Guess Earnings: Rings Past Revenue Estimate

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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 Inc. Earnings Cheat Sheet

Results: Net income for Guess Inc. fell to $36.6 million (43 cents per share) vs. $66.3 million (71 cents per share) a year earlier. This is a decline of 44.7% from the year-earlier quarter.

Revenue: Fell 2.2% to $628.8 million from the year-earlier quarter.

Actual vs. Wall St. Expectations: Guess Inc. fell short of the mean analyst estimate of 44 cents per share. It beat the average revenue estimate of $569.9 million.

Quoting Management: Paul Marciano, Chief Executive Officer, commented, “Third quarter earnings were consistent with our guidance but fell short of our operational goals, as economic pressures impacted consumer confidence in most of our markets. Our European business was stronger at the beginning of the quarter, though business softened toward the end of the period. We posted solid double digit growth in Asia. In North America, our key strategies remain relevant as we focus on driving traffic to the stores through enhanced customer engagement initiatives and elevating the brand with quality.” Mr. Marciano continued, “We do expect that the current market conditions in the global economy will continue for some time and we are more cautious on near term customer demand trends. Accessories performance, specifically handbags and watches, have been a top priority and I am very confident of these categories going forward. Our goal is to retain our high-quality standards. Meanwhile, our team is focused on shortening the development cycle of a large portion of our products to a fast track calendar to deliver current trends at the right time, in addition to our iconic denim lines for men and women that we have offered for the last 30 years.” Mr. Marciano concluded, “We have a strong financial position and will run our business proactively to adapt to the existing economic climate, manage our expenses and inventories tightly and reallocate capital in growth regions of the world, specifically Eastern and Northern Europe as well as Asia. We plan to evaluate new strategies to drive growth and profitability and improve the performance of our stores in the U.S. and in Canada. At the same time, with our strong financial position, our goal is to focus on delivering balanced returns to our shareholders, including through our dividend and share repurchase programs.”

Key Stats:

Revenue has been on the decline for three quarters in a row. In the second quarter, revenue declined 6.2% to $635.4 million while the figure fell 2.2% in the first quarter from the year earlier.

The company has now fallen short of estimates in the last two quarters. In the second quarter, it missed expectations by one cent with net income of 49 cents versus a mean estimate of net income of 50 cents per share.

Looking Forward: Expectations for the company’s next-quarter results are lower than they have been. Over the past sixty days, the average estimate for fourth quarter has fallen from 98 cents per share to 95 cents. The average estimate for the fiscal year is $2.17 per share, down from $2.20 ninety days ago.

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

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