Guess Inc. Earnings: Increased Costs Strains Margins as Profit Drops

Guess Inc. (NYSE:GES) reported its results for the fourth 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 Fourth Quarter

Results: Net income for Guess Inc. fell to $95.9 million ($1.05 per share) vs. $103.3 million ($1.11 per share) a year earlier. This is a decline of 7.2% from the year-earlier quarter.

Revenue: Rose 2.5% to $775.8 million from the year-earlier quarter.

Actual vs. Wall St. Expectations: Guess Inc. fell in line with the mean analyst estimate of $1.05 per share. Analysts were expecting revenue of $778.8 million.

Quoting Management: Paul Marciano, Chief Executive Officer, commented, “We are pleased to deliver fourth quarter earnings consistent with our expectations, even as economic pressures impacted consumer confidence in some of our markets. These results mark the end of a year in which we made significant progress on important initiatives that support our long-term objectives. We leveraged the global momentum of the Guess? brand, opening 261 new stores during the year, and increased revenues in all segments. We reached the $1 billion revenue mark in Europe for the first time and gained significant traction in Northern and Eastern Europe, where we are developing a strong market presence. South Korea and China continued their double digit growth and in North America, we succeeded in elevating the Guess brand, which drove significant profit improvements in that region.”

Key Stats:

For each of the last four quarters, the company has seen its net income fall. In the third quarter, net income fell 4% while the figure fell 9.1% in the second quarter and 15.2% in the first quarter.

Gross margin shrank 0.9 percentage point to 43.5%. The contraction appeared to be driven by increased costs, which rose 4.2% from the year earlier quarter while revenue rose 2.5%.

Revenue has risen for the last four quarters. Revenue increased 4.7% to $642.8 million in the third quarter. The figure rose 17.3% in the second quarter from the year earlier and climbed 9.8% in the first quarter from the year-ago quarter.

The company met estimates last quarter after falling short of forecasts in the previous quarter with net income of 71 cents versus a mean estimate of net income of 73 cents per share.

Looking Forward: Analysts appear increasingly negative about the company’s results for the next quarter. The average estimate for the first quarter of the next fiscal year has moved down from 52 cents a share to 51 cents over the last ninety days. Over the past sixty days, the average estimate for the fiscal year has reached $3.06 abs per share, a decline from $3.08.

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

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