Guess Inc. Earnings Cheat Sheet: Profit Slides Again

Guess Inc. (NYSE:GES) reported its results for the third quarter. Guess designs, markets, distribute and licenses a leading lifestyle collection of contemporary apparel and accessories for men, women and children.

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Guess Earnings Cheat Sheet for the Third Quarter

Results: Net income for Guess Inc. fell to $66.3 million (71 cents per share) vs. $69.1 million (75 cents per share) a year earlier. This is a decline of 4% from the year earlier quarter.

Revenue: Rose 4.7% to $642.8 million from the year earlier quarter.

Actual vs. Wall St. Expectations: GES fell short of the mean analyst estimate of 74 cents per share. Analysts were expecting revenue of $655.2 million.

Quoting Management: Paul Marciano, Chief Executive Officer, commented, “We are pleased to deliver third quarter earnings consistent with our expectations, even as economic pressures have intensified and are affecting consumer confidence in many of our markets, particularly in Europe. During the quarter, we made good progress on many key strategic initiatives. Our efforts to elevate our brand in North America are yielding significant improvements in profitability. We enjoy momentum in Asia and the newer markets in Europe where our brand is well known but where our business is still under-penetrated. And we are focusing on sound execution, managing our inventories, expenses and capital prudently.”

Key Stats:

Revenue has risen the past four quarters. Revenue increased 17.3% to $677.2 million in the second quarter. The figure rose 9.8% in the first quarter from the year earlier and climbed 17.9% in the fourth quarter of the last fiscal year from the year-ago quarter.

The company has now seen net income fall in each of the last three quarters. In the second quarter, net income fell 9.1% from the year earlier, while the figure fell 15.2% in the first quarter.

The company fell short of forecasts after beating estimates in the previous two quarters. In the second quarter, it topped the mark by 3 cents, and in the first quarter, it was ahead by 11 cents.

Gross margins grew 50.9 percentage points to 94.3%. The growth appeared to be driven by falling costs, as the figure fell 89.5% from the year earlier while revenue rose 4.7%.

Looking Forward: Analysts appear increasingly negative about the company’s results for the next quarter. The average estimate for the fourth quarter has moved down from $1.32 a share to $1.25 over the last ninety days. For the fiscal year, the average estimate has moved down from $3.47 a share to $3.32 over the last ninety days.

Competitors to Watch: Liz Claiborne, Inc. (NYSE:LIZ), The Wet Seal, Inc. (NASDAQ:WTSLA), Express, Inc. (NYSE:EXPR), Destination Maternity Corp. (NASDAQ:DEST), The Cato Corporation (NYSE:CATO), bebe stores, inc. (NASDAQ:BEBE), Cache, Inc. (NASDAQ:CACH), Carter’s, Inc. (NYSE:CRI), The Talbots, Inc. (NYSE:TLB), and Ascena Retail Group Inc (NASDAQ:ASNA).

Stock Performance: Shares of GES were up 4.2% from the previous close.

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(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

 

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