Polo ralph Ralph Lauren Sweaters lauren pushed off horse j

After march 28, shopping district giant jc penney corp. (Jcp)Issued a music 1q08 earnings warning.Citing extreme demands on households budgets that led to comparable store sales(Comps)Over the crucial easter holiday selling season falling well below deliverables(Declined by a double digit cut), The keep issued 1Q08 earnings per share guidance of $0.50(Agreement $0.75).This was particularly troubling in the sense that jc penney serves primarily low end consumers, a group of population most prone to economic duress when conditions decline.

The news was equally concern for polo ralph lauren corp. (Rl)As it supplied jc penney with preliminary round of goods under the new american living brand in february.Launched at 575 jc penney store cities, and spanning 40 home/apparel product categories, american living was supposed to help elevate Polo Ralph Lauren Outlet UK the department store's cachet with consumers in addition to leveraging a new home internet online home business for polo.

But bear in mind, we observed significant discounts of the american living brand almost rigtht after the launch, a sign that Ralph Lauren Outlet UK price conscious consumers failed to respond to the more costly wares.

The good news for polo is that jc penney bears the markdown risk connected american living.Yet, underperformance of american living may lead to canceled orders from jc penney and that would have a profound negative impact on the value of inventory(Note stock options was up 21.0% at 3Q08 end mostly Lauren due to stock for yankee Living).

Inside view, this issue in tandem with ongoing investment spending on new growth vehicles and softening demand at polo's outlets elevates the risk of a reduction to management's current fy09 earnings per share guidance($3.95 $4.05).By doing this, we have reduced our fy09 earnings per share approximate to $3.85 after $4.00.We are reiterating our underweight third party tip and issuing a price target of $53.00.
 

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