Guess? Q4 Profit, Sales Stumble May Continue to Q1

In What's New, Industry News by Jeff Prine

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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