First Quarter 2008 Revenues Increased by 42%, to $378 Million
First Quarter 2008 EPS Increased by 65%, to $0.38 Versus $0.23 Last Year
Company Raises Fiscal Year EPS Guidance to a Range of $1.75 to $1.80, from a
Range of $1.65 to $1.70
First Quarter Highlights
- Revenues grew 42.3% to $377.9 million
- North American comp sales up 13.6%
- Operating margin improved 240 basis points to 15.3%
- Net earnings grew 71.9% to $35.5 million
LOS ANGELES, June 5 /PRNewswire-FirstCall/ -- Guess?, Inc. (NYSE: GES) today reported financial results for the first quarter of its 2008 fiscal year, which ended May 5, 2007.
First Quarter 2008 Results
For the first quarter of fiscal 2008, the Company reported record net earnings of $35.5 million, an increase of 71.9% compared to net earnings of $20.7 million for the recast quarter ended April 29, 2006. Diluted earnings per share increased 65% to $0.38 per share in the current quarter versus $0.23 per share in the prior year quarter.
Paul Marciano, Chief Executive Officer, commented, "The strength of our brand and the solid execution of our global strategy have driven these record results, which represented our 15th consecutive quarter of earnings growth. I am extremely pleased with our team's outstanding performance. All of our businesses generated double digit revenue growth, led by strong execution in our international operations. In Europe, the addition of Focus Europe, our contemporary line, and the growth of our existing businesses drove a 77% sales increase in the segment. Strong sales performance in South Korea drove Asian revenues higher and led to a 77% increase in our wholesale segment revenues."
Mr. Marciano continued, "Our North American retail business performed extremely well, posting its 17th consecutive quarter of same store sales growth. And the strength of our accessory lines drove licensing revenue growth of 42%. It is important to note that our footwear licensee's business has been expanding rapidly. Compared to just a year ago, their business has experienced explosive revenue growth, more than doubling its volume in the period. We continue to be very excited about the prospects of this business both domestically and internationally."
Mr. Marciano concluded, "On a consolidated basis, we increased net earnings by 71.9%, driven by earnings growth in all of our businesses around the world. Our earnings were well balanced and our performance once again demonstrates the power of our diversified business model."
Total net revenue for the first quarter of fiscal 2008 increased 42.3% to $377.9 million from $265.7 million in the prior-year period. The Company's retail stores in the U.S. and Canada generated revenue of $179.5 million in the first quarter of fiscal 2008, a 19% increase from $150.9 million in the same period a year ago. Comparable store sales increased 13.6% for the quarter ended May 5, 2007, compared to the thirteen weeks ended May 6, 2006. The Company operated 336 retail stores in the U.S. and Canada at the end of the first quarter of fiscal 2008 versus 316 stores a year earlier.
Net revenue from the Company's wholesale segment, which includes the Company's Asian operations, increased 77.4% to $59.2 million in the first quarter of fiscal 2008, from $33.4 million in the prior-year period.
Net revenue from the Company's European segment increased 77.2% to $118.9 million in the first quarter of fiscal 2008, compared to $67.1 million in the prior-year period.
Licensing segment net revenue increased 41.5% to $20.3 million in the first quarter of fiscal 2008, from $14.3 million in the prior-year period.
Operating earnings for the first quarter of fiscal 2008 increased 69.0% to $57.9 million from $34.3 million in the prior-year period. Operating margin in the first quarter improved 240 basis points to 15.3%, compared to the prior year's quarter. This margin expansion was driven by better product margins, significant operating margin expansion in the wholesale segment, and the positive impact in the Company's first quarter business mix of the higher margin European business. The Company's SG&A rate increased 30 basis points quarter over quarter.
