EXHIBIT 99.1
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Investor Contact: Denise Gillen 212.318.7516
Media Contact: Nancy Murray 212.813.7862
Polo Ralph Lauren Raises First Quarter Fiscal 2006 Expectations
Company Also Provides Supplemental Information for Quarterly Fiscal 2005 Results
New York (July 8, 2005) - Polo Ralph Lauren Corporation (NYSE: RL) announced
today it is raising its earnings expectation for the first quarter of Fiscal
2006 as a result of operating margins trending ahead of prior guidance. Also,
the Company is providing additional information regarding quarterly adjusted
earnings per share for Fiscal 2005.
The Company is raising its expectation for the first quarter of Fiscal 2006,
ended July 2, 2005, based on significant improvements in business operations
made during the quarter. While revenues are expected to increase more than 20%,
as previously forecast, the operating margin is now expected to increase between
500 and 550 basis points compared to last year. The Company's previous guidance
was that operating margins would almost double last year's 3.7%. The Company
intends to address its full year outlook when it reports the first quarter of
Fiscal 2006 on August 9, 2005.
"We are pleased that our multi-year business strategy is resulting in better
than forecasted performance. Our retail and wholesale businesses are reporting
strong revenue gains that were driven by better full-price sell-throughs. In
addition, we were able to better leverage our incremental sales through improved
expense management," said Roger Farah, President and Chief Operating Officer.
"However, our first quarter is our smallest profit contributor for the year and
it would be premature to address full year guidance at this time. We will be in
a better position to comment on our full year outlook when we report our first
quarter earnings in August."
In addition, as previously reported, the Company provided adjusted earnings per
diluted share for Fiscal 2005 that excluded certain items to give investors an
additional tool to evaluate the Company's results. For Fiscal 2005, the company
reported full year adjusted diluted earnings per share of $2.47 and communicated
that the quarterly adjusted numbers would be provided after the 10-K was filed.
Adjusted earnings per diluted share for the first and second quarters of Fiscal
2005 are unchanged. Adjusted earnings per diluted share have been revised to
$0.73 for the third quarter of Fiscal 2005 to exclude a $2 million pre-tax
litigation charge, and to $0.84 for the fourth quarter of Fiscal 2005 to exclude
a $98 million pre-tax litigation charge and a change to the income tax provision
for the quarter. These changes have no effect on reported GAAP results. For a
full analysis of the adjustments, please refer to the table reconciliation of
GAAP results to adjusted results.
Polo Ralph Lauren Corporation is a leader in the design, marketing and
distribution of premium lifestyle products in four categories: apparel, home,
accessories and fragrances. For more than 37 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", "Ralph Lauren Purple Label", "Ralph Lauren",
"Black Label", "Blue Label", "Lauren by Ralph Lauren", "Polo Jeans Co.", "RRL",
"RLX", "Rugby", "RL Childrenswear", "Chaps", and "Club Monaco" among others,
constitute one of the world's most widely recognized families of consumer
brands. For more information, go to HTTP://INVESTOR.POLO.COM.
THIS PRESS RELEASE AND ORAL STATEMENTS MADE FROM TIME TO TIME BY REPRESENTATIVES
OF THE COMPANY CONTAIN CERTAIN "FORWARD-LOOKING STATEMENTS" CONCERNING CURRENT
EXPECTATIONS ABOUT THE COMPANY'S FUTURE RESULTS AND CONDITION, INCLUDING SALES,
STORE OPENINGS, GROSS MARGINS, EXPENSES AND EARNINGS. ACTUAL RESULTS MIGHT
DIFFER MATERIALLY FROM THOSE PROJECTED IN THE FORWARD-LOOKING STATEMENTS. AMONG
THE FACTORS THAT COULD CAUSE ACTUAL RESULTS TO MATERIALLY DIFFER INCLUDE, AMONG
OTHERS, CHANGES IN THE COMPETITIVE MARKETPLACE, INCLUDING THE INTRODUCTION OF
NEW PRODUCTS OR PRICING CHANGES BY OUR COMPETITORS, CHANGES IN THE ECONOMY AND
OTHER EVENTS LEADING TO A REDUCTION IN DISCRETIONARY CONSUMER SPENDING; 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 CHANGES IN SOCIAL, POLITICAL, ECONOMIC AND OTHER CONDITIONS
AFFECTING FOREIGN OPERATIONS OR SOURCING (INCLUDING FOREIGN EXCHANGE
FLUCTUATIONS) AND THE POSSIBLE ADVERSE IMPACT OF CHANGES IN IMPORT RESTRICTIONS;
RISKS ASSOCIATED WITH UNCERTAINTY RELATING TO THE COMPANY'S ABILITY TO IMPLEMENT
ITS GROWTH STRATEGIES OR ITS ABILITY TO SUCCESSFULLY INTEGRATE ACQUIRED
BUSINESSES; RISKS ARISING OUT OF LITIGATION OR TRADEMARK CONFLICTS, AND OTHER
RISK FACTORS IDENTIFIED IN THE COMPANY'S FORM 10-K, 10-Q AND 8-K REPORTS FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION. THE COMPANY UNDERTAKES NO
OBLIGATION TO UPDATE OR REVISE ANY FORWARD-LOOKING STATEMENTS TO REFLECT
SUBSEQUENT EVENTS OR CIRCUMSTANCES.
