Polo Ralph Lauren Corp. (RL)
Q3 2010 Earnings Call Transcript
February 3, 2010 9:00 a.m. ET

Executives

James Hurley - Investor Relations
Roger N. Farah - President and Chief Operating Officer
Tracey T. Travis - Senior Vice President, Finance and Chief Financial Officer

Analysts

Omar Saad - Credit Suisse
Lizabeth Dunn - Thomas Weisel Partners
Robert S. Drbul - Barclays Capital
Adrianne Shapira - Goldman Sachs
David Glick - Buckingham Research Group
Christine Chen - Needham & Company, LLC
Jeffery Klinefelter - Piper Jaffray
Michael Binetti - UBS
Christopher Kim - JP Morgan

Presentation

Operator

Good morning. Thank you for calling the Polo Ralph Lauren Third Quarter Fiscal 2010 Earnings Conference Call. As a reminder, today’s conference is being recorded. All lines will be in a listen-only function during the presentation today. At the end of the presentation, we will conduct a question-and-answer session. Instructions on how to ask a question will be given at that time.

Now for opening remarks and introductions, I will turn the call over to Mr. James Hurley. Please go ahead, sir.

James Hurley

Good morning. And thank you for joining us on Polo Ralph Lauren’s third quarter conference call. The agenda for the call today includes Roger Farah, our President and Chief Operating Officer, who will give an overview of the quarter and comment on broader strategic initiatives. And then Tracey Travis, our Chief Financial Officer, will provide operational and financial highlights from the third quarter in addition to reviewing our expectations for the remainder of fiscal 2010. After that, we will open the call up for your questions which we ask that you please limit to one per caller.

As you know, we’ll be making some forward-looking comments today including our financial outlook. Our expectations may contain any risks and uncertainties. The principal risks and uncertainties that could cause our results to differ materially from our current expectations are detailed in our SEC filings.

And now, I’d like to turn the call over to Roger.

Roger N. Farah

Thank you, Jim, and good morning, everyone. We reported strong third quarter and year-to-date results this morning. Year-to-date, our profits are at a record level, despite operating in the worst economic environment since the great depression and we’ve exceeded our own expectations on oil operating metrics.

We have been able to achieve this level of performance even as we have intensified our investments and our long-term strategic initiatives, which for the first nine months of the year, include building an entirely new organization in Hong Kong to support our growth aspirations through Asia, investing in important new flagships in New York, Paris and Greenwich, Connecticut and developing a host of exciting new products.

We ended the third quarter with more than $1.3 billion in cash and investments, with net cash more than double last year’s level. And we continue to reinvest in our business, buyback stock and reduce debt.

Of course, we benefit from having exceptionally strong product and strategic merchandising initiatives. As Ralph said in today’s release, customers appreciate our unwaivering commitment to quality and invasion and we are defining characteristic -- which are defining characteristics of our company. This brand and product excellence, coupled with superb worldwide execution by the team has allowed us to succeed.

As much as our third quarter and year-to-date performances reflect the day-to-day operational excellence of our teams, they are also a result of many years of careful planning, investment, strategic decision-making that some times have a negative short term impact, but they have ultimately made us stronger and more profitable organization. We would not be in the position we are today without these years of preparation and execution.

Two years ago, when the first signs of global financial crisis were emerging, we made a decision that our foremost priority was to protect our brand and our profits. We executed this by developing focused merchandise strategies and calibrating our global shipment volumes with the expected customer demand trends.