Polo Ralph Lauren's bespoke results portend more upside ahead

You know it's an especially painful downturn when even the better-off among us stop shelling out for luxury brands. The last time we went through a recession upscale retailers like Polo Ralph Lauren (RL) actually held up pretty well. This time? Not so much.

That's why the company's second-quarter earnings report was somewhat reassuring. True, Polo blew past Street estimates, but then it's done that for at least nine quarters in a row. More encouraging was an expansion in gross margin (an indication that the company is getting some pricing power back), as well as its better outlook for sales in 2010.