Polo Ralph Lauren Corporation (NYSE: RL) reported today adjusted net income of $47.1 million, or $0.47 per diluted share, for the third quarter Fiscal 2003 ended December 28, 2002, compared to pro forma adjusted net income of $23.1 million, or $0.23 per diluted share, for the comparable year-ago quarter. Actual third quarter Fiscal 2003 net income was $42.8 million, or $0.43 per diluted share, compared to net income of $45.6 million, or $0.46 per diluted share, for the third quarter of Fiscal 2002.
For the third quarter Fiscal 2003, the adjusted results exclude a $5.1 million restructuring charge, net of taxes, for operational consolidation efforts in Europe which the Company announced in November 2002. For the third quarter Fiscal 2002, the adjusted pro forma information reports the European business on a current basis consistent with Fiscal 2003 results. For both periods, the results exclude gains on foreign currency translations.
''In a difficult economic environment, I am pleased by our strong performance led by our luxury retail business. That shows if you create exciting lifestyle merchandise with a distinct point of view and offer it in a unique retail environment, you can succeed despite challenging marketplace conditions,'' said Ralph Lauren, Chairman and Chief Executive Officer.
''Customer demand for our American luxury sensibility is growing worldwide. We are exactly where we need to be to execute our global strategy. We have an experienced management team and a tremendous depth of creative talent, and we're focused on opportunities that exist in Europe, Asia and elsewhere around the world, '' Mr. Lauren continued.
''The diversity of our Polo Ralph Lauren products enables us to reach all types of customers. By offering everything from Purple Label suits and the finest custom furniture to fragrances and the iconic Polo shirt, we reach all aspects of a complete lifestyle. It's what makes us so unique, and it is what will enable us to deliver another record year,'' Mr. Lauren added.
Roger Farah, President and Chief Operating Officer said, ''Our business model, which incorporates wholesale, retail and appropriate licensing businesses, and which is supported by disciplined financial management, delivered another quarter of strong earnings.''
''Our retail sales exceeded our initial expectations and benefited from strong customer response to our holiday assortments and fresh flow of product. In addition, we dramatically reduced the promotional activity in all of our retail formats and experienced good expense management. As a result, we improved our retail operating margins by 470 basis points for the quarter and, year to date, our operating margins have increased 290 basis points,'' Mr. Farah said.
''While our retail business produced strong results, the department store channel experienced a more difficult holiday sell-through. Although our men's wholesale sell-ins were more appropriate, our overall results were less than we expected and we continue to plan conservatively going forward,'' Mr. Farah added.
''We continued to deliver strong quarterly financial results from our multi-year supply chain initiatives. We ended the quarter with $98 million in cash net of debt and we reduced our cash-to-cash cycle by 7%. We further reduced our inventory levels and drove a 13% increase in revenues on 11% less inventory, which has helped us improve our trailing twelve months inventory turn by 36%,'' Mr. Farah said.
''While we delivered solid short-term results, we are focused on the longer term and continue to invest in our growth strategy. In Europe, we are investing in our infrastructure, as we believe this business will continue to deliver accelerated growth over the next few years. During the next 12 months, our major efforts in Europe include consolidating our headquarters into Geneva, centralizing our logistics operations in Italy, and migrating to information systems throughout Western Europe that are consistent with our worldwide platform. During the third quarter, we completed the consultation efforts in the United Kingdom and Italy. We would expect to complete the French consultation process regarding the back office consolidation during the current quarter,'' Mr. Farah said, adding, ''With the Japanese acquisition closing later this month, we will also increase our focus on our expansion efforts in Japan and Asia, which are key growth markets for our company.''