Polo Ralph Lauren Corp (RL)

• 
  Third Quarter Diluted EPS Increased 5% to $1.10
  


• 
  Third Quarter Revenues Were $1.2 billion and Comparable Store Sales
  Rose 6%
  


• 
  Third Quarter Gross Margin Rate Expanded 470 Basis Points to 58.2%
  


• 
  Cash and Investments Were $1.3 billion at the End of the Third Quarter
  

NEW YORK--(BUSINESS WIRE)--
Polo Ralph Lauren Corporation (NYSE:RL) today reported net income of
$111 million, or $1.10 per diluted share, for the third quarter of
Fiscal 2010, compared to net income of $105 million, or $1.05 per
diluted share, for the third quarter of Fiscal 2009.

Net income for the first nine months of Fiscal 2010 rose 1% to $365
million from $362 million in the comparable period last fiscal year. Net
income per diluted share of $3.60 in the first nine months of Fiscal
2010 was also 1% greater than the $3.56 reported in the prior year
period.

"The global momentum of our brands and products is evident in today????s
strong results," said Ralph Lauren, Chairman and Chief Executive
Officer. "Customers appreciate our unwavering commitment to quality and
innovation, which are defining characteristics of our Company. Our
continued focus on our longer-term strategies has served us well. We????ve
made excellent progress with our accessories efforts; our footwear
business is growing nicely, we????ve opened several watch salons around the
world and we????ve greatly enhanced our handbag and small leathergoods
collections. We are also beginning an exciting new journey in Asia ???? an
important part of our long-term vision ???? and we have a superb team and a
track record of success to guide us," Mr. Lauren added.

"We had a strong holiday season and I am proud of the quality of our
third quarter and year to date results," said Roger Farah, President and
Chief Operating Officer. "Our exceptional merchandising strategies,
which were complemented by disciplined operational and inventory
management, enabled us to gain profitable market share worldwide. Having
assumed direct control of our operations in key Asian markets on January
1, 2010, we are now focused on driving growth in this dynamic region,
particularly as we expand distribution and introduce new product
categories. While we are cautious regarding global consumer spending
trends, we remain committed to our strategic investments in broadening
our international presence and expanding our direct to consumer reach.?????

Third Quarter and Nine Months Fiscal 2010 Income Statement Review

Net Revenues. Net revenues for the third quarter of Fiscal
2010 were $1.2 billion, 1% below net revenues for the comparable period
last year. The decline in net revenues primarily reflects lower domestic
and Japanese wholesale sales that more than offset higher same-store
sales at the Company????s retail segment and mid single-digit constant
currency growth in Europe. The net favorable effect of foreign currency
translation on reported revenues was 2%.

Net revenues for the first nine months of Fiscal 2010 were $3.6 billion,
4% below the comparable period of Fiscal 2009. The decline in net
revenues is primarily attributable to lower domestic wholesale revenues
and a reduction in same-store sales at the Company????s retail segment that
more than offset the wholesale contribution of formerly licensed
childrenswear and golf apparel products in Japan and low single-digit
constant currency growth in Europe.

• 
  Wholesale Sales. Wholesale sales of $604 million in the third
  quarter were 8% below the prior year period. Lower global shipment
  volumes were partially offset by higher footwear sales and the net
  favorable effect of foreign currency translation.
  
  
  
  For the
  first nine months of Fiscal 2010, wholesale sales were $1.9 billion,
  7% below the prior year period. The year-over-year decline in
  wholesale sales reflects lower global shipment volumes that more than
  offset the incremental benefit of formerly licensed childrenswear and
  golf apparel products in Japan and higher footwear sales.
  


• 
  Retail Sales. Retail sales rose 8% to $592 million from $547
  million in the third quarter last year, reflecting a net increase in
  comparable store sales and a net favorable effect of foreign currency
  translation. Comparable store sales, which include RalphLauren.com,
  increased 6%, reflecting 4% growth at Ralph Lauren stores, 6%
  expansion at factory stores and 7% growth at Club Monaco stores.
  RalphLauren.com sales increased 13% in the third quarter of Fiscal
  2010.
  
  
  
  Retail sales for the first nine months of Fiscal 2010
  were $1.6 billion, equivalent with the prior year period. Comparable
  store sales for the first nine months of Fiscal 2010 declined 3%,
  reflecting a reduction of 13% at Ralph Lauren stores, a 1% decline at
  factory stores and a 4% reduction at Club Monaco stores.
  RalphLauren.com sales grew 13% over the comparable nine month period
  last year.
  
  
  


• 
  Licensing. Licensing royalties in the quarter declined 3% to
  $48 million from $50 million in the third quarter last year. Declines
  in fragrance and home product licensing royalties were partially
  offset by higher international licensing royalties.
  
  
  
  Licensing
  royalties in the first nine months of Fiscal 2010 were down 8% to $137
  million from $149 million in the prior year period. Lower fragrance
  and home product licensing revenues and a decline in Japanese product
  licensing revenues associated with the Company assuming direct control
  of certain product categories in Japan were partially offset by higher
  Chaps licensing royalties.
  

