Lands' End, Polo improve
Lands' End sails past 2Q estimates; Polo Ralph Lauren 1Q in line
NEW YORK (CNNfn) - Two retailers posted higher quarterly results Wednesday, with catalog merchant Lands' End blowing past Wall Street expectations and clothing designer and merchant Polo Ralph Lauren matching forecasts.|
Shares of both companies soared in Wednesday afternoon trading following the reports.
Lands' End and Polo's earnings reports and optimistic forecasts come a day before most retailers are expected to report lackluster sales for the month of July.
The slowing economy has prompted consumers to streamline their spending, shifting more of their dollars to discount chains like Wal-Mart (WMT: up $0.07 to $55.15, Research, Estimates) and Kmart (KM: down $0.18 to $12.98, Research, Estimates), and away from higher-priced department stores.
Apparel retailers have been particularly hard hit since, in addition to a sluggish economy, there have been no "must-have" fashions to drive sales. However, some analysts have said that dull period has passed and that apparel chains are refocusing, offering a more fashionable mix to core customers.
The back-to-school season, which is just getting underway, should be a barometer for the success of their efforts, analysts said.
Lands' End, one of the few retailers with a profitable e-commerce business, reported second-quarter earnings of $3 million, or 10 cents a share, compared with a net loss of $1.9 million, or 6 cents a share, a year earlier. Analysts on average anticipated a profit of a penny a share, according to First Call.
Second-quarter sales increased 4 percent to $285.8 million from $275.6 million.
"They are continuing to be tight on costs, and the merchandise sales look fine," Goldman Sachs specialty retail analyst Barbara Miller told Reuters Wednesday.
The company said it managed to reduce operating expenses and liquidated excess inventories, which helped to boost profit.
Lands' end (LE: up $2.29 to $37.45, Research, Estimates) stock jumped $3.33 to $38.49 in Wednesday afternoon trading following the earnings report.
Lands' End also said it sees single-digit sales increases for fiscal 2002 and that it anticipates earnings per share to increase 20 percent. Analysts on average are forecasting earnings of $1.56 a share for the year, according to earnings tracker First Call.
Polo Ralph Lauren meets estimates
Separately, specialty clothing designer and retailer Polo Ralph Lauren Corp. reported increased fiscal first-quarter earnings Wednesday, boosted by sales gains in Europe and the retail division, and reaffirmed its outlook for the full year.
The New York-based company said its income for the first quarter, ended June 30, was $29.3 million, or 30 cents per diluted share, excluding restructuring charges. That was up from $24.0 million, or 25 cents a share, in the year-earlier period.
Analysts' consensus estimate was 30 cents a share, according to earnings tracking firm First Call.
Ralph Lauren's shares were up $2.10 to $25.25 in Wednesday afternoon trading.
"Given the environment, they came in with a pretty good quarter. The inventories look well-controlled," Margaret Whitfield, an analyst with Tucker Anthony Capital Markets, told Reuters Wednesday.
Revenue for the quarter rose 6 percent to $517.8 million from $487.3 million.
Gains were driven domestically by the women's collection and internationally by European sales of Polo brands. Single-digit sales growth was recorded across all of the retail division, the company said.
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As previously announced, the company expects fiscal 2002 earnings per share of $1.93 to $1.98, with mid-single-digit revenue growth and 100 basis points of improvement in operating margins due to decreased operating expenses. For the fiscal second quarter, the company expects earnings of 54 to 58 cents per share, with low-single-digit revenue growth.
The First Call consensus earnings estimates are $1.96 a share for the year and 56 cents for the second quarter.
--from staff and wire reports