Polo Ralph Lauren Reports Record Fourth Quarter And Full Year 2001 Earnings Per Share
NEW YORK--(BUSINESS WIRE)--May 23, 2001--Polo Ralph Lauren Corporation (NYSE: RL):
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Fourth Quarter Earnings Per Share as Adjusted Increased 38% to $0.44. Full Year EPS as Adjusted Increased 18% to $1.71.
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Fourth Quarter Revenues Increased 15%. Full Year Revenues Increased 14%.
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Operating Income as Adjusted Increased 31% for the Fourth Quarter and 14% for the Full Year.
Polo Ralph Lauren Corporation (NYSE: RL) today reported earnings per diluted share of $0.44 cents on net income of $43.1 million, excluding restructuring, special charges and foreign currency gains, for the fourth quarter ended March 31, 2001, compared to earnings per diluted share of $0.32 cents on net income of $31.8 million for the same period of the prior year. Including the restructuring, special charges and foreign currency gains, net income for the quarter rose to $47.5 million, or $0.48 cents earnings per diluted share. The results were driven by a 15% increase in net revenues and a 180 basis point improvement in operating margins.
"During an uncertain economic environment, we reported a strong fourth quarter that capped a year of outstanding results. We have strengthened our business and expanded Polo Ralph Lauren brands worldwide. Among our greatest accomplishments was our successful expansion in Europe, our enhanced focus on the luxury market, our increasing profitability in retail stores and our management realignment. We now have one of the deepest and most experienced teams in our industry," said Ralph Lauren, Chairman and Chief Executive Officer.
"During the year, we focused on building a strong and long-lasting organization to support our worldwide growth initiatives. I believe we are just beginning to see the benefits of melding the marketing and design driven excellence of Polo Ralph Lauren with our commitment to developing a world-class operation," Mr. Lauren added.
Commenting on the growth strategies, Roger Farah, President and Chief Operating Officer, said, "We are focused on four key initiatives to measure our success this year - growing the luxury business in our Polo Ralph Lauren stores, expanding our brands worldwide, creating new and profitable brands for our department store customers and operating a flexible market-based organization that produces world-class results."
"In our Polo Ralph Lauren stores we are continuing to focus our merchandise strategy on profitably showcasing our finest, highest quality products, such as Purple Label, Women's Collection and Black Label."
"Our European expansion continues to exceed expectations. This past year, we expanded the distribution of Polo products in Europe by 40%. We continue to believe our global expansion is in its infancy and we intend to drive the strong growth in Europe and beyond."
"As the number one resource in our category in department stores, we are continuing to develop and bring innovative products to market. Our new Lauren for men classifications have been well received and we are planning to expand the group with sweaters and outerwear in the fall."
"All of these initiatives are underpinned by the strong global infrastructure we are establishing. Our additions of key talent in Finance, Human Resources, Global Logistics and Retail now allow us to better analyze and respond to market opportunities. We are confident that we can continue to execute our growth strategy and reach our sales and operating goals. In addition, I believe that in executing our strategy, we will continue to identify further opportunities to increase our profitability," Mr. Farah stated.
Net Revenues
Net revenues were $538.5 million in the fourth quarter, a gain of 15% compared to $466.9 million in the prior year's fourth quarter. These gains were driven by sales from the acquisition of the Polo Ralph Lauren brands in Europe, single digit sales growth in the Polo Ralph Lauren full price and outlet stores and continuing demand for the Company's licensed brands, particularly Lauren and swimwear, at department stores.
For the year ended March 31, 2001, net revenues grew to $2.2 billion, an increase of 14% over the prior fiscal year. The revenue growth was driven by a 19% increase in wholesale net sales, an 11% increase in retail net sales and a 3% increase in licensing revenue.
Gross Profit
Gross profit as adjusted for the quarter rose 80 basis points to
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49.5% of net revenues compared to 48.7% of net revenues in the prior year's quarter. The increase was a result of higher margins associated with the European business and sales of a larger proportion of men's and women's luxury apparel.