Five-Week Transition Period and Recast 2006 Financial Results
The Company also announced today the financial results for the five-week transition period ended February 3, 2007 and the results for the recast fourth quarter and year ended February 3, 2007. The five-week transition period resulted from the Company's decision to change its fiscal year. For the five-week transition period, revenues were $136.0 million, net earnings were $8.0 million and diluted earnings per share were $0.09 on a post-split basis. This represents a $0.09 improvement over the diluted earnings per share reported in the year-ago January period.
For the recast quarter ended February 3, 2007, revenues were $396.2 million, operating earnings were $71.4 million, operating margin reached 18.0% and net earnings were $45.9 million. Diluted earnings per share for the recast fourth quarter ended February 3, 2007 were $0.49.
Revenues for the recast year ended February 3, 2007 were $1.25 billion, operating earnings were $205.5 million, operating margin reached 16.4% and net earnings were $131.2 million. Diluted earnings per share for the recast year ended February 3, 2007 were $1.42.
The quarterly and annual recast financial information for 2006 is included in today's press release and is posted on the Company's website under the "Investor's Info" link.
Outlook
The Company's expectations for the second quarter ending July 7, 2007, are as follows:
- Consolidated net revenues are expected to range from $335 million to $345 million.
- Operating margin is expected to be about 14%.
- Diluted earnings per share are expected to be in the range of $0.31 to $0.33.
The Company's expectations for the fiscal year ending February 2, 2008, are now as follows:
- Consolidated net revenues are expected to range from $1.51 billion to $1.56 billion.
- Operating margin is expected to be about 17.5%.
- Diluted earnings per share are expected to be in the range of $1.75 to $1.80.
The fiscal year ending February 2, 2008 will include 52 weeks and a four-week January, compared to the recast year ended February 3, 2007, which included 53 weeks and a five-week January.
Dividend
The Company also announced today that its Board of Directors has declared a cash dividend of $0.06 per share on the Company's common stock. The dividend will be payable on July 6, 2007 to shareholders of record at the close of business on June 20, 2007.
The Company will hold a conference call at 4:30 pm (ET) on June 5, 2007 to discuss the news announced in this press release. A live webcast of the conference call will be accessible at http://www.guessinc.com via the "Investor's Info" link. The webcast will be archived on the website for 30 days.
Guess?, Inc. designs, markets, distributes and licenses a lifestyle collection of contemporary apparel, accessories and related consumer products. At May 5, 2007 the Company operated 336 retail stores in the United States and Canada. The Company also distributes its products through better department and specialty stores around the world. For more information about the Company, please visit http://www.guessinc.com.
Except for historical information contained herein, certain matters discussed in this press release, including statements concerning the Company's future prospects and guidance for fiscal year 2008, are forward-looking statements that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are only expectations, and involve known and unknown risks and uncertainties, which may cause actual results in future periods to differ materially from what is currently anticipated. Factors which may cause actual results in future periods to differ materially from current expectations include our ability to, among other things, anticipate consumer preferences, effectively operate our retail stores, effectively manage inventories, successfully execute our strategies, including our supply chain and international growth strategies, and domestic and international general economic conditions and consumer confidence. In addition to these factors, the economic and other factors identified in the Company's most recent annual report on Form 10-K and other filings with the Securities and Exchange Commission, including but not limited to the risk factors discussed therein, could cause actual results to differ materially from current expectations.
