JOC Staff | Aug 05, 2009 5:46PM EDT
Clothing retailer Polo Ralph Lauren said Wednesday it earned a $76.8 million profit despite falling sales in its fiscal first quarter in part through savings on logistics and transportation costs.
The savings included shifting some of its imports from air freight to ocean transport, which meant taking the goods earlier to account for the longer delivery cycle, the New York-based company said.
Although that raised inventory costs, “due to continued improvements in the planning calendar and to the order flow to factories, we are very comfortable with the cost benefit of pursuing supply chain and logistic savings opportunities that still allow us to maintain the currency of our global inventory,” Roger Farah, president and chief operating officer, told investment analysts on a conference call.
Farah said the company set up “an air traffic controller concept in Asia so that at the last minute we can decide depending on need and depending on what stage of manufacturing we’re in whether to get the savings off of boat or whether air shipments are needed. And it allowed us to shave dramatic costs out of the transit line of the margin.
The company earned $76.8 million in the three months ending June 27, down 20 percent from the same quarter a year ago, on an 8 percent drop in revenue, to just beyond $1 billion.
But Polo Ralph Lauren also improved its gross profit margin compared to last year’s first fiscal quarter and said it was partly the result of greater logistics operating efficiency.
“Supply chain initiatives … have allowed us to move more product via lower-cost modes of transportation and have therefore yielded freight savings on our inbound inventory,” said Tracey Travis, chief financial
officer.
Contact Paul Page at ppage@joc.com.
