Feb 16, 2006 /PRNewswire-FirstCall via COMTEX News Network/ -- Guess?, Inc. (NYSE: GES) today reported record financial results for the fourth quarter and fiscal year ended December 31, 2005. Net revenue and net earnings for the quarter and the year were at their highest levels since the Company went public in 1996.
Fourth Quarter Results
For the fourth quarter of 2005, the Company reported net earnings of $25.8 million, or diluted earnings of $0.57 per share, compared to net earnings of $14.9 million, or diluted earnings of $0.33 per share, for the fourth quarter of 2004.
Paul Marciano, Co-Chairman and Co-CEO, commented, "The record revenues and earnings performance in the fourth quarter cap off a strong year for Guess?. These results reflect the progress that we have made in all our businesses -- retail and wholesale operations in North America, our European business, and domestic and international licensing. We believe that Guess? customers around the world continue to respond favorably to our product assortment and mix which is supported by a consistent, global branding effort. In our core North American retail business, fourth quarter comparable store sales increased 15.9%. Retail productivity rose while we maintained appropriate inventory levels. Our balance sheet and cash flow continue to strengthen and should continue to provide most of the funding for our future growth."
Mr. Marciano continued, "We have been emphasizing the globalization of the Guess? brand and the full-year 2005 results show the early success of this strategy. Our earnings were more balanced geographically with the North American segments contributing about half, and Europe and worldwide licensing the other half. Our European business, including our jeanswear licensee which we acquired in January 2005, earned $28.1 million from operations compared to $7.7 million the prior year. We see further opportunities in Europe and elsewhere, especially in Asia. We believe that our growing global presence will help us drive strong and consistent results."
Total net revenue for the fourth quarter of 2005 increased 23.5% to $276.6 million from $224.0 million in the fourth quarter of 2004. The Company's retail stores, including those in Canada, generated revenues of $207.1 million in the 2005 fourth quarter, a 20.5% increase from $172.0 million reported in the same period a year ago. Comparable store sales increased 15.9% during the fourth quarter of 2005 from the year-ago period. Net revenue from the Company's wholesale segment was flat at $33.0 million in the fourth quarter of 2005 compared to the year-ago period. Net revenue from the Company's European operations segment increased 243.8% to $22.9 million in the fourth quarter of 2005, compared to $6.6 million in the prior-year period, following the acquisition of the Company's European jeanswear licensee in January 2005. Licensing segment net revenue increased 10.1% to $13.7 million in the 2005 fourth quarter from $12.4 million in the fourth quarter last year.
Full Year 2005 Results
For the full year ended December 31, 2005, the Company reported net earnings increased to $58.8 million, or diluted earnings of $1.31 per share, versus net earnings of $29.6 million, or diluted earnings of $0.66 per share, in the comparable 2004 period. The 2005 results include in the third quarter a special performance-based compensation expense of $4.6 million, or $2.7 million after tax, or $0.06 per diluted share, related to the performance and contributions of the licensing business to the Company's operations. There was no corresponding expense in the comparable prior year period.
Total net revenue for 2005 increased 28.4% to $936.1 million from $729.3 million in 2004. The Company's retail stores, including those in Canada, generated revenue of $612.9 million for 2005, an increase of 18.1% from $518.9 million for last year. Comparable store sales increased 9.2% for the 2005 year. Net revenue from the Company's wholesale segment increased slightly to $121.1 million in 2005 from $120.4 million in 2004. Net revenue from the Company's European operations increased 259.6% to $153.8 million for 2005, compared to $42.8 million in the prior year period, following the acquisition of the Company's European jeanswear licensee in January 2005. Licensing segment net revenue for 2005 increased 2.3% to $48.3 million from $47.2 million for the prior year.
The Company will hold a conference call at 1:00 pm (ET) on February 16, 2006 to discuss the news announced in this press release. A live webcast of the conference call will be accessible at www.guess.com via the "Investor's Info" link from the "Guess?, Inc." section of the site. 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 January 28, 2006, the Company operated 311 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 www.guess.com.
Except for historical information contained herein, certain matters discussed in this press release 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 and other future events to differ materially from what is currently anticipated. Factors which may cause actual results in future periods to differ from current expectations include, among other things, the continued desirability and customer acceptance of existing and future product lines (including licensed product lines), the successful integration of acquisitions, new stores and new licensees into existing operations, the successful execution of our international growth strategies, possible cancellations of wholesale orders, the success of competitive products, the continued availability of adequate sources of capital, our ability to attract and retain key personnel, general economic conditions, acts of terrorism or acts of war, government regulation, currency fluctuations and possible future litigation. 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 affect the forward-looking statements contained herein and in the Company's other public documents.
