Dazzling Quarter for Polo

Earnings and revenue easily top Wall Street's estimates.
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Wall Street underestimated the smashing three months that clothing designer and fragrance seller

Polo Ralph Lauren

(RL) - Get Report

had in store to start its fiscal year.

First-quarter revenue rose more than 20% from a year ago, and the New York-based company raised its earnings forecast for the 2006 fiscal year. Polo earned $50.7 million, or 48 cents a share, for the fiscal first quarter, up from $12.7 million, or 12 cents a share, in the year-ago period.

Net revenue for the quarter increased to $752 million from $606 million a year ago. Shares of Polo were gaining $2.17, or 4%, to $52.31 Tuesday.

"We continue to be excited by the strong customer response to our brand and its growing appeal," said Ralph Lauren, the company's chairman and chief executive. "One of the keys to our success is that we are not about a season or a fashion moment. We are unique in our industry. The breadth and depth of our brands across all product categories distributed through multiple channels and in multiple geographies show the strength of our business."

For the full fiscal year, Polo expects earnings of $2.85 to $2.92 a share, an increase from its previous guidance. While the company is projecting a strong operating performance, the results will be somewhat offset by the effect of the acquisition of Ralph Lauren Footwear, a higher tax rate, a higher share count and unfavorable currency exchange rates.

The company is forecasting revenue growth at a high-single-digit percentage pace for the year. For the second quarter, Polo expects revenue to rise by a low-double-digit percent.

Thomson First Call carried a consensus profit estimate of 36 cents for the second quarter, with a revenue projection of $699.5 million. For fiscal 2006, analysts are looking for earnings of $2.90.