* Q3 adjusted EPS $1.06 tops Wall St view of 86 cts
* Cuts '09 view to $3.85-$4/shr; earlier expected $4-$4.10
* Sees 2010 revenue down, but gives no profit outlook
* Shares down 3.2 percent (Adds background, analyst comments)
By Martinne Geller
NEW YORK, Feb 4 Polo Ralph Lauren Corp (RL.N) cut its full-year earnings forecast on Wednesday and said it would not provide a profit outlook for its next fiscal year as it waits to see when shoppers will spend again.
Shares of the fashion company, which owns the Polo, Chaps and Club Monaco brands, fell 3.2 percent.
"It's never a good sign to see guidance removed, but it makes sense," said Pete Larson, an analyst with Gradient Analytics, given Polo's expectation for continued volatility in consumer spending.
Polo expects net revenue for fiscal 2010, which begins in March, to be "slightly below" fiscal 2009 levels, Polo Chief Financial Officer Tracey Travis said on a conference call.
"At this point, there is a tremendous amount of uncertainty regarding how long the current retrenchment in consumer spending will last, or how much additional deterioration in personal consumption may occur," Travis said.
Chief Operating Officer Roger Farah said on the call that consumers in all channels of distribution were pulling back on spending and becoming increasingly selective when they do decide to shop.
"The uncertainty and volatility that has defined the last 12 months will most likely continue for the foreseeable future," Farah said.
Polo's net income fell to $105.3 million, or $1.05 per share, in the third quarter ended on Dec. 27 from $112.7 million, or $1.08 per share, a year earlier.
Excluding restructuring charges, the company earned $1.06 per share, easily topping analysts' average estimate of 86 cents, according to Reuters Estimates.
Net revenue fell 1 percent to $1.25 billion.
KEEPING INVENTORY, COSTS IN CHECK
Besides cutting costs in areas like stock-based compensation, public relations and advertising, Polo has been aggressive in keeping its inventory levels more in line with reduced consumer demand.
Standard & Poor's equity analyst Marie Driscoll noted that Polo began cutting its inventories early last year -- before some rivals -- which reduced the need to discount unsold merchandise and thereby aided the company's retail partners, brand positioning and profits.
Gradient's Larson expects retail sales to keep falling industrywide as the U.S. recession deepens. He said the companies most likely to come out ahead will be those, like Polo Ralph Lauren, that protect profits by managing inventory best.
Sales from the company's retail stores fell 7 percent to $547 million as sales at stores open at least a year tumbled 13.5 percent. Same-store sales fell 21.7 percent at Ralph Lauren stores, 9.1 percent at factory stores and 17.2 percent at Club Monaco stores.
Sales at international stores were hurt as economies in Europe weakened and the U.S. dollar strengthened.
Sales in the wholesale business, which supplies clothes to retailers such as Macy's Inc (M.N), rose 5 percent to $655 million, as Polo expanded its presence in European and Japanese stores and took control of distributing its children's clothing and golf apparel in Japan.
Polo said it now expects to earn $3.85 to $4 per share in fiscal 2009, down from its prior forecast of $4 to $4.10.
Full-year net revenue is now expected to be flat to down at a low single-digit percentage rate, compared with a prior expectation for growth in the low single digits.
Polo shares fell as low as $36.96, before trading $1.24 weaker at $38.46 on the New York Stock Exchange shortly before the market close. (Reporting by Martinne Geller; Editing by Lisa Von Ahn, Richard Chang)