RL EPS Q4 FY 2011 - Polo Ralph Lauren Offers Complexity

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Polo Ralph Lauren

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RL EPS Q4 FY 2011

Polo Ralph Lauren (NYSE: RL) shares were down 11% Wednesday, after it reported 36% lower fiscal fourth quarter net income. The $0.74 a share it earned was short of the $0.79 forecast by analysts. The company said the prior year included an extra week, costing it perhaps $0.13 this year. RL also blamed a shift in the Easter holiday, but investors were not listening, since the analysts’ forecasts would have included those factors. Same-store sales increased 7%, and the company forecast first quarter revenue climbing in the mid-20% range. Same-store sales are seen slipping though to a low double-digit rate. RL experienced a narrowing gross margin, as "unprecedented inflationary pressure" plagued it. The entire industry is seeing higher raw materials costs and also increased wage demands in China. This complex report shows that managing volatile supply, i.e. wildly rising cotton prices, offers an uncertainty that can cost investors.



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