Contacts: Carlos Alberini
President & Chief Operating Officer
(213) 765-3582
Dennis R. Secor
SVP & Chief Financial Officer
(213) 765-3289
Joseph Teklits
Integrated Corporate Relations
(203) 682-8258
Guess?, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(dollars in thousands, except per share data)
Three Months Ended
May 5, April 29,
2007 2006
$ % $ %
Net revenue
Product sales $357,643 94.6% $251,337 94.6%
Net royalties 20,306 5.4% 14,346 5.4%
377,949 100.0% 265,683 100.0%
Cost of product sales 210,367 55.7% 155,073 58.4%
Gross profit 167,582 44.3% 110,610 41.6%
Selling, general and administrative
expenses 109,648 29.0% 76,333 28.7%
Earnings from operations 57,934 15.3% 34,277 12.9%
Other (income) expense:
Interest expense 924 0.2% 1,465 0.6%
Interest income (1,712) (0.5%) (1,227) (0.5%)
Other, net 891 0.3% (297) (0.1%)
Earnings before income taxes and
minority interest 57,831 15.3% 34,336 12.9%
Income taxes 22,363 5.9% 13,665 5.1%
Minority interest (59) (0.0%) --- ---
Net earnings $35,527 9.4% $20,671 7.8%
Net earnings per share:
Basic $0.39 $0.23
Diluted $0.38 $0.23
Weighted number of shares outstanding:
Basic 91,886 90,146
Diluted 93,240 91,622
Guess?, Inc. and Subsidiaries
Consolidated Segment Data
(in thousands)
Three Months Ended
May 5, April 29, %
2007 2006 chg
Net revenue:
Retail operations $179,529 $150,861 19%
Wholesale operations 59,195 33,360 77%
European operations 118,919 67,116 77%
Licensing operations 20,306 14,346 42%
$377,949 $265,683 42%
Earnings (loss) from operations:
Retail operations $19,892 $13,689 45%
Wholesale operations 10,701 3,072 248%
European operations 27,717 16,944 64%
Licensing operations 17,357 11,888 46%
Corporate overhead (17,733) (11,316) 57%
$57,934 $34,277 69%
Operating margins:
Retail operations 11.1% 9.1%
Wholesale operations 18.1% 9.2%
European operations 23.3% 25.2%
Licensing operations 85.5% 82.9%
Total Company 15.3% 12.9%
Guess?, Inc. and Subsidiaries
Selected Condensed Consolidated Balance Sheet Data
(in thousands)
May 5, February 3, April 29,
2007 2007 2006
ASSETS
Cash and cash equivalents $189,396 $207,617 $155,533
Receivables, net 206,383 142,659 125,976
Inventories, net 164,500 173,668 108,241
Other current assets 39,373 39,523 34,166
Property and equipment, net 176,722 162,555 150,730
Other assets 126,412 117,300 97,026
Total Assets $902,786 $843,322 $671,672
LIABILITIES AND STOCKHOLDERS' EQUITY
Current installments of notes
payable, long-term debt and capital
lease $37,547 $20,804 $44,768
Other current liabilities 253,171 258,725 164,536
Notes payable, long-term debt and
capital lease, excluding current
installments 17,796 17,336 52,152
Other liabilities 103,328 103,126 88,420
Minority interest 4,548 4,607 ---
Stockholders' equity 486,396 438,724 321,796
Total Liabilities and Stockholders'
Equity $902,786 $843,322 $671,672
Guess?, Inc. and Subsidiaries
Condensed Consolidated Cash Flow Data
(in thousands)
Three Months Ended
May 5, April 29,
2007 2006
Net cash used in operating activities $(11,357) $(17,726)
Net cash used in investing activities (24,867) (13,039)
Net cash provided by financing
activities 16,440 18,559
Effect of exchange rates on cash 1,563 545
Net increase in cash and cash
equivalents (18,221) (11,661)
Cash and cash equivalents at the
beginning of the year 207,617 167,194
Cash and cash equivalents at the end
of the period $189,396 $155,533
Supplemental information:
