May 27 (Bloomberg) -- Polo Ralph Lauren Corp., the designer of Chaps and Club Monaco clothing, posted a fourth-quarter profit that declined less than analysts estimated on sales in department stores.

Net income dropped 57 percent to $44.5 million, or 44 cents a share, in the three months through March 28, from $103.5 million, or $1, a year earlier, New York-based Polo said today in a statement. Before one-time items, profit was 86 cents a share. Analysts projected earnings of 40 cents on average.

Polo sales fared better than expected at department stores in the recession. Wholesale revenue, which accounts for 66 percent of the total, gained 3 percent, driven by children’s wear and golf apparel in Japan and European sales. Profit also benefited from 500 job cuts and a lower tax rate.

Both revenue and cost control were “significantly” better than projected, Liz Dunn, an analyst with Thomas Weisel Partners LLC in New York, wrote today in a note to investors. She rates the shares “market weight,”

Polo, which had gained as much as 8 percent during the day, dropped 35 cents to $54.03 at 4 p.m. in New York Stock Exchange composite trading as the overall U.S. stock market declined. The shares have risen 19 percent this year.

Revenue dropped 1.3 percent to $1.22 billion, exceeding the $1.08 billion average analysts’ estimate in a Bloomberg survey. Fiscal 2010 sales will fall by a “high-single digit” percentage, Polo said.

Club Monaco

Sales at the retailer’s own stores open at least a year slumped 16 percent, led by a 29 percent decline at Ralph Lauren locations and a 21 percent drop at Club Monaco shops. In the first quarter, those so-called comparable sales will fall by a “mid-teens” rate, Polo said.

Wholesale revenue rose to $811.5 million, compared with Dunn’s estimate of $707 million.

“The mood has stabilized from what was a panicked customer in September,” President Roger Farah said on a conference call with analysts.

The retailer closed Club Monaco, Rugby and Ralph Lauren stores in the U.S. after sales to foreign tourists were hit by the stronger dollar, Chief Financial Officer Tracey Travis said on the call.

Polo recorded a $21 million pretax expense for the job cuts, which occurred throughout the company, and store closures, and a $48 million pretax charge to write down the value of its stores.

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

Last Updated: May 27, 2009 16:36 EDT