For the full year, gross profit as adjusted rose 90 basis points to 49.6% of net revenues compared to 48.7% of net revenues in the prior year. The increase was a result of the higher margins associated with the European business and the domestic men's and women's apparel business.
Total S,G & A Expenses
Total S,G&A expenses decreased 90 basis points to 35.1% of net revenues compared to total S,G&A expenses of 36.0% of net revenues in the fourth quarter of fiscal year 2000. The expense reduction was driven by better cost management throughout all businesses.
For fiscal year 2001, S,G &A expenses as adjusted as a percent of net revenues increased 90 basis points to 36.1% compared to 35.2% in the prior year. The expenses rose due to the acquisition of our European business that generates higher expense rates.
Income from Operations
Fourth quarter income from operations as adjusted was $77.4 million, or 14.4% of net revenues, compared to $59.0 million, or 12.6% of net revenues in the prior year's period. The gain represents a 180 basis point improvement in operating margin.
For fiscal year 2001, income from operations as adjusted was $300.3 million, a gain of 14% over the prior year's income from operations of $263.9 million.
Inventory
At year end, inventory was $425.6 million compared to $391.0 million at April 1, 2000, an increase of 9%. While supporting a 15% increase in net sales, inventory turns continued to show improvement due to better planning at wholesale and better merchandising in the retail group.
Financial Position
At March 31, 2001, the Company's total debt, net of cash on hand and marketable securities, was $280.9 million. The total debt, $383.1 million, consisted of $86.1 million of short-term debt, $80 million of long-term bank debt and $217.0 million of Eurobond debt. At year end, the Company had repurchased $25.3 million of its Eurobonds thus reducing the outstanding Eurobond debt by 10%.
At year end, long-term debt, net of cash and marketable securities, to total capitalization was unchanged at 19%. Excluding cash and marketable securities, the Company's total debt to equity was 47% compared to 56% in the previous year. Excluding the restructuring, special charges and foreign currency gains, the Company's return on equity was 22%, up from 21% in the prior year.
Store Count
During the fourth quarter, Polo Ralph Lauren opened one Polo Concept Store and closed one full line Polo Ralph Lauren store, 12 Polo Jeans Co. stores and 11 Club Monaco stores. At quarter end, the Company had 229 stores, including 28 Polo brand stores, seven Polo Concept stores, 95 full line Outlet stores, 26 Polo Jeans Co. Outlet stores, eight European Outlet stores and 65 Club Monaco stores.
Earnings Outlook
As previously stated in October 2000, the Company expects fiscal 2002 earnings per share in the range of $1.93 to $1.98 driven by mid-single digit revenue growth and a 100 basis points of improvement in the operating margins from decreased operating expenses.
CONFERENCE CALL THIS MORNING TO DISCUSS FOURTH QUARTER RESULTS
As previously announced, the Company will host a conference call today, May 23, 2001 at 9:00 A.M. Eastern to discuss the quarter and full year 2001 results. To participate in the call, please call 1-800-266-1824. For international participants, please call 1-212-676-5393. Alternatively, individuals are invited to listen to a live online broadcast of the conference call by accessing the investor relations page through http://investor.polo.com on the Internet.
A replay of the call will be available through 5 P.M. Friday, May 25th by dialing 1-800-633-8284, or 1-858-812-6440 and entering reservation number 18765489. An online archive of the broadcast will also be available through 5:00 P.M. Eastern, Friday, May 25, 2001.
Polo Ralph Lauren Corporation (NYSE: RL) is a leader in the design, marketing and distribution of premium lifestyle products in four categories: apparel, home, accessories and fragrances. For more than 30 years, Polo's reputation and distinctive image have been consistently developed across an expanding number of products, brands and international markets. The Company's brand names, which include, "Polo by Ralph Lauren", "Polo Sport Ralph Lauren", "Ralph Lauren Collection", "Ralph Lauren Purple Label", "RALPH by Ralph Lauren", "Lauren by Ralph Lauren", "Polo Jeans Co. Ralph Lauren", and "Chaps Ralph Lauren", among others, constitute one of the world's most widely recognized families of consumer brands. In May 1999, Polo Ralph Lauren acquired Club Monaco, a vertical lifestyle retailer based in Toronto. In February 2000, Ralph Lauren Media, LLC was formed as a joint venture between Polo Ralph Lauren, NBC and an affiliated company - ValueVision International, Inc. (Nasdq: VVTV) - to bring the Polo Ralph Lauren American lifestyle experience to consumers via multiple media platforms, including the Internet, broadcast, cable and print.
