Ralph Lauren's 4Q profit rises 35 pct

Ralph Lauren Corp. reported a 35 percent increase in fourth-quarter profit as the luxury retailer benefited from lower cotton prices. But economic challenges here and abroad and the move to eliminate some businesses to focus on the most profitable ones cut into sales.

The results, announced Thursday, show how the New York based luxury company is seeing increasing profits since the first half of its fiscal year, when cotton costs soared and the company was bearing the brunt of the costs of eliminating certain businesses such as its Rugby brand. But it's still navigating the rough patches of a choppy global economy.

"Our better-than-expected profitability in the fourth quarter and full year fiscal 2013 periods is a direct result of the strong operational management of our global teams," Roger Farah, president and chief operating officer, said in a statement. "Enhanced profit flow-through was achieved despite sustained macroeconomic challenges and strategic decisions that mitigated revenue growth during the year."

The New York-based company reported net income of $127.2 million, or $1.37 per share, for the three months that ended March 30. That compares with $94.4 million, or 99 cents per share, a year earlier.

Revenue rose a slim 1.2 percent to $1.64 billion.

Analysts had expected earnings of $1.31 per share on revenue of $1.7 billion.

Ralph Lauren said that its wholesale segment's sales slipped 4 percent to $796 million compared with the year-ago period. That was primarily due to the discontinuation of the American Living brand to J.C. Penney and a planned reduction in shipments to certain European customers.

Sales at its own Ralph Lauren stores rose 7 percent to $804 million from $752 million in the year-ago period.

Still, Ralph Lauren offered a sales forecast that indicates that it expects sales to improve. Ralph Lauren expects revenue to be up in the low single digits for the current quarter and anywhere from 4 percent to 7 percent for the full year.

The company ended the quarter with 388 directly operated stores - 116 Ralph Lauren stores, 50 Club Monaco stores and 213 Polo factory stores. The company also operated 494 concession shop locations worldwide at the end of the quarter. In addition to company-operated locations, international licensing partners operated 62 Ralph Lauren stores and 32 dedicated shops as well as 64 Club Monaco stores and shops at the end of the fourth quarter.

Shares fell more than 4 percent, or $7.81, to $188.06 in premarket trading.