November 2, 2012 / 12:22 PM / in 8 years

Ralph Lauren lowers full-year sales view, second-quarter results fall

(Reuters) - Ralph Lauren Corp (RL.N) on Friday reported lower quarterly earnings and reduced its full-year sales forecast because of its ongoing closures of locations in China and the discontinuation of its American Living brand, warning that the global economy is still threatening demand for its fashion items.

Designer Ralph Lauren waves after presenting his Spring/Summer 2013 collection during New York Fashion Week, September 13, 2012. REUTERS/Lucas Jackson

Ralph Lauren’s sales have been hurt by its phasing out of stores and boutiques operated by local partners in China. It plans to replace the stores over time with company-run shops in what it has said will be better spots that elevate its image.

The company’s sales have also been hit by the phase-out of its American Living brand, which was dropped by low-price department store J.C. Penney Co Inc (JCP.N) earlier this year.

Ralph Lauren Chief Operating Officer Roger Farah said in a statement that global economic conditions “lead us to be incrementally more cautious on near-term demand”.

The company now expects revenue to be up 2 percent to 3 percent for the year ending in March, compared with a previous forecast for mid-single-digit percentage growth.

Ralph Lauren shares were down 2.5 percent at $155 in morning trading.

For the current quarter, which includes the holiday season, Ralph Lauren expects a low-single-digit percentage revenue gain, with sales at its own shops vastly outperforming business at department stores such as Macy’s Inc (M.N) and other retailers that carry its various brands.

Revenue fell 2.2 percent to $1.86 billion. Excluding the impact of its Chinese store closings and the American Living brand, revenue rose 3 percent in the quarter.

But that decline was less steep than the company’s forecast of a mid-single-digit percentage drop.

Wholesale sales fell 8 percent in part because Ralph Lauren shopped fewer goods to European stores. Sales at Ralph Lauren’s own stores rose 5 percent, despite the impact of China.

Net income fell 8.5 percent to $213.7 million, or $2.29 per share, in the second quarter ended September 29, from $233.5 million, or $2.46 per share, a year earlier.

Excluding one-time tax items, Ralph Lauren earned $2.45 per share, above the $2.15 Wall Street analysts were expecting, according to Thomson Reuters I/B/E/S. (Reporting by Phil Wahba in New York; Editing by Gerald E. McCormick and Dale Hudson)

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