Guess? Q4 Profit, Sales Stumble May Continue to Q1

From the Guess? Spring/Summer brand magazine

From the Guess? Spring/Summer brand magazine

Los Angeles—Another Millennial brand hit by promotions and lower traffic during fourth quarter: Guess? Inc. said late Wednesday afternoon that its profit and sales were down especially in North America.

For the quarter ended Feb. 1, the jeanswear and accessories company posted a profit of $69.6 million, or 82 cents a share, down from $72.6 million, or 85 cents a share, a year earlier. Excluding restructuring-related charges and items, adjusted earnings were 83 cents a share, which beat estimates for 80 cents a share.

Weak Q1 Forecast Hits Shares

Net revenue slipped 5.7% to $768.4 million, missing analysts’ estimate for $773 million in sales. Gross margin narrowed to 39.3% from 40.8%.

The company’s North American stores reported a 6% decrease in sales to $329 million. Comparable store sales fell 4.4% due to lower mall traffic in the United States and Canada. (Excluding the currency fluctuations, segment revenues slipped 3%.)

Net revenue in the North American wholesale segment fell 20% to $41.0 million. Licensing revenue was down 2.6% to $28.4 million.

In Europe, sales were down 4.4% 4.4% to $287.1 million, due to lower wholesale business of Spring/Summer’14 order.

“2013 was a challenging year and I was especially disappointed in the performance of North American retail business outside of online sales,” said Paul Marciano, co-founder/ceo.

Even Asia sales slipped, down 1.4% to $83 million “due to weak results in Greater China following lower consumer spending.”

For its full fiscal year, Guess? reported earnings of $1.91 a share, ahead of analysts’ estimate for $1.89 a share. Total revenue was down 3% to $2.6 billion due to lower traffic in most of the company stores.

Looking ahead, Guess? forecast a first quarter loss that sent its shares down more than 5% in early trading today.

The company expects an adjusted loss of 5 cents to 9 cents a share and revenue of $520 million to $535 million. Analysts’ average estimate was for 11 cents a share in earnings and $546.3 million in sales.

Nonetheless, Guess? predicted its full year adjusted earnings would be $1.40 to $1.60 a share on sales in the range of $2.53 billion to $2.58 billion. Analysts’ consensus expects $2 a share in full year earnings on revenue of $2.6 billion.

Marciano said the more optimistic forecast was due to the company’s gains online.

“We have high hopes for this year but we still have to make a lot of investment, a lot of adjustment and patience,” Marciano told analysts in a conference call.

 

 

 

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Jeff Prine, Editor at Large, Accessories Magazine
Jeff returns as a regular contributor to Accessories magazine. Initially Jeff worked as senior editor at Accessories more than 20 years ago and his love of the industry has followed him until present. Since his tenure here, Jeff has continued to report jewelry, watch and other luxury goods trends as executive editor at Modern Jeweler magazine, fashion director at Lustre, and as contributor on products and trends for consumer and trade publications and websites. In addition to his editorial experience, Jeff also served as an adjunct instructor for accessories merchandising at Fashion Institute of Technology. jeffp@busjour.com

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