Guess? Earnings Call Insights: Q1 Conversion Rate and Europe Outlook

Guess?(NYSE:GES) recently reported its first quarter earnings and discussed the following topics in its earnings conference call.

Q1 Conversion Rate

Erinn Murphy – Piper Jaffray: Nice to see some of the top line improvements in North America. I guess, I wanted to focus a little bit more on that segment specifically just kind of pacing out both the top line kind of recent improvement and then coupling that with kind of the profitability in the quarter. I guess the first part of this is how should we think about the conversion rate in the first quarter as you did start to kind of test some of the product, kind of, sharper price points in the product categories as $79 denim. Did that actually help improve conversion? Then what kind of products have you been seeing standout in the second quarter to date?

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Russell Bowers – CFO, North America Retail Business: So to follow-up on that. Yes, we did see trends get a lot better during the quarter. With the first half we were down in the teens and the second half we were down mid-singles. In May so far we’ve improved even more and just as importantly, we haven’t given up as much in product margin as we did in the first quarter, it’s down, but it’s only down about a third of what we lost in Q1, so trends are really looking better across the board. In regards to the conversion rate, yes conversion has improved for us. It was up over last year during the first quarter and it’s still up so far in the second quarter. So we are encouraged by that. In relation to the pricing, it’s still early to draw a lot of conclusions based on that because we haven’t done it in a big way yet. I mean we’ve really just added $179 style to the denim wall and there was another style that we repriced that wasn’t as significant. But we have seen some positive results with the lower price denim so far and a lot of the entry-level price point glasses have also done well. Of course the overall numbers are better too. So we are encouraged.

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