Polo Ralph Lauren Reports First Quarter FY2007 Results; Operating Income Increased 66%; Earnings Per Share Increased 54%; Company Raises Full Year Guidance to Range of $3.25 to $3.35

Net revenues for the first quarter of Fiscal 2007 increased 27% to$954 million, compared to $752 million in the first quarter last year.Excluding the impact of the footwear and Polo Jeans Co. acquisitions,net revenues increased 19%. Operating income, reflecting higherrevenues and margin improvement, increased 66% to $133 millioncompared to $80 million last year. Operating income as a percent ofrevenue improved 330 basis points to 14% from 10.7% last year.

"We are extremely pleased by the continuing demand for our brandand its worldwide growth as evidenced by these strong results. One ofthe keys to our success is that we convey our passion and our clearpoint of view in all we do. That vision is represented in all of ourbrands and in every product category whether it is menswear,womenswear, childrenswear, accessories or home," said Ralph Lauren,Chairman and Chief Executive Officer. "We have enjoyed tremendoussuccess in the U.S., and we are carrying the best of what we do toEurope and Asia. In addition, we continue to grow our business on manydifferent levels - from expanding our retail presence to extending ourbrands."

Mr. Lauren added, "We have a powerful organization that is focusedon the success of our brand long-term. I have never been more excitedabout our company and its future. I believe this will be anotheroutstanding year as we continue to expand globally."

"The first quarter represents outstanding performances by all ofour ongoing businesses across all areas of wholesale and retail. Thehigh quality of our sales translated into solid margin expansion thisquarter, resulting in a substantial 66% increase in operating income.Concurrently, our integration plans for our new footwear and jeansbusinesses are proceeding as we expected," said Roger Farah, Presidentand Chief Operating Officer.

Looking to the balance of the year, Mr. Farah said, "We willcontinue to focus our management efforts and investments on long-terminitiatives to accelerate our retail expansion, to further elevate ourbrand through all appropriate channels of distribution and to buildand leverage our global infrastructure. In the near-term, theexecution of these strategies continues to produce powerful results.Because of the ongoing appeal of our brand and the strong performancewe are driving, we are raising our expectations for Fiscal 2007earnings."

First Quarter Fiscal 2007 Income Statement Review

Net Revenues

Net revenues for the first quarter of Fiscal 2007 increased 27% asreported, or 19% excluding the effects of acquisitions, to $954million compared to $752 million in the first quarter last year. Theincrease was driven by a 46% increase in reported wholesale sales, or26% excluding the effects of acquisitions, and a 15% increase inretail sales, slightly offset by a 12% decrease in licensing revenues.Excluding the effect of the prior-year acquisitions, the wholesaleincrease was primarily driven by the launch of the new Chaps lines,menswear, Lauren women's and the children's lines. In addition, Europedrove strong sales across all brands. Retail sales were driven bystrong comparable sales in all of the company's retail formats,including Polo.com. Licensing was down compared to the first quarterlast year due primarily to the loss of licensing revenues of PoloJeans Co. and footwear which are now owned.

Gross Profit

Gross Profit for the first quarter increased 28% to $532 millioncompared to $414 million in the first quarter of Fiscal 2006. Grossprofit rate improved 60 basis points in the first quarter to 55.7%compared to 55.1% during the same period last year. Improvements ingross profit for the first quarter were driven primarily by increasesin full-price sell-throughs in the wholesale and retail segments,strong inventory management and the effects of ongoing sourcinginitiatives.

SG&A Expenses

SG&A expenses were $398 million, including incremental stockcompensation expense of $2.6 million, compared to $334 million in thefirst quarter of Fiscal 2006. Expenses as a percent of revenues were41.7% compared to 44.4% in the first quarter last year, representing a270 basis point improvement. The expense rate improved primarily fromthe leveraging of incremental sales volume over existinginfrastructure.

The first quarter Fiscal 2007 expenses also include a $2.2 millionrestructuring charge related to the intended closure of all eight ofClub Monaco's Caban stores and $2.6 million of incremental costrelated to the expensing of all stock-based compensation as a resultof the effect of the first time application of SFAS 123R.

Operating Income

Operating income increased 66% to $133 million compared to $80million in the first quarter last year. Operating margin was 14%,compared to 10.7% in the first quarter last year, an increase of 330basis points.

Net Income

Net income for the first quarter was $80 million, or $0.74 perdiluted share, compared to net income of $51 million, or $0.48 perdiluted share, for the first quarter of Fiscal 2006.

First Quarter Fiscal 2007 Segment Review

Wholesale

Wholesale sales in the first quarter were $491 million, up 46%,compared to $337 million in the first quarter last year. Excluding theeffect of the acquisitions, revenues increased 26% primarily due to asuccessful spring season for the Chaps for women and Chaps for boy'slines, and increased sales in the domestic menswear, Lauren women's,and children's lines. In addition, Europe experienced increased salesacross all brands. Wholesale operating income in the first quarter was$90 million, compared to $46 million in the first quarter last year.Wholesale operating margin was 18.4% in the first quarter compared to13.7% in the first quarter last year, an improvement of 470 basispoints. The gain was driven primarily by improvement in gross profitand strong expense leverage in the core product lines slightly offsetby lower operating margins in newly acquired Polo Jeans Co. andfootwear.

