Ralph Lauren Soars, but Was the Quarter Really So Stellar?

Ralph Lauren (RL) rose sharply in early trading after beating fiscal third quarter earnings expectations.

The preppy apparel maker posted $1.78 of EPS, 11 cents better than expectations. Revenue of $1.81 billion beat expectations for $1.75 billion. The company said it now expects to post 20% sales growth for its current fiscal year (the company is in the fourth fiscal quarter), narrowing its prior forecast for growth in the high-teens to low-20′s.

Shares rose 12% in early trading. But analyst Brian Sozzi,, chief strategist for NBG Productions, wrote that the earnings beat was of only “so-so” quality, as the timing of expenses appeared to account for part of it.

“I wouldn’t characterize the quarter as amazing, rather very much reflective of why I wasn’t going to recommend the name into the release. There were soft spots to the report that are at least warranting of a near-term reassessment on the company’s valuation. The market is fixated on the next six months for Polo, which is likely to be a period where rampant inflation from calendar 2011 that hammered gross margins will reverse, leaving that tailwind along with good realization of price increases and increasing international sales mix.”