Guess posts solid revenue gains and expectation-topping earnings

By

Robin Driver

Published
Aug 29, 2019

Los Angeles-based fashion brand Guess?, Inc. announced a 5.8% increase (8.8% in constant currencies) in second-quarter revenues on Tuesday, having made particular progress on the European market and in its American wholesale channel.  

 
Guess’ total net revenue for the second quarter ended August 3, 2019, came to $683.2 million, up from $645.9 million in the prior-year period.
 
In Europe, the company’s revenues rose 9.1%, or 14.1% in constant currencies, although retail comp sales decreased 3% (a 1% increase in constant currencies). In the Americas, retail revenues increased 0.9% (1.2% in constant currencies), but it was wholesale that made the biggest strides, registering a 22.3% rise (22.4% in constant currencies).

Elsewhere, Guess’ Asian revenues crept up 0.6%, or 5.2% in constant currencies, despite a 13% decline in retail comp sales. Quarterly licensing revenues fell 5.9%.
 
The company’s net earnings for the three-month period totaled $25.3 million, down 0.8% from the $25.5 million it reported in the previous year’s second quarter. Diluted earnings per share were $0.35, up 12.9% from $0.31.
 
Adjusted for one-time costs, Guess’ diluted EPS was $0.38, beating out analysts’ predictions of $0.29, as cited by Business Insider.
 
“I am very pleased with our second quarter financial performance, which delivered strong operating profit growth,” said Guess CEO Carlos Alberini in a release. “This performance exceeded our expectations and was driven by a solid top line increase, strong margin performance and effective expense management.”
 
Year to date, the company’s total net revenue rose 4.5% to $1.22 billion, compared to $1.17 billion in the first half of the previous year. Here again, wholesale in the Americas was a bright spot, posting a 17.6% increase, while retail revenues in the region rose 1.9%.
 
In Europe, the company’s revenues rose 6.4%, while Asian sales increased 1.0%, and licensing revenues saw a 5.4% decrease.
 
Net earnings for the six-month period jumped 8.4% to $3.9 million, compared to $4.3 million in the same period in the previous year. Diluted EPS remained flat at $0.05.
 
 “Based on our second quarter performance, our strong inventory position and our expectations for the Fall and Holiday seasons, we are raising our guidance for the full year,” added Alberini. “As we previously communicated, our team is finalizing our strategic business planning process and we plan to share our findings and key strategic initiatives by the end of October.”
 
Looking forward, Guess expects to see an increase in net revenue of between 2.0% and 3.0% in the third quarter, with EPS predicted to be in the range of $0.12 to $0.15. For the full fiscal year 2020, the company expects revenues to rise between 3.0% and 3.5%, while EPS is predicted to be between $1.18 to $1.26.