Polo Ralph Lauren Corp. (RL) Tuesday posted a higher-than-expected quarterly profit on strong European demand for its clothing, but shares fell as it cut its full-year forecast.

It said fiscal third-quarter earnings rose 21 percent, beating Wall Street forecasts.

But the company, which sells clothing and accessories to department stores and operates its own specialty stores, cut its full-year outlook, citing costs from buying back the Polo Jeans business and closing its Club Monaco outlet stores.

Shares slipped to $55.62 in early trading, from their $57.47 close.

The New York-based company posted net income of $90.7 million, or 84 cents per share, compared with $75 million, or 72 cents per share, for the year-ago quarter.

Analysts surveyed by Reuters Estimates had expected Polo Ralph Lauren to earn a net profit of 74 cents per share and a profit after accounting for one-time items of 77 cents per share.

Revenues rose 10 percent to $995.5 million, higher than the $963.2 million Wall Street had been expecting. Comparable store sales increased 7.4 percent.

For the 2006 fiscal year, ended March, the company said it expects earnings per share of $2.80 to $2.85, as opposed to the $2.85 to $2.92 per share it forecast earlier, as it accounts for buying back Polo Jeans from Jones Apparel Group Inc. and closes eight Caban home stores and all five Club Monaco outlets.

Wall Street had been looking for 2006 net earnings of $2.88.

The company also forecast fiscal 2007 earnings below Wall Street's consensus estimates to account for its Polo Jeans acquisition. Polo Ralph Lauren said it expected full-year earnings of $3.00 to $3.10 per share, including costs related to stock compensation of about 15 cents per share. Excluding those expenses, the company forecast earnings of $3.15 to $3.25 per share.

Analysts were expecting net earnings of $3.23 per share.