Guess, Inc. Earnings: Margins Shrink on Rising Costs, Net Income Falls

Guess, Inc. (NYSE:GES) reported its results for the first quarter. Guess Inc designs, markets, distribute and licenses a leading lifestyle collection of contemporary apparel and accessories for men, women and children that reflect the American lifestyle and European fashion sensibilities.

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Guess Earnings Cheat Sheet for the First Quarter

Results: Net income for Guess, Inc. fell to $42.7 million (46 cents/share) vs. $50.3 million (54 cents/share) a year earlier. A decline of 15.2% from the year earlier quarter.

Revenue: Rose 9.8% to $592.2 million YoY.

Actual vs. Wall St. Expectations: GES beat the mean analyst estimate of 44 cents/share. Estimates ranged from 43 cents per share to 46 cents per share.

Quoting Management: Paul Marciano, Chief Executive Officer, commented, “We are pleased with our first quarter performance, with all of our businesses delivering earnings within or beyond our previous expectations. We continued to expand the global presence of the Guess? brand, with each of our segments growing in the quarter. Europe and Asia continued to drive that expansion, individually delivering double digit revenue increases, which combined to represent almost two-thirds of the Company’s top line growth. Our team executed well, managing costs and inventories tightly, which produced an operating margin that was two full points stronger than our previous expectations.”

Key Stats:

Last quarter’s profit decrease breaks a streak of four consecutive quarters of year-over-year profit increases. In the fourth quarter of the last fiscal year, net income rose 19.3% from the year earlier while the figure increased 7.8% in third quarter of the last fiscal year, 12.1% four quarters ago and 54.7% five quarters earlier.

Gross margin shrunk 1.5 percentage points to 42.1%. The contraction appeared to be driven by rising costs as the figure rose 12.8% from the year earlier quarter while revenue rose 9.8%.

Revenue has risen the past four quarters. Revenue increased 17.9% to $756.9 million in fourth quarter of the last fiscal year. The figure rose 17.4% in third quarter of the last fiscal year from the year earlier and climbed 10.5% in second quarter of the last fiscal year from the year-ago quarter.

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 are up 2.48% from the previous close.

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(Sources: YahooFinance, Xignite Financials)