Contact: Carlos Alberini
President & Chief Operating Officer
(213) 765-3582
Frederick G. Silny
SVP & Chief Financial Officer
(213) 765-3289
Guess?, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(dollars in thousands, except per share data)
Three Months Ended
December 31, December 31,
2005 2004
$ % $ %
Net revenue
Product sales $262,980 95.1% $211,573 94.5%
Net royalties 13,669 4.9% 12,410 5.5%
276,649 100.0% 223,983 100.0%
Cost of product sales 158,919 57.4% 135,573 60.5%
Gross profit 117,730 42.6% 88,410 39.5%
Selling, general and
administrative expenses 74,307 26.9% 62,264 27.8%
Earnings from operations
43,423 15.7% 26,146 11.7%
Other (income) expense:
Interest expense 1,870 0.7% 1,293 0.6%
Interest income (1,124) 0.4%) (275) (0.1%)
Other, net -- -- (265) (0.1%)
Earnings before
income taxes 42,677 15.4% 25,393 11.3%
Income taxes 16,875 6.1% 10,540 4.7%
Net earnings $25,802 9.3% $14,853 6.6%
Net earnings per share:
Basic $0.58 $0.34
Diluted $0.57 $0.33
Weighted number of
shares outstanding:
Basic 44,698 44,169
Diluted 45,589 44,622
Year Ended
December 31, December 31,
2005 2004
$ % $ %
Net revenue
Product sales $887,782 94.8% $682,020 93.5%
Net royalties 48,310 5.2% 47,242 6.5%
936,092 100.0% 729,262 100.0%
Cost of product sales 555,223 59.3% 455,278 62.4%
Gross profit 380,869 40.7% 273,984 37.6%
Selling, general and
administrative expenses 279,059 29.8% 218,502 30.0%
Earnings from operations 101,810 10.9% 55,482 7.6%
Other (income) expense:
Interest expense 6,741 0.7% 5,653 0.7%
Interest income (2,626) (0.2%) (619) (0.1%)
Other, net -- -- (265) --
Earnings before
income taxes 97,695 10.4% 50,713 7.0%
Income taxes 38,882 4.1% 21,147 2.9%
Net earnings $58,813 6.3% $29,566 4.1%
Net earnings per share:
Basic $1.33 $0.67
Diluted $1.31 $0.66
Weighted number of
shares outstanding:
Basic 44,387 44,010
Diluted 45,059 44,544
Guess?, Inc. and Subsidiaries
Consolidated Segment Data
(in thousands)
Three Months Ended Year Ended
December 31, December 31, December 31, December 31,
2005 2004 2005 2004
Net revenue:
Retail operations $207,127 $171,950 $612,862 $518,855
Wholesale
operations 33,002 32,977 121,103 120,392
European
operations(1) 22,851 6,646 153,817 42,773
Licensing
operations(1) 13,669 12,410 48,310 47,242
$276,649 $223,983 $936,092 $729,262
Earnings (loss)
from operations:
Retail operations $36,449 $24,177 $65,274 $47,788
Wholesale
operations 3,143 1,122 7,325 (5,565)
European
operations(1) 192 (1,615) 28,103 7,748
Licensing
operations(1) 12,892 9,544 37,804 37,722
Corporate overhead (9,253) (7,082) (36,696) (32,211)
$43,423 $26,146 $101,810 $55,482
(1). The European operations segment includes net revenue and earnings
from the acquired European Jeanswear licensee commencing from the
acquisition date of January 3, 2005. In 2004, licensing income from
the licensee was included in the licensing operations segment. Net
revenues of the acquired business for the three and twelve month
periods ended December 31, 2005 were $17,204 and $84,361,
respectively. Earnings from operations for the acquired business
for the same periods were $1,243 and $11,945, respectively.
Licensing income included in the licensing operations segment for
the three and twelve month periods ended December 31, 2004 were
$1,732 and $5,873, respectively.
Guess?, Inc. and Subsidiaries
Selected Condensed Consolidated Balance Sheet Data
(in thousands)
December 31, December 31,
2005 2004
ASSETS
Cash and cash equivalents $171,549 $106,003
Restricted cash 2,759 3,660
Receivables, net 81,762 53,915
Inventories, net 122,037 82,329
Other current assets 32,670 25,116
Property and equipment, net 144,007 113,944
Other assets 78,590 39,337
Total Assets $633,374 $424,304
LIABILITIES AND STOCKHOLDERS' EQUITY
Current installments of notes payable
and long-term debt $34,232 $13,430
Other current liabilities 182,994 119,369
Notes payable and long-term debt,
excluding current installments 40,054 41,396
Other liabilities 87,801 29,532
Stockholders' equity 288,293 220,577
Total Liabilities and Stockholders' Equity $633,374 $424,304
Guess?, Inc. and Subsidiaries
Condensed Consolidated Cash Flow Data
(in thousands)
Year Ended
December 31, December 31,
2005 2004
Net cash provided by operating activities $142,768 $81,592
Net cash used in investing activities (69,072) (34,086)
Net cash used in financing activities (8,018) (8,813)
Effect of exchange rates on cash (132) 147
Net increase in cash and cash equivalents 65,546 38,840
Cash and cash equivalents at the beginning
of the year 106,003 67,163
Cash and cash equivalents at the end
of the period $171,549 $106,003
Supplemental information:
Depreciation and amortization $34,639 $35,442
Rent 73,126 63,352
Guess?, Inc. and Subsidiaries
Retail Store Data
U.S. and Canada
Year Ended
December 31, December 31,
2005 2004
Number of stores at the beginning of the year 287 265
Store openings 37 34
Store closures (9) (12)
Number of stores at the end of the period 315 287
Total store square footage at the end
of the period 1,563,000 1,460,000
SOURCE Guess?, Inc.
Carlos Alberini, President & Chief Operating Officer, +1-213-765-3582, or Frederick G. Silny, SVP & Chief Financial Officer, +1-213-765-3289, both of Guess?, Inc.
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