# # # #
Tables Follow
# # #
POLO RALPH LAUREN CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
PREPARED IN ACCORDANCE WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (GAAP)
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
(UNAUDITED)
THREE MONTHS ENDED
-----------------------------------------------------
JANUARY 1, JANUARY 1, APRIL 2,
2005 2005 2005
----------------- ---------------- ----------------
(AS PREVIOUSLY (AS RESTATED
REPORTED) SEE NOTE B)
Wholesale Net Sales $ 427,445 $ 427,445 $ 543,009
Retail Net Sales 402,613 416,194 291,499
----------------- ---------------- ----------------
NET SALES 830,058 843,639 834,508
Licensing Revenue 57,935 57,935 67,714
----------------- ---------------- ----------------
NET REVENUES 887,993 901,574 902,222
Cost of Goods Sold 449,960 455,498 425,313
----------------- ---------------- ----------------
GROSS PROFIT 438,033 446,076 476,909
Depreciation Expense 26,096 26,096 32,826
Other SG&A Expenses 296,885 303,572 402,118
Restructuring Charge 218 218 494
----------------- ---------------- ----------------
TOTAL SG&A EXPENSES 323,199 329,886 435,438
Income From Operations 114,834 116,190 41,471
Foreign Currency (Gains) Losses (400) (400) (2,739)
Interest Expense, net 1,996 1,989 733
----------------- ---------------- ----------------
Income Before Income Taxes and Other (Income) Expense 113,238 114,601 43,477
Provision for Income Taxes 40,199 40,280 17,349
----------------- ---------------- ----------------
Income after Tax 73,039 74,321 26,128
Other (Income) Expense, net (A) (1,803) (715) 2,732
----------------- ---------------- ----------------
NET INCOME $ 74,842 $ 75,036 $ 23,396
================= ================ ================
NET INCOME PER SHARE - BASIC $ 0.73 $ 0.74 $ 0.23
================= ================ ================
NET INCOME PER SHARE - DILUTED $ 0.72 $ 0.72 $ 0.22
================= ================ ================
Weighted Average Shares Outstanding - Basic 101,896,000 101,896,000 102,506,000
================= ================ ================
Weighted Average Shares & Share Equivalents Outstanding - Diluted 104,325,000 104,325,000 105,341,000
================= ================ ================
(A) Includes Equity Investment Income of $2,607, $2,607 and $629 net of
Minority Interest Expense of $804, $804 and $608 for Q3 as reported, Q3 as
restated and Q4, respectively. Also included in Q3 as restated and Q4 is
$1,088 and $2,753, respectively, of Minority Interest Expense for RL Media.
(B) As restated to give effect to the lease adjustments and the consolidation
of RL Media as previously disclosed.
POLO RALPH LAUREN CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
(UNAUDITED)
The following is a reconciliation of GAAP Net Income (as previously reported) to Adjusted Net Income:
THREE MONTHS ENDED
----------------------------------
JANUARY 1, APRIL 2,
2005 2005
---------------- ----------------
Net Income (as previously reported) $ 74,842 $ 23,396
Lease Adjustments 198 --
Ralph Lauren Media Consolidation Adjustment 77 --
Tax Adjustment (81) --
----------------- -----------------
Net Income as Restated $ 75,036 $ 23,396
Other Expense (Income), net (C) (715) 2,732
Provision for Income Taxes (D) 40,280 17,349
Restructuring Charge 218 494
Foreign Currency (Gains) Losses (400) (2,739)
Litigation Reserve 2,000 98,000
Alleged Breach of Retail Computer Systems Reserve -- 6,200
Lease Adjustments (198) 1,217
Ralph Lauren Media Consolidation Adjustment (77) (2,607)
---------------- ----------------
Revised Income Before Income Taxes 116,144 144,042
Revised Provision for Income Taxes 40,845 53,110
Other Expense (Income), net (715) 2,732
---------------- ----------------
Net Income Excluding Restructuring, Foreign Currency (Gains) Losses,
Litigation Reserve, Alleged Breach of Retail Computer Systems Reserve,
Lease Adjustments and RL Media Consolidation $ 76,014 $ 88,200
================ ================
ADJUSTED NET INCOME PER SHARE - BASIC $ 0.75 $ 0.86
================ ================
ADJUSTED NET INCOME PER SHARE - DILUTED $ 0.73 $ 0.84
================ ================
(C) - Other (Income) Expense, net for Q3 is adjusted by $1,088 to include the
consolidation of RL Media
(D) - Provisions for Income Taxes is adjusted by $81 to include the effect of
the lease restatement