Retail

Retail sales were $412 million in the first quarter, up 15%,compared to $357 million in the first quarter last year, reflectingincreased sales in all of the company's retail formats, includingPolo.com. Total company comparable store sales increased 7.2%,reflecting an increase of 9.4% at Club Monaco stores, 8.4% in ourfactory stores and 3.7% at Ralph Lauren stores. The factory storesincreases were partially related to higher seasonal sales associatedwith the Easter holiday that fell in the first quarter of fiscal 2007.The Polo.com sales grew 49% over the comparable period last year.Retail operating income was $65 million compared to $36 million in thefirst quarter last year. Retail operating margin was 15.7% in thefirst quarter compared to 10% last year, an improvement of 570 basispoints. The gain was driven by stronger full price sell-throughs andsolid expense management offset by the initial investments for theTokyo flagship and the Rugby retail concept.

At the end of the first quarter, we operated 295 stores, withapproximately 2.3 million square feet, compared to 282 stores, withapproximately 2.2 million square feet, at the end of the first quarterlast year. Our retail group consists of 70 Ralph Lauren stores, sevenRugby stores, 72 Club Monaco stores and 146 Polo factory stores.

Licensing

Licensing revenues in the first quarter were $50 million, comparedto $57 million in the first quarter last year. Operating income was$26 million, compared to $35 million in the first quarter last year.Licensing revenues and operating income were down compared to lastyear primarily due to the elimination of royalties from the formerPolo Jeans Co. and footwear licenses.

First Quarter Fiscal 2007 Balance Sheet Review

We ended the first quarter with $429 million in cash, or $138million cash net of debt. We ended the first quarter with $526 millionin inventory, up from $468 million last year, primarily due to theinclusion of Polo Jeans Co. and footwear. We continue to carefullymanage our inventory and we generated a 30% increase in wholesale andretail sales on a 12% increase in inventory. During the quarter, thecompany invested $35 million in capital expenditures, compared to $33million in the prior year's quarter.

During the first quarter, the Company invested approximately $68million to repurchase 1.2 million shares of Class A common stock. Therepurchase is part of the $100 million share repurchase authorization,of which approximately $32 million is left.

Fiscal 2007 Full Year Outlook

-- Consolidated revenue growth is projected to be low to mid-teen percent.

-- Operating margins are expected to increase slightly compared to Fiscal 2006. Fiscal 2007 forecasts include an incremental stock compensation expense of approximately $18 million to $25 million.

-- Earnings per share are expected to be in the range of $3.25 to $3.35. This earnings projection includes an estimate of stock compensation dilution in the range of $0.10 to $0.15 per share.

Fiscal 2007 Second Quarter Outlook

-- Consolidated revenue growth is projected to be low double digits, reflecting mid-teen percent growth in wholesale, low double-digit percent growth in retail and a mid-single percent decrease in licensing.

-- Operating margins are expected to be slightly lower than the comparable quarter last year including incremental stock compensation expense of approximately $6 to $8 million.

Conference Call

As previously announced, we will host a conference call and liveonline broadcast today at 9:00 A.M. Eastern. The dial-in number is(719) 457-2645. The online broadcast is accessible athttp://investor.polo.com.

Polo Ralph Lauren Corporation is a leader in the design, marketingand distribution of premium lifestyle products in four categories:apparel, home, accessories and fragrances. For more than 38 years,Polo's reputation and distinctive image have been consistentlydeveloped across an expanding number of products, brands andinternational markets. The Company's brand names, which include "Poloby Ralph Lauren", "Ralph Lauren Purple Label", "Ralph Lauren", "BlackLabel", "Blue Label", "Lauren by Ralph Lauren", "Polo Jeans Co.","RRL", "RLX", "Rugby", "RL Childrenswear", "Chaps", and "Club Monaco"among others, constitute one of the world's most widely recognizedfamilies of consumer brands. For more information, go tohttp://investor.polo.com.

This press release and oral statements made from time to time byrepresentatives of the Company contain certain "forward-lookingstatements" concerning current expectations about the Company's futureresults and condition, including sales, store openings, gross margins,expenses and earnings. Actual results might differ materially fromthose projected in the forward-looking statements. Among the factorsthat could cause actual results to materially differ include, amongothers, changes in the competitive marketplace, including theintroduction of new products or pricing changes by our competitors,changes in the economy and other events leading to a reduction indiscretionary consumer spending; risks associated with the Company'sdependence on sales to a limited number of large department storecustomers, including risks related to extending credit to customers;risks associated with the Company's dependence on its licensingpartners for a substantial portion of its net income and risksassociated with a lack of operational and financial control overlicensed businesses; risks associated with changes in social,political, economic and other conditions affecting foreign operationsor sourcing (including foreign exchange fluctuations) and the possibleadverse impact of changes in import restrictions; risks associatedwith uncertainty relating to the Company's ability to implement itsgrowth strategies or its ability to successfully integrate acquiredbusinesses; risks arising out of litigation or trademark conflicts,and other risk factors identified in the Company's Form 10-K, 10-Q and8-K Reports filed with the Securities and Exchange Commission. TheCompany undertakes no obligation to update or revise anyforward-looking statements to reflect subsequent events orcircumstances.
POLO RALPH LAUREN CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Prepared in accordance with Generally Accepted Accounting Principles
(GAAP)
(In millions, except per share data)
(Unaudited)