Gross Profit. Gross profit for the third quarter of Fiscal
2010 rose 8% to $724 million from $670 million in the prior year period.
The gross profit rate increased 470 basis points to 58.2% from 53.5% in
the third quarter last year. The expansion in the gross profit rate
reflects improved wholesale and retail segment margins, and was
primarily driven by disciplined inventory management that led to reduced
markdowns in our retail stores, improved product mix across all channels
and continued savings from supply chain initiatives.

Gross profit for the first nine months of Fiscal 2010 increased 1% to
$2.1 billion. The gross profit rate increased 270 basis points to 57.9%,
primarily due to higher wholesale and retail segment margins,
particularly in international markets, as well as supply chain cost
savings initiatives and disciplined inventory management.

Operating Expenses. Operating expenses increased 10% in
the third quarter to $551 million from $503 million in the third quarter
of Fiscal 2009. Operating expense margin was 44.3%, 410 basis points
greater than last year, primarily as a result of lower sales, higher
incentive compensation costs, the net unfavorable effect of foreign
currency translation and incremental expenses associated with business
expansion that were partially offset by Company-wide expense savings
initiatives.

Operating expenses in the first nine months of Fiscal 2010 were $1.6
billion, 2% greater than the prior year period. Operating expense margin
was 43.2%, 260 basis points greater than the first nine months of Fiscal
2009, primarily due to lower sales, higher incentive compensation costs
and incremental expenses associated with business expansion that were
partially offset by lower advertising expense and Company-wide cost
savings initiatives.

Operating Income. Operating income for the third quarter
of Fiscal 2010 rose 4% to $173 million from $167 million in the third
quarter last year. The operating margin was 13.9%, representing a 60
basis point improvement compared to the third quarter last year,
primarily due to the higher gross profit margin and expense savings
initiatives that were partially offset by lower sales volumes and higher
operating expenses described above.

For the first nine months of Fiscal 2010, operating income declined 4%
to $535 million from $556 million in the prior year period. Operating
margin rate for the first nine months of Fiscal 2010 was 14.7%, in line
with the prior year period.

• 
  Wholesale Operating Income. Wholesale operating income declined
  17% in the third quarter of Fiscal 2010 to $107 million from $130
  million last year. Wholesale operating margin was 17.7% in the third
  quarter, 210 basis points below last year, primarily as a result of
  deleveraging operating expenses on lower global shipment volumes.
  
  
  
  Wholesale
  operating income declined 10% in the first nine months of Fiscal 2010
  to $404 million from $449 million last year. Wholesale operating
  margin for the first nine months of Fiscal 2010 was 20.8%, 80 basis
  points below the prior year period, as lower global shipment volumes,
  incremental costs related to business expansion and expenses
  associated with integrating the Japanese childrenswear and golf
  apparel operations more than offset an improved wholesale segment
  gross profit rate and disciplined expense management.
  


• 
  Retail Operating Income. Retail operating income was $101
  million, 75% greater than the $58 million achieved in the third
  quarter of Fiscal 2009, and retail operating margin was 17.0% compared
  to 10.5% in the prior year period. The growth in retail operating
  income and the expansion in margin rate is a result of positive
  comparable store sales growth, disciplined inventory management and
  strong sell-through rates across most retail concepts.
  
  
  
  Retail
  operating income increased 28% in the first nine months of Fiscal 2010
  to $234 million from $182 million in the prior year period, and the
  retail operating margin was 14.9%, 330 basis points greater than the
  first nine months of Fiscal 2009. The growth in retail operating
  income and the expansion in margin rate is a result of broad-based
  profit improvement across most retail concepts, particularly in
  international markets, and was achieved despite a decline in
  comparable store sales for the first nine months of the year.
  


• 
  Licensing Operating Income. Licensing operating income declined
  12% to $24 million from $28 million in the third quarter of Fiscal
  2009, primarily due to lower licensing royalties and incremental Asia
  Pacific-related expenses.
  
  
  
  Licensing operating income for
  the first nine months of Fiscal 2010 declined 7% to $73 million from
  $78 million in the prior year period as lower licensing royalties more
  than offset improved profitability for domestic product licenses and
  lower net costs associated with the transition of formerly licensed
  operations to directly controlled operations.
  

Net Income and Diluted EPS. Net income for the third
quarter of Fiscal 2010 grew 6% to $111 million from $105 million last
year. Net income per diluted share rose 5% to $1.10 per share from $1.05
last year. The effective tax rate of 33% was approximately in line with
the prior year period. The growth in net income and diluted EPS results
for the third quarter of Fiscal 2010 principally relates to the higher
operating income discussed above.

Net income for the first nine months of Fiscal 2010 rose 1% to $365
million from $362 million last year. Net income per diluted share of
$3.60 in the first nine months of Fiscal 2010 was also 1% greater than
the $3.56 earned in the prior year period. The net income and diluted
EPS results for the first nine months of Fiscal 2010 include the impact
of a 30% effective tax rate, which is 410 basis points below the prior
year period, a function of the resolution of certain discrete tax items
and a more favorable geographic income mix.

