Updated from 10:12 a.m. EDT
Polo Ralph Lauren
, the world's largest luxury apparel retailer, on Thursday announced plans to close all of its Polo Jeans stores and 11 Club Monaco stores and take a charge of up to $115 million in the second quarter.
The company plans to open two new flagship stores in Dallas and Beverly Hills, and a luxury-focused store in Boston, as well as new Club Monaco stores in Los Angeles, New York and South Beach Miami.
In a statement, Chairman and Chief Executive Ralph Lauren said the retailer plans to focus on the strong global demand for its luxury designs and, in particular, on the accessories business, which has become the fastest-growing category in the luxury market.
"While we open these new stores, we are closing stores that are not consistent with this philosophy," Lauren said.
The New York-based luxury retailers will close a total of 23 stores, including sites in Canada, and expects to take an after-tax charge of $1.13 to $1.18 per share in the second quarter of 2001, or between $110 million and $115 million.
The charge includes about $74 million from the writedown of assets and the closure of those stores, while about $23 million relate to writedowns from the acceleration in the reduction of aged inventory. About $15.5 million relates to other "operating efficiency initiatives" including the consolidation of some overseas sourcing operations and employee-related costs.
Excluding the charges, Polo executives said they expect to meet expectations for the second quarter of fiscal year 2001 and is scheduled to report results on Nov. 8. On average, analysts surveyed by
First Call/Thomson Financial
expect earnings per share of 50 cents for the quarter.
Polo also expects the changes to result in a 200-basis-point year-over-year increase in profit margins by the second half of this fiscal year. The company expects earnings per share of 50 cents to 52 cents in the third quarter -- significantly higher than Wall Street's consensus estimate of 44 cents per share.
Polo also expects to earn profits of 42 cents to 44 cents in the fourth quarter. The company is anticipating earnings per share to increase to $1.93 to $1.98 per share for fiscal year 2002.
Polo Ralph Lauren finished Thursday regular trading up $2.88, or 18%, at 19.