Polo Ralph Lauren Reports Fourth Quarter and Full Year Fiscal 2006 Results

The fourth quarter and full year results for Fiscal 2005 include aone-time charge of approximately $100 million associated with ourlitigation with Jones Apparel Group, Inc., which has now been settled.Excluding this charge from the fourth quarter results for Fiscal 2005,we would have reported net income of $86 million and earnings of $0.82per diluted share. Excluding this charge from the full year resultsfor Fiscal 2005, we would have reported net income of $254 million andearnings of $2.44 per diluted share.

"This has been another record-breaking year for Polo Ralph Lauren,with numerous accomplishments," said Ralph Lauren, Chairman and ChiefExecutive Officer. "Our strategy is sound and the worldwide appeal ofour brand continues to strengthen. I am extremely pleased with ourposition and eager to take advantage of the many opportunities thatlie ahead."

"The underlying fundamentals of our business and the ability toleverage our strengths have never been better. Looking forward, wewill continue to take steps to advance our retail expansion, tofurther enhance the quality of distribution of our brands and tofurther strengthen our infrastructure. We are excited about ourprospects and look forward to another strong year," Mr. Lauren added.

"We entered this year with a number of goals including expandingspecialty stores, growing internationally, capitalizing on newmerchandise opportunities and continuing to invest in our globalinfrastructure. During the year, we executed well on this strategy. Weexpanded our direct to customer presence by opening Ralph Lauren andRugby stores in key markets and growing Polo.com. We entered into anew global eyewear license with Luxottica and assumed direct ownershipof two key product categories with our footwear and denimacquisitions," said Roger Farah, President and Chief OperatingOfficer. "I feel very good about our progress in each of theseinitiatives and look forward to even more success in Fiscal 2007."

Fourth Quarter and Full Year Fiscal 2006 Income Statement Review

Net Revenues

Net revenues for the fourth quarter of Fiscal 2006 increased 8% to$972 million compared to $902 million in the fourth quarter last year,driven by a 15% increase in retail and a 6% increase in wholesalesales. Net revenues for the full Fiscal Year increased 13% to $3.75billion compared to $3.31 billion in Fiscal 2005, driven by strongincreases in retail sales and wholesale sales. Fiscal 2006 revenuesreflect the acquisition of Polo Jeans in the fourth quarter andfootwear in the second quarter.

Gross Profit

Gross Profit for the fourth quarter increased 10% to $525 millioncompared to $477 million in the fourth quarter of Fiscal 2005. Grossmargin rate improved 110 basis points in the fourth quarter to 54.0%of revenues compared to 52.9% of revenues during the same period lastyear. Gross Profit for the full Fiscal Year increased 20% to $2.02billion compared to $1.68 billion in Fiscal 2005. Gross margin rateimproved 300 basis points to 54.0% of revenues compared to 51.0% ofrevenues last year. Improvements in gross margin for the fourthquarter and the full year reflect increases in full-pricesell-throughs and sourcing efficiencies.

SG&A Expenses

SG&A expenses were $409 million in the fourth quarter compared to$435 million in the fourth quarter of Fiscal 2005. SG&A expenses as apercent of revenues were 42.1% in the fourth quarter compared to 48.3%for the fourth quarter last year. SG&A expenses for the full FiscalYear 2006 were $1.51 billion compared to $1.38 billion last year. SG&Aexpenses as a percent of revenues were 40.2% in Fiscal 2006 comparedto 41.9% in Fiscal 2005. Excluding the approximately $100 millionlitigation charge, the increase in expenses in the fourth quarter andthe full year reflect the acquisition of Polo Jeans and footwear, aswell as increases to support our wholesale and retail business growth.

Operating Income

Operating income for the fourth quarter increased to $116 millioncompared to $42 million in the fourth quarter last year. Operatingmargin was 11.9%, compared to 4.6% in the fourth quarter last year, anincrease of 730 basis points. For the full Fiscal Year 2006, operatingincome increased to $517 million compared to $300 million last year.Operating margin for Fiscal 2006 was 13.8%, an increase of 470 basispoints compared to 9.1% last year.

Excluding the approximately $100 million litigation charge,operating income would have been $140 million in the fourth quarterlast year, with a 15.5% operating margin, and $400 million for thefull year Fiscal 2005, with a 12.1% operating margin.

