Polo Profit Tops View as Demand Picks Up

NEW YORK (Reuters) - Polo Ralph Lauren Corp posted a quarterly profit far above Wall Street estimates and strengthened its full-year revenue outlook, as demand for its fashions picked up as the quarter progressed.

The maker of clothing brands such as Ralph Lauren, Chaps and Club Monaco saw its shares rise 2.6 percent as investors hoped results indicated more sustainable demand.

"I am of the opinion the customer has begun to move back into a more balanced point of view," Chief Operating Officer Roger Farah said on a conference call. "Those that have money are beginning to spend it again."

While retailers have been keeping inventory tight to prevent a need for deep discounts to move merchandise, Farah said retail partners like department stores are likely to resume larger orders in the fall of 2010.

Chief Financial Officer Tracey Travis said both wholesale and retail sales were stronger than expected in the fiscal second quarter, saying the strength extended across regions and product categories. But Travis said it was too early to talk about a full revival of consumer interest in clothing.

"The reality is that sales and order trends still remain at depressed levels," Travis said. "The whole macro environment continues to be weak."

Polo attributed its earnings beat to the better than expected sales as well as a lower tax rate and tight control of inventories and costs.

Net income rose to $177.5 million, or $1.75 per share, in the fiscal second quarter that ended September 26, from $161.0 million, or $1.58 per share, a year earlier.

Analysts on average were expecting $1.31 per share, according to Thomson Reuters I/B/E/S.

Net revenue fell to $1.37 billion from $1.43 billion a year earlier, hurt by lower domestic wholesale sales and a decline in retail sales at stores open at least a year. Analysts were expecting $1.31 billion.

SAME-STORE SALES FALL