Three Months Ended
------------------
July 1, July 2,
2006 2005
------- -------


Wholesale Net Sales $ 491.2 $ 337.2
Retail Net Sales 412.1 357.4
------- -------

Net Sales 903.3 694.6

Licensing Revenue 50.3 57.3
------- -------

Net Revenues 953.6 751.9

Cost of Goods Sold (a) (422.1) (337.5)
------- -------

Gross Profit 531.5 414.4

Selling General & Adminstrative Expenses (a) (390.3) (333.2)
Amortization of Intangible Assets (5.6) (1.0)
Restructuring Charges (2.2) -
------- -------
Total SG&A Expenses (398.1) (334.2)

Operating Income 133.4 80.2

Foreign Currency Gains (Losses) (1.1) -

Interest Expense (4.4) (2.5)

Interest Income 3.8 2.9

Equity Income on Equity-Method Investees 0.8 1.8

Minority Interest Expense (4.0) (1.4)
------- -------

Income Before Provision for Income Taxes 128.5 81.0

Provision for Income Taxes (48.3) (30.3)
------- -------

Net Income $ 80.2 $ 50.7
======= =======

Net Income Per Share - Basic $ 0.76 $ 0.49
======= =======

Net Income Per Share - Diluted $ 0.74 $ 0.48
======= =======

Weighted Average Shares Outstanding - Basic 105.1 103.0
======= =======

Weighted Average Shares Outstanding - Diluted 108.1 105.5
======= =======

Dividends declared per share $ 0.05 $ 0.05
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(a) Includes total depreciation expense of: $ (32.2) $ (27.7)
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POLO RALPH LAUREN CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In millions)
(Unaudited)

July 1, April 1, July 2,
2006 2006 2005
-------- -------- --------

ASSETS
Current assets
Cash and cash equivalents $ 429.2 $ 285.7 522.3
Accounts receivable, net of allowances 349.7 484.2 275.6
Inventories 525.6 485.5 467.6
Deferred tax assets 33.6 32.4 70.7
Prepaid expenses and other 102.3 90.7 111.3
-------- -------- --------

Total current assets 1,440.4 1,378.5 1,447.5

Property and equipment, net 541.6 548.8 488.7
Deferred tax assets 9.9 - 34.6
Goodwill 705.4 699.7 547.8
Intangibles, net 253.1 258.5 46.0
Other assets 234.2 203.2 179.2
-------- -------- --------

Total assets $3,184.6 $3,088.7 2,743.8
======== ======== ========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $ 203.6 $ 202.2 160.3
Income tax payable 86.0 46.6 55.7
Accrued expenses and other 308.2 314.3 375.7
Current maturities of debt 291.0 280.4 -
-------- -------- --------

Total current liabilities 888.8 843.5 591.7

Deferred tax liabilities 20.5 20.8 -
Other non-current liabilities 183.5 174.8 139.8
-------- -------- --------

Total liabilities 1,092.8 1,039.1 1,000.6
-------- -------- --------

Stockholders' equity
Common Stock 1.1 1.1 1.1
Additional paid-in-capital 760.4 783.6 715.8
Retained earnings 1,454.2 1,379.2 1,133.1
Treasury Stock, Class A, at cost (156.1) (87.1) (81.6)
Accumulated other comprehensive income 32.2 15.5 19.3
Unearned compensation - (42.7) (44.5)
-------- -------- --------

Total stockholders' equity 2,091.8 2,049.6 1,743.2
-------- -------- --------

Total liabilities and
stockholders' equity $3,184.6 $3,088.7 2,743.8
======== ======== ========


POLO RALPH LAUREN CORPORATION AND SUBSIDIARIES
OTHER INFORMATION
(In millions, except per share data)
(Unaudited)

SEGMENT INFORMATION
The net revenues and operating income for the periods ended July 1,
2006 and July 2, 2005 for each segment were as follows:

Three Months
Ended
---------------
July 1, July 2,
2006 2005
------ ------


Net revenues:
Wholesale $491.2 $337.2
Retail 412.1 357.4
Licensing 50.3 57.3
------ ------
$953.6 $751.9
====== ======

Operating Income (Loss):
Wholesale $ 90.3 $ 46.3
Retail 64.6 35.6
Licensing 26.4 35.2
------ ------
$181.3 $117.1
Less:
Unallocated Corporate Expenses (45.7) (36.9)
Unallocated Restructuring Charges (2.2) -
------ ------
$133.4 $ 80.2
====== ======