Net Income

Net income for the fourth quarter was $63 million, or $0.58 perdiluted share, compared to net income of $23 million, or $0.22 perdiluted share, for the fourth quarter of Fiscal 2005. Fiscal Year 2006net income was $308 million, or $2.87 per diluted share, compared tonet income of $190 million, or $1.83 per diluted share for Fiscal Year2005.

Excluding the approximately $100 million litigation charge, netincome would have been $86 million, or $.82 per diluted share, for thefourth quarter and $254 million, or $2.44 per diluted share, for thefull year Fiscal 2005.

Our effective tax rate was 38.8% for the year, above ourpreviously announced expectations of 37.2% for the year. Our year endtax reserve estimate includes the impact of the continued growth inour domestic wholesale and retail businesses, which resulted in ahigher state tax rate impact than previously anticipated, and therebyincreasing the overall effective tax rate. Diluted weighted averageshares outstanding were 108.1 million in the fourth quarter, anincrease of 2.8 million shares compared to the fourth quarter lastyear. Diluted weighted average shares outstanding for the full yearFiscal 2006 were 107.2 million, an increase of 3.1 million sharescompared to the full year Fiscal 2005.

Fourth Quarter and Full Year Fiscal 2006 Segment Review

Wholesale

Wholesale sales in the fourth quarter were $574 million, up 6%,compared to $543 million in the fourth quarter last year. The increasecame primarily from the inclusion of Polo Jeans and footwear, thelaunch of Chaps for women and boys, and increased sales in Lauren andin our full-price menswear business. In the fourth quarter we also hada meaningful reduction in off-price sales. Wholesale operating incomein the fourth quarter was $127 million, compared to $141 million inthe fourth quarter last year. Wholesale operating margin was 22.1% inthe fourth quarter compared to 25.9% in the fourth quarter last yeardue to the dilutive inclusion of Polo Jeans and footwear.

Wholesale sales in Fiscal Year 2006 were $1.94 billion, up 13%,compared to $1.71 billion last year. The increase came from increasedsales across all of our wholesale product lines and the addition ofacquisitions. Wholesale operating income increased 33% to $398 millioncompared to $300 million last year with improvement in all productcategories owned for the full fiscal year. Wholesale operating marginimproved 300 basis points to 20.5% compared to 17.5% last year.

Retail

Retail sales were $335 million in the fourth quarter, up 15%,compared to $292 million in the fourth quarter last year, reflectingincreases in all of our retail formats. Total company comparable storesales increased 3.0%, reflecting an increase of 1.2% at Ralph Laurenstores, 10.6% at Club Monaco stores and 2.8% in our factory stores.Polo.com revenues increased 73%. Retail operating income was $1million compared to a loss of $10 million in the fourth quarter lastyear. Retail operating margin improved 380 basis points from a loss of3.5% last year. Our retail segment operating income excludes a $9million pre-tax restructuring charge related to the closing of ClubMonaco outlet stores and the planned disposition of Caban home stores.

Retail sales in Fiscal 2006 were $1.56 billion, up 16%, comparedto $1.35 billion last year, reflecting increases in all of our retailformats. Total company comparable store sales increased 6.4%,reflecting an increase of 6.0% at Ralph Lauren stores, 8.1% at ClubMonaco stores and 6.3% in our factory stores. Polo.com revenuesincreased 47%. Retail operating income increased 69% to $140 millioncompared to $83 million last year. Retail operating margins improved290 basis points to 9.0% compared to 6.1% last year.

At the end of Fiscal Year 2006, we operated 289 stores, with 2.265million square feet, compared to 278 stores, with 2.164 million squarefeet, at the end of last year. Our retail group consists of 68 RalphLauren stores, five Rugby stores, 64 Club Monaco stores, 133 Polofactory stores, 11 Polo Jeans Co. factory stores, seven Caban stores,and one Club Monaco factory store.

Licensing

Licensing revenues in the fourth quarter were $63 million,compared to $68 million in the fourth quarter last year. The decreasereflects lost royalty from footwear for the quarter and Polo Jeans fortwo months, as they transitioned to our wholesale segment postacquisition. This reduction was partially offset by strengthdomestically in our Chaps for men lines. Operating income was $40million, compared to $48 million in the fourth quarter last year.Licensing revenues of $245 million for the full year were flat to lastyear. Operating income was $154 million in Fiscal 2006, compared to$160 million last year.

