 per share.
On average, 15 analysts polled by Thomson Reuters expected the company to report earnings of $1.30 per share for the quarter. Analysts' estimates typically exclude special items.
Net revenues for the quarter grew 1.3 percent or 1.9 percent in constant currency, to $1.64 billion from $1.62 billion in the same quarter last year, but missed twelve Wall Street analysts' consensus estimate of $1.70 billion.
Excluding the impact of discontinuing American Living and China store closures as well as the net negative foreign currency translation impact, net revenues grew about 4 percent.
The company said the growth in revenues reflects continued strong retail segment expansion, partially offset lower wholesale segment sales. Comparable store sales increased 4 percent or 4 percent on a constant currency basis.
Wholesale net sales declined 3.9 percent to $795.8 million, while retail net sales grew 7.0 percent or 8.4 percent in constant currency, to $894.4 billion from a year-ago quarter. Licensing revenues edged down 0.7 percent or increased 0.5 percent in constant currency, to $43.1 million from last year's $43.4 million.
Operating margin for the quarter expanded 270 basis points to 11.1 percent, primarily due to a 220 basis points increase in gross profit margin to 59.3 percent, and a 50 basis points improvement in operating expense as a percentage of revenues.
For fiscal 2013, the company reported net income of $750.0 million or $8.00 per share, higher than $681.0 million or $7.13 per share in the prior year. Excluding charges, adjusted net income for the latest period was $762.0 million or $8.13 per share. Net revenues for the full year grew to $6.94 billion from $6.86 billion in the previous year.
Analysts expected the company to report full-year 2013 earnings of $8.03 per share on annual revenues of $7.00 billion.
Looking ahead to the first quarter of fiscal 2014, the company expects consolidated revenues to increase at a low-single-digit percentage, while analysts currently expect revenues to grow 8.6 percent to $1.73 billion.
For fiscal 2014, the company now anticipates consolidated revenues to increase by about 4 to 7 percent, implying revenues between $7.22 billion and $7.43 billion. Street is currently looking for full-year 2014 revenues of $7.63 billion.
"We are excited about the Company's diverse and compelling opportunities for future growth, and have planned Fiscal 2014 as a year of accelerated investment in our highest priority strategic initiatives," Farah added.
RL closed Wednesday's regular trading session at $188.06, down $1.22 on a volume of 1.12 million shares. In the past 52-week period, the stock has been trading in a broad range of $134.29 to $192.03.
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