Certain statements including, without limitation, the statements made by Ralph Lauren and Roger Farah and the statements relating to the earnings outlook for fiscal 2002 contained herein constitute "forward-looking statements" within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Such forward-looking statements are based on current expectations and involve certain risks and uncertainties. Actual results might differ materially from those projected in the forward-looking statements. Among the factors that could cause actual results to materially differ are the following: risks associated with implementing the Company's plans to enhance its worldwide luxury retail business, inventory management program and operating efficiency initiatives; risks associated with changes in the competitive marketplace, including the introduction of new products or pricing changes by the Company's competitors; changes in global economic conditions; risks associated with the Company's dependence on sales to a limited number of large department store customers, including risks related to extending credit to customers; risks associated with the Company's dependence on its licensing partners for a substantial portion of its net income and risks associated with a lack of operational and financial control over licensed businesses; risks associated with consolidations, restructurings and other ownership changes in the retail industry; risks associated with competition in the segments of the fashion and consumer product industries in which the Company operates, including the Company's ability to shape, stimulate and respond to changing consumer tastes and demands by producing attractive products, brands and marketing, and its ability to remain competitive in the areas of quality and price; risks associated with uncertainty relating to the Company's ability to implement its growth strategies; risks associated with the Company's entry into new markets either through internal development activities or through acquisitions; risks associated with the possible adverse impact of the Company's unaffiliated manufacturers' inability to manufacture in a timely manner, to meet quality standards or to use acceptable labor practices and other factors detailed in the filings made by the Company with the Securities and Exchange Commission. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
Attached are the Consolidated Statements of Income for the quarter and year end March 31, 2001 and the Consolidated Balance Sheets as of March 31, 2001 and April 1, 2000. The Consolidated Statements of Income present the effect of the restructuring, special charges and foreign currency gains on an aggregate basis, net of taxes, as we believe this information is useful given the significance of our internal operational review. This data should not be considered as any measure of performance or liquidity under generally accepted accounting principles. Also, restructuring and special charges may not be comparable to similarly titled measures reported by other companies.
Polo Ralph Lauren Corporation
Consolidated Statements of Income
(In thousands, except per share data)
(Unaudited)
Three Months Ended
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March 31, April 1,
2001 2000
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Wholesale Net Sales $295,651 $242,121
Retail Net Sales 177,896 163,445
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Net Sales 473,547 405,566
Licensing Revenue 64,972 61,357
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Net Revenues 538,519 466,923
Cost of Goods Sold 272,033 239,755
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Gross Profit 266,486 227,168
Depreciation And Amortization 18,515 13,206
Other SG&A Expenses 170,567 154,916
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Total SG & A Expenses 189,082 168,122
Income from Operations 77,404 59,046
Interest Expense 6,122 5,428
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Income Before Taxes, Restructuring,
Special Charges and Foreign Currency Gains 71,282 53,618
Provision for Income Taxes 28,157 21,848
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Net Income Before Restructuring,
Special Charges and Foreign Currency Gain 43,125 31,770
Restructuring, Special Charges and Foreign
Currency Gains, net of taxes 4,372 -
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Net Income $47,497 $31,770
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Net Income Per Share Before Restructuring,
Special Charges and Foreign Exchange Gains,
net - Basic $0.45 $0.32
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Net Income Per Share Before Restructuring,
Special Charges and Foreign Exchange Gains,
net-Diluted $0.44 $0.32
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Net Income Per Share - Basic $0.49 $0.32