Fourth Quarter Fiscal 2006 Balance Sheet Review

We ended the fourth quarter with $286 million in cash, afterfunding the acquisition of Polo Jeans for $255 million, the footwearacquisition for $110 million, and settling all outstanding litigationand claims between Polo Ralph Lauren and Jones Apparel for $100million. We continue to carefully manage our inventory and ended thefourth quarter with $486 million in inventory, up from $430 million inthe fourth quarter last year, primarily due to the inclusion offootwear and Polo Jeans. We currently intend to refinance ourapproximately EUR 227 million bonds at or before their maturity inNovember 2006, depending on favorable market conditions. For the fullFiscal year 2006 pre-tax ROI was 30%, compared to 25% for Fiscal 2005,adjusted for the litigation charge.

Fiscal 2007 Full Year Outlook

-- Consolidated revenue growth is projected to be low double digit percent.

-- Including the effect of stock compensation expense, operating margins are expected to be flat compared to Fiscal 2006.

-- As disclosed in February, 2006, earnings per share are expected to be in the range of $3.00 to $3.10. This earnings projection includes an estimate of stock option expense in the range of $0.15 to $0.20 per share.

Fiscal 2007 First Quarter Outlook

-- Consolidated revenue growth is projected to be high teens to low twenties percent, reflecting mid-thirties percent growth in wholesale, high single digit percent growth in retail and a mid-teens percent decrease in licensing. Revenues in our wholesale segment reflect the addition of Polo Jeans and footwear.

-- Operating margins are expected to be slightly lower than the comparable quarter last year, reflecting the effect of stock compensation expense, the impact of the footwear and Polo Jeans acquisitions and an anticipated $2 million restructuring charge for Club Monaco to complete the disposition of Caban.

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) 457-2680. 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
---------------------
April 1, April 2,
2006 2005
---------- ----------


Wholesale Net Sales $ 573.8 $ 543.0
Retail Net Sales 334.9 291.5
--------- ---------

Net Sales 908.7 834.5

Licensing Revenue 62.9 67.7
--------- ---------

Net Revenues 971.6 902.2

Cost of Goods Sold (446.6) (425.3)
--------- ---------

Gross Profit 525.0 476.9

Depreciation and Amortization Expense (32.5) (28.2)
Other SG&A Expenses (367.7) (406.7)
Restructuring Charges (9.0) (0.5)
--------- ---------
Total SG&A Expenses (409.2) (435.4)

Operating Income 115.8 41.5

Foreign Currency Gains (Losses) 0.8 2.7

Interest Income (Expense), net 0.2 (0.7)

Equity Investment Income (Expense) (0.2) 0.6

Minority Interest Expense (6.3) (3.4)
--------- ---------

Income Before Income Taxes 110.3 40.7

Provision for Income Taxes (47.8) (17.3)
--------- ---------

Net Income $ 62.5 $ 23.4
========= =========

Net Income Per Share - Basic $ 0.60 $ 0.23
========= =========

Net Income Per Share - Diluted $ 0.58 $ 0.22
========= =========

Weighted Average Shares Outstanding - Basic 104.9 102.5
========= =========

Weighted Average Shares Outstanding - Diluted 108.1 105.3
========= =========

Dividends declared per share $ 0.05 $ 0.05
========= =========





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)



Twelve Months Ended
---------------------
April 1, April 2,
2006 2005
---------- ----------


Wholesale Net Sales $ 1,942.5 $ 1,712.1
Retail Net Sales 1,558.6 1,348.6
--------- ---------

Net Sales 3,501.1 3,060.7

Licensing Revenue 245.2 244.7
--------- ---------

Net Revenues 3,746.3 3,305.4

Cost of Goods Sold (1,723.9) (1,620.9)
--------- ---------

Gross Profit 2,022.4 1,684.5

Depreciation and Amortization Expense (127.0) (102.1)
Other SG&A Expenses (1,369.8) (1,280.4)
Restructuring Charges (9.0) (2.3)
--------- ---------
Total SG&A Expenses (1,505.8) (1,384.8)

Operating Income 516.6 299.7

Foreign Currency Gains (Losses) (5.7) 6.1

Interest Income (Expense), net 1.2 (6.4)

