Hmm. Looks like Ralph is being deep sixed.
Polo profit tumbles 36% on cost pressures
By Andria Cheng, MarketWatch
Last Update: 5/25/2011 12:52:15 PM
NEW YORK (MarketWatch) -- Apparel designer Polo Ralph Lauren Corp. said Wednesday
that its fiscal fourth-quarter profit tumbled a bigger-than-expected 36%, hurt by
higher cotton and other costs, which weren't passed on to consumers.
However, executives said on a conference call that Polo will begin raising some
prices heading into fall, even though it still expects to absorb some of the cost
inflation. Shoppers have been facing higher food and gasoline prices, which in
turn have pressured midpriced retailers like Kohl's Corp. (KSS) and J.C. Penney
Co. (JCP)
Polo (RL) forecast lower profit margin for the year, as it said customers'
reaction to price increases remains unknown after a decade of price deflation.
Read related story on inflation pain among retailers.
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Shares of Polo fell 8.4% to $118.59, as various inflationary pressures have
dented sector sentiment.
The high-end customer, "who had been so voracious in their appetite for our
products, will pay higher prices where fair value is provided," said President
and Chief Operating Officer Roger Farah on a conference call. "We were more
cautious with merchandise categories that were in other channels of distribution
where we think the customer is going to be squeezed with a lot of inflationary
things coming at them in the fall."
Apparel retailers and manufacturers, including Gap Inc. (GPS), Nike Inc. (NKE),
Target Corp. (TGT) and Jones Group Inc. (JNY), have all warned about rising costs
as the industry wrestled with how to pass on cost increases to budget-conscious
shoppers, who are also paying more for gasoline and food.
Last week, Gap's shares saw their biggest percentage decline in almost 10 years
after the company slashed its annual forecast on cost concerns. See full story on
Gap outlook.
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