Nov. 3 (Bloomberg) -- Polo Ralph Lauren Corp., the maker of Chaps and Club Monaco clothing, raised its full-year sales forecast and reported second-quarter profit and revenue that exceeded analysts’ projections.

Net income rose 10 percent to $177.5 million, or $1.75 a share, in the three months through Sept. 26, from $161 million, or $1.58, a year earlier, New York-based Polo said today in a statement. Analysts projected earnings of $1.31 a share, the average of estimates compiled by Bloomberg.

Revenue fell 3.8 percent to $1.37 billion, compared with analysts’ $1.3 billion average estimate. Lower inventories helped the company reduce markdowns, expanding gross margin, a measure of profitability. A lower tax rate also boosted profit.

“It’s really the top-line number that beat our expectations,” Liz Dunn, an analyst with Thomas Weisel Partners LLC in New York, said in a telephone interview. “They are seeing some improvement in their retail business and their wholesale business.” Dunn rates the shares “market weight.”

Polo Ralph Lauren rose $1.76, or 2.3 percent, to $78.47 at 4:01 p.m. in New York Stock Exchange composite trading. The shares have jumped 73 percent this year.

Polo Ralph Lauren took advantage of its more-flexible supply chain to quickly produce products that were in demand, Chief Financial Officer Tracey Travis said in a telephone interview. Shoppers sought its “classic” apparel with “fashion twists,” such as women’s jackets and sweaters with leather trim and patches, she said.

“The environment is still very tentative and our customers are very cautious,” Travis said.

Revenue for the full year will decline by a “mid-single- digit” percentage, the company said, less than the “high- single-digit” decrease previously forecast.

To contact the reporter on this story: Cotten Timberlake in Washington at ctimberlake@bloomberg.net

Last Updated: November 3, 2009 16:07 EST