Equity Investment Income 4.3 6.4

Minority Interest Expense (13.5) (8.0)
--------- ---------

Income Before Income Taxes 502.9 297.8

Provision for Income Taxes (194.9) (107.4)
--------- ---------

Net Income $ 308.0 $ 190.4
========= =========

Net Income Per Share - Basic $ 2.96 $ 1.88
========= =========

Net Income Per Share - Diluted $ 2.87 $ 1.83
========= =========

Weighted Average Shares Outstanding - Basic 104.2 101.5
========= =========

Weighted Average Shares Outstanding - Diluted 107.2 104.1
========= =========

Dividends declared per share $ 0.20 $ 0.20
========= =========



POLO RALPH LAUREN CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In millions)
(Unaudited)



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

ASSETS
Current assets
Cash and cash equivalents 285.7 350.5
Accounts receivable, net of allowances 484.2 455.7
Inventories 485.5 430.1
Deferred tax assets 32.4 74.8
Prepaid expenses and other 90.7 102.7
---------- ----------

1,378.5 1,413.8

Property and equipment, net 548.8 487.9
Deferred tax assets - 36.0
Goodwill, net 699.7 558.9
Intangibles, net 258.5 47.0
Other assets 203.2 183.1
---------- ----------

3,088.7 2,726.7
========== ==========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable 202.2 184.4
Income tax payable 46.6 72.1
Accrued expenses and other 314.3 365.9
Current maturities of long-term debt 280.4 -
---------- ----------

843.5 622.4

Long-term debt - 291.0
Deferred tax liabilities 20.8 -
Other noncurrent liabilities 174.8 137.6
---------- ----------

Total liabilities 1,039.1 1,051.0
---------- ----------

Stockholders' equity
Common Stock 1.1 1.1
Additional paid-in-capital 783.6 664.3
Retained earnings 1,379.2 1,090.3
Treasury Stock, Class A, at cost (87.1) (80.0)
Accumulated other comprehensive income 15.5 29.9
Unearned compensation (42.7) (29.9)
---------- ----------

Total stockholders' equity 2,049.6 1,675.7
---------- ----------

3,088.7 2,726.7
========== ==========



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 April 1,
2006 and April 2, 2005 for each segment were as follows:

Three Months Ended Twelve Months Ended
------------------- -------------------
April 1, April 2, April 1, April 2,
2006 2005 2006 2005
--------- --------- --------- ---------


Net revenues:
Wholesale $ 573.8 $ 543.0 $1,942.5 $1,712.1
Retail 334.9 291.5 1,558.6 1,348.6
Licensing 62.9 67.7 245.2 244.7
-------- -------- -------- --------
$ 971.6 $ 902.2 $3,746.3 $3,305.4
======== ======== ======== ========

Operating Income (Loss):
Wholesale $ 126.7 $ 140.7 $ 398.3 $ 299.7
Retail 1.1 (10.1) 140.0 82.8
Licensing 39.9 48.0 153.5 159.5
Corporate (42.6) (32.4) (159.1) (133.8)
-------- -------- -------- --------
$ 125.1 $ 146.2 $ 532.7 $ 408.2
Less: Unallocated Legal
Charges (0.3) (104.2) (7.1) (106.2)
Less: Unallocated
Restructuring Charges (9.0) (0.5) (9.0) (2.3)
-------- -------- -------- --------
$ 115.8 $ 41.5 $ 516.6 $ 299.7
======== ======== ======== ========


OTHER INFORMATION

The comparability of the Company's operating results for the fourth
quarter and full year has been affected by a one-time charge of
approximately $100 million recognized in Fiscal 2005 associated with
its litigation with Jones Apparel Group, Inc. that has now been
settled. A reconciliation of as-reported, conventional GAAP measures
for Fiscal 2005 to adjusted GAAP measures is as follows:



Three Months Ended Twelve Months Ended
April 2, 2005 April 2, 2005
----------------------------- -----------------------------
Net Net
Income Income
Per Per
Operating Net Diluted Operating Net Diluted
Income Income Share Income Income Share
--------- --------- --------- --------- --------- ---------

As
reported $ 41.5 $ 23.4 0.22 $ 299.7 $ 190.4 1.83
Litigation
charge 98.0 62.6 0.60 100.0 63.9 0.61
-------- -------- --------- -------- -------- ---------
As
adjusted $ 139.5 $ 86.0 0.82 $ 399.7 $ 254.3 2.44
======== ======== ========= ======== ======== =========