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Net Income Per Share - Diluted $0.48 $0.32
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Weighted Average Shares Outstanding--Basic 96,739,635 98,242,706
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Weighted Average Shares & Share Equivalents
Outstanding--Diluted 98,164,353 98,347,281
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Supplemental information:
EBITDA $95,919 $72,252
Polo Ralph Lauren Corporation
Consolidated Statements of Income
(In thousands, except per share data)
Fiscal Year Ended
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March 31, April 1,
2001 2000
(unaudited)
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Wholesale Net Sales $1,053,842 $885,246
Retail Net Sales 928,577 833,980
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Net Sales 1,982,419 1,719,226
Licensing Revenue 243,355 236,302
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Net Revenues 2,225,774 1,955,528
Cost of Goods Sold 1,121,231 1,002,390
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Gross Profit 1,104,543 953,138
Depreciation And Amortization 78,599 66,280
Other SG&A Expenses 725,596 622,947
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Total SG&A Expenses 804,195 689,227
Income from Operations 300,348 263,911
Interest Expense 25,113 15,025
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Income Before Taxes, Accounting Change,
Restructuring, Special Charges and Foreign
Currency Gains 275,235 248,886
Provision for Income Taxes 108,718 101,422
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Income Before Accounting Change,
Restructuring, Special Charges and Foreign
Currency Gains 166,517 147,464
Cumulative Effect of Change in Accounting
Principle, Net of Taxes - 3,967
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Net Income Before Restructuring, Special
Charges and Foreign Currency Gains 166,517 143,497
Restructuring, Special Charges and Foreign
Currency Gains, net of taxes 107,255 -
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Net Income $59,262 $143,497
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Income Per Share Before Accounting Change,
Restructuring, Special Charges and Foreign
Currency Gains $1.72 $1.49
Cumulative Effect of Change in Accounting
Principle, Net - 0.04
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Net Income Per Share Before Restructuring,
Special Charges and Foreign Currency Gains -
Basic $1.72 $1.45
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Net Income Per Share Before Restructuring,
Special Charges and Foreign Currency Gains -
Diluted $1.71 $1.45
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Net Income Per Share - Basic and Diluted $0.61 $1.45
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Weighted Average Shares Outstanding--Basic 96,773,282 98,926,993
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Weighted Average Shares Outstanding--Diluted 97,446,482 99,035,781
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Supplemental Information: $378,947 $330,191
EBITDA
Polo Ralph Lauren Corporation
Consolidated Balance Sheets
(In thousands, except per share data)
March 31, April 1,
2001 2000
(unaudited)
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ASSETS
Current assets
Cash and cash equivalents $51,498 $164,571
Marketable securities 50,721 -
Accounts receivable, net of allowances 269,010 204,447
Inventories 425,594 390,953
Deferred tax assets 31,244 40,378
Prepaid expenses and other 73,654 52,542
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Total current assets 901,721 852,891
Property and equipment, net 326,729 372,977
Deferred tax assets 61,056 11,068
Goodwill, net 251,591 277,822
Other assets, net 84,996 105,804
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$1,626,093 $1,620,562
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Notes and acceptances payable - banks $86,112 $86,131
Accounts payable 178,293 151,281
Accrued expenses and other 175,172 168,816
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Total current liabilities 439,577 406,228
Long-term debt 296,988 342,707
Other noncurrent liabilities 80,219 99,190
Stockholders' equity
Common Stock 1,009 1,004
Additional paid-in-capital 463,001 450,030
Retained earnings 430,047 370,785
Treasury Stock, Class A, at cost (3,771,806
and 2,952,677 shares) (71,179) (57,346)
Accumulated other comprehensive income (10,529) 9,655
Unearned compensation (3,040) (1,691)
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Total stockholders' equity 809,309 772,437
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$1,626,093 $1,620,562
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| CONTACT: | Polo Ralph Lauren Corporation |
|---|---|
| Investor Contact: | |
| Nancy S. Murray, 212/813-7862 | |
| Media Contact: | |
| Jim Abernathy, 212/371-5999 | |