Depreciation and amortization $12,702 $8,372
Rent 25,875 20,160
Guess?, Inc. and Subsidiaries
Retail Store Data
U.S. and Canada
Three Months Ended
May 5, April 29,
2007 2006
Number of stores at the beginning of
the year 334 311
Store openings 8 9
Store closures (6) (4)
Number of stores at the end of the
period 336 316
Total store square footage at the end
of the period 1,603,000 1,553,000
Guess?, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(dollars in thousands, except per share data)
Three Months Ended Three Months Ended Three Months Ended
April 29, July 29, October 28,
2006 2006 2006
$ % $ % $ %
Net revenue
Product sales $251,337 94.6% $247,685 94.6% $311,914 94.9%
Net royalties 14,346 5.4% 14,264 5.4% 16,902 5.1%
265,683 100.0% 261,949 100.0% 328,816 100.0%
Cost of product
sales 155,073 58.4% 151,618 57.9% 174,285 53.0%
Gross profit 110,610 41.6% 110,331 42.1% 154,531 47.0%
Selling, general and
administrative
expenses 76,333 28.7% 76,683 29.3% 88,366 26.9%
Earnings from
operations 34,277 12.9% 33,648 12.8% 66,165 20.1%
Other (income)
expense:
Interest expense 1,465 0.6% 1,794 0.7% 1,517 0.5%
Interest income (1,227) (0.5%) (1,494) (0.6%) (1,770) (0.6%)
Other, net (297) (0.1%) (827) (0.3%) (1,646) (0.5%)
Earnings before
income taxes and
minority interest 34,336 12.9% 34,175 13.0% 68,064 20.7%
Income taxes 13,665 5.1% 13,652 5.1% 23,963 7.3%
Minority interest --- --- (123) (0.0%) 111 0.0%
Net earnings $20,671 7.8% $20,646 7.9% $43,990 13.4%
Net earnings per
share:
Basic $0.23 $0.23 $0.48
Diluted $0.23 $0.22 $0.48
Weighted number of
shares outstanding:
Basic 90,146 90,594 90,846
Diluted 91,622 91,936 92,250
Guess?, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(dollars in thousands, except per share data)
Three Months Ended Twelve Months Ended
February 3, February 3,
2007 2007
$ % $ %
Net revenue
Product sales $374,592 94.5% $1,185,528 94.6%
Net royalties 21,624 5.5% 67,136 5.4%
396,216 100.0% 1,252,664 100.0%
Cost of product sales 219,179 55.3% 700,155 55.9%
Gross profit 177,037 44.7% 552,509 44.1%
Selling, general and
administrative
expenses 105,608 26.7% 346,990 27.6%
Earnings from operations 71,429 18.0% 205,519 16.4%
Other (income) expense:
Interest expense 2,886 0.7% 7,662 0.6%
Interest income (1,748) (0.4%) (6,239) (0.5%)
Other, net (1,890) (0.5%) (4,660) (0.4%)
Earnings before income taxes and
minority interest 72,181 18.2% 208,756 16.7%
Income taxes 26,335 6.6% 77,615 6.2%
Minority interest (19) (0.0%) (31) (0.0%)
Net earnings $45,865 11.6% $131,172 10.5%
Net earnings per
share:
Basic $0.50 $1.44
Diluted $0.49 $1.42
Weighted number of
shares outstanding:
Basic 91,506 90,786
Diluted 92,892 92,222
Guess?, Inc. and Subsidiaries
Consolidated Segment Data
(in thousands)
Three Three Three Three Twelve
Months Months Months Months Months
Ended Ended Ended Ended Ended
Apr 29, Jul 29, Oct 28, Feb 3, Feb 3,
2006 2006 2006 2007 2007
Net revenue:
Retail operations $150,861 $166,095 $178,834 $245,314 $741,104
Wholesale operations 33,360 32,824 43,939 42,500 152,623
European operations 67,116 48,766 89,141 86,778 291,801
Licensing operations 14,346 14,264 16,902 21,624 67,136
$265,683 $261,949 328,816 396,216 $1,252,664
Earnings (loss) from
operations:
Retail operations $13,689 $20,939 $26,787 $44,109 $105,524
Wholesale operations 3,072 5,394 9,040 7,660 25,166
European operations 16,944 8,219 31,103 16,914 73,180
Licensing operations 11,888 13,232 13,115 20,421 58,656