Third Quarter Fiscal 2010 Balance Sheet Review

The Company ended the third quarter with $1.3 billion in cash and
investments, or $1.0 billion in cash and investments net of debt ("net
cash and investments"), compared to $908 million in cash and investments
and $489 million in net cash and investments at the end of the third
quarter of Fiscal 2009.

During the third quarter, the Company repurchased approximately 1.0
million shares of Class A Common Stock, utilizing $78 million of its
authorized share repurchase programs, and has approximately $352 million
remaining under such programs. The Company had $51 million in capital
expenditures in the third quarter, compared to $45 million in the prior
year period. The third quarter ended with inventory down 7% to $545
million from $585 million in the third quarter of last year.

Global Retail Store Network

During the third quarter, the Company opened five directly operated
stores and did not close any directly operated stores. Over the last
twelve months, the Company has opened 12 directly operated stores and
closed 11 directly operated stores.

At the end of the third quarter, the Company operated 333 stores with a
total of approximately 2.5 million square feet compared to 332 stores
with approximately 2.5 million square feet in the prior year. The
current retail group consists of 89 Ralph Lauren stores, 62 Club Monaco
stores, 171 Polo factory stores and 11 Rugby stores. In addition, at the
end of the third quarter, international licensing partners operated 91
Ralph Lauren stores and 60 Club Monaco stores and dedicated shops.

Fiscal 2010 Outlook

Due to the better-than-expected revenue performance for the first nine
months of the year, the Company now expects Fiscal 2010 net revenues to
decline by a low single digit rate, which compares to prior guidance of
a mid single digit decline in net revenues. Beginning in the fourth
quarter, results for the newly transitioned Asia Pacific operations will
primarily be reflected in the retail segment. The Company expects
operating expenses for the fourth quarter of Fiscal 2010 to grow at a
mid single digit rate from the prior year period (which included
impairment and restructuring charges), primarily reflecting incremental
expenses related to its new Asia Pacific operations, a higher amount of
sales from its retail segment and additional incentive compensation
accruals. The anticipated dilution related to the Company????s newly
transitioned Asia Pacific operations is approximately $0.08-$0.10 per
diluted share in the fourth quarter of Fiscal 2010.

Conference Call

As previously announced, the Company will host a conference call and
live online webcast today, Wednesday, February 3, 2010, at 9:00 a.m.
Eastern. Listeners may access a live broadcast of the conference call on
the Company's investor relations website at http://investor.ralphlauren.com
or by dialing (719) 325-2167. To access the conference call, listeners
should dial in by 8:45 a.m. Eastern and request to be connected to the
Polo Ralph Lauren Third Quarter Fiscal Year 2010 conference call.

An online archive of the broadcast will be available by accessing the
Company's investor relations website at http://investor.ralphlauren.com.
A telephone replay of the call will be available from 1:00 P.M. Eastern,
Wednesday, February 3, 2010 through 1:00 P.M. Eastern, Tuesday, February
9, 2010 by dialing (719) 457-0820 and entering passcode 2401184.

ABOUT POLO RALPH LAUREN

Polo Ralph Lauren Corporation (NYSE: RL) is a leader in the design,
marketing and distribution of premium lifestyle products in four
categories: apparel, home, accessories and fragrances. For more than 40
years, Polo's reputation and distinctive image have been consistently
developed across an expanding number of products, brands and
international markets. The Company's brand names, which include Polo by
Ralph Lauren, Ralph Lauren Purple Label, Ralph Lauren Collection, Black
Label, Blue Label, Lauren by Ralph Lauren, RRL, RLX, Rugby, Ralph Lauren
Childrenswear, American Living, Chaps and Club Monaco, constitute one of
the world's most widely recognized families of consumer brands. For more
information, go to http://investor.ralphlauren.com.

This press release, including the statements in the ????Fiscal 2010
Outlook????? section and oral statements made from time to time by
representatives of the Company, contain certain "forward-looking
statements" concerning current expectations about the Company's future
results and condition, including revenues, store openings, gross
margins, expenses and earnings. These expectations contain risks and
uncertainties. Actual results might differ materially from those
projected in the forward-looking statements. Among the factors that
could cause actual results to materially differ include, among others,
changes in the competitive marketplace, including the introduction of
new products or pricing changes by our competitors, changes in the
economy and other events leading to a reduction in discretionary
consumer spending; risks associated with the Company's dependence on
sales to a limited number of large department store customers, including
risks related to extending credit to customers; risks associated with
the Company's dependence on its licensing partners for a substantial
portion of its net income and risks associated with a lack of
operational and financial control over licensed businesses; risks
associated with changes in social, political, economic and other
conditions affecting foreign operations or sourcing (including foreign
exchange fluctuations) and the possible adverse impact of changes in
import restrictions; risks associated with uncertainty relating to the
Company's ability to implement its growth strategies or its ability to
successfully integrate acquired businesses; risks arising out of
litigation or trademark conflicts, and other risk factors identified in
the Company's Annual Report on Form 10-K, Form 10-Q and Form 8-K reports
filed with the Securities and Exchange Commission. The Company
undertakes no obligation to update or revise any forward-looking
statements, whether as a result of new information, future events or
otherwise.