Polo Ralph Lauren Knocked Off Horse

4/2 - "On March 28, department store giant JC Penney Corp. (JCP) issued a material 1Q`08 earnings warning...The news was equally worrisome for Polo Ralph Lauren Corp. (RL) as it supplied JC Penney with the initial round of goods under the new American Living brand in February...we observed significant discounts of the American Living brand almost immediately following the launch, a sign that price conscious consumers failed to respond to the higher priced wares."

"In our view, this issue in tandem with ongoing investment spending on new growth vehicles and softening demand at Polo’s retail stores elevates the risk of a reduction to management’s current FY`09 earnings per share guidance ($3.95-$4.05). As a result, we have reduced our FY`09 earnings per share estimate to $3.85 from $4.00. We are reiterating our underweight recommendation and issuing a price target of $53.00."