Corporate overhead (11,316) (14,136) (13,880) (17,675) (57,007)
$34,277 $33,648 $66,165 $71,429 $205,519
Operting margins:
Retail operations 9.1% 12.6% 15.0% 18.0% 14.2%
Wholesale operations 9.2% 16.4% 20.6% 18.0% 16.5%
European operations 25.2% 16.9% 34.9% 19.5% 25.1%
Licensing operations 82.9% 92.8% 77.6% 94.4% 87.4%
12.9% 12.8% 20.1% 18.0% 16.4%
Guess?, Inc. and Subsidiaries
Selected Condensed Consolidated Balance Sheet Data
(in thousands)
April 29, July 29, October 28, February 3,
2006 2006 2006 2007
ASSETS
Cash and cash equivalents $155,533 $196,027 $163,806 $207,617
Restricted cash --- --- 16,361 ---
Receivables, net 125,976 109,068 173,750 142,659
Inventories, net 108,241 132,453 144,514 173,668
Other current assets 34,166 36,911 39,097 39,523
Property and equipment, net 150,730 157,755 160,677 162,555
Other assets 97,026 104,630 109,337 117,300
Total Assets $671,672 $736,844 $807,542 $843,322
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current installments of notes
payable, long-term debt and
capital lease $44,768 $26,262 $52,585 $20,804
Other current liabilities 164,536 226,805 229,159 258,725
Notes payable, long-term
debt and capital lease,
excluding current
installments 52,152 46,946 41,122 17,336
Other long-term liabilities 88,420 88,606 87,930 103,126
Minority interest --- 367 478 4,607
Stockholders' equity 321,796 347,858 396,268 438,724
Total Liabilities and
Stockholders' Equity $671,672 $736,844 $807,542 $843,322
Guess?, Inc. and Subsidiaries
Condensed Consolidated Cash Flow Data
(in thousands)
Three Months Six Months Nine Months Twelve Months
Ended Ended Ended Ended
April 29, July 29, October 28, February 3,
2006 2006 2006 2007
Net cash (used in)
provided by operating
activities $(17,726) $63,102 $39,514 $141,738
Net cash used in
investing activities (13,039) (32,813) (47,785) (75,708)
Net cash provided
(used in) financing
activities 18,559 (2,087) 4,243 (25,942)
Effect of exchange rates on
cash 545 631 640 335
Net (decrease) increase in
cash and cash
equivalents (11,661) 28,833 (3,388) 40,423
Cash and cash equivalents
at the beginning of the
year 167,194 167,194 167,194 167,194
Cash and cash equivalents
at the end of the
period $155,533 $196,027 $163,806 $207,617
Supplemental information:
Depreciation and
amortization $8,372 $17,888 $27,991 $39,600
Rent 20,160 41,195 63,003 85,368
Guess?, Inc. and Subsidiaries
Retail Store Data
U.S. and Canada
Three Months Six Months Nine Months Twelve Months
Ended Ended Ended Ended
April 29, July 29, October 28, February 3,
2006 2006 2006 2007
Number of stores at
the beginning of the
year 311 311 311 311
Store openings 9 17 27 33
Store closures (4) (6) (6) (10)
Number of stores at
the end of the
period 316 322 332 334
Total store square
footage at the end
of the period 1,553,000 1,574,000 1,607,000 1,610,000
Three Three Three Three Twelve
Months Months Months Months Months
Ended Ended Ended Ended Ended
April 29, July 29, October 28, February 3, February 3,
2006 2006 2006 2007 2007
Comparable store
sales percentage
increase 12.6% 13.7% 8.9% 11.0% 11.4%
SOURCE Guess?, Inc.
06/05/2007
CONTACT: Carlos Alberini, President & Chief Operating Officer,
+1-213-765-3582, or Dennis R. Secor, SVP & Chief Financial Officer,
+1-213-765-3289, both of Guess?, Inc.; or Joseph Teklits of Integrated
Corporate Relations, +1-203-682-8258, for Guess?, Inc.
Web site: http://www.guessinc.com
(GES)