Print Page | E-mail Page
<< Back
Guess?, Inc. Reports First Quarter Results
Q1 Fiscal 2013 EPS Reached $0.30, Compared to $0.46 in Q1 Fiscal 2012
Q1 Revenues Decreased 2% to $579 Million; Increased Slightly in Constant Dollars
Provides Q2 EPS Guidance in the Range of $0.48 to $0.52
Maintains Full Year Fiscal 2013 EPS Guidance in the Range of $2.50 to $2.65

LOS ANGELES, May 22, 2012 /PRNewswire/ -- Guess?, Inc. (NYSE: GES) today reported financial results for the first quarter ended April 28, 2012.

First Quarter Fiscal 2013 Highlights

  • North American Retail revenues increased 2%; retail comp sales declined 5.5%
  • Asian revenues increased 8%
  • European revenues decreased 10% in U.S. dollars; declined 5% in local currency
  • Operating earnings decreased 45% and operating margin declined 520 basis points to 6.8%

First Quarter Fiscal 2013 Results

For the first quarter of fiscal 2013, the Company reported net earnings of $26.6 million, a 37.6% decrease compared to net earnings of $42.7 million for the first quarter of fiscal 2012.  Diluted earnings per share decreased 34.8% to $0.30, compared to $0.46 for the prior-year quarter.  The prior year quarter's earnings per share included $0.08 in net non-operating charges, primarily unrealized mark-to-market charges related to foreign currency contracts and balances.

Paul Marciano, Chief Executive Officer, commented, "We are pleased to deliver first quarter financial results that exceeded both our top and bottom line expectations, even as economic conditions remained challenging in many markets.  We continued to focus our efforts on growing in newer international markets, and we succeeded, expanding in key markets such as China, Germany and Russia.  While we did face economic headwinds in southern Europe, our brand remains strong there and our business is stable.  Our global licensing business outperformed expectations, even as our licensees encountered many of those same economic challenges."

Mr. Marciano continued, "We're off to a very encouraging start this year – a milestone year for Guess? as we celebrate our 30th anniversary.  We've launched great new marketing campaigns that invoke the rich tradition of Guess? and reach consumers through both traditional and social media.  We are developing innovative product designs to support our customers' lifestyle and reinforce our fashion authority.  We intend to leverage the strength of our global lifestyle brand and expand in underdeveloped markets and newer concepts.  As always, we will manage our business prudently from our position of financial strength and, above all, protect our most valuable asset, the Guess? brand."

Total net revenue for the first quarter of fiscal 2013 decreased 2.2% to $579.3 million from $592.2 million in the prior-year quarter.  In constant dollars, total net revenue increased slightly.

  • The Company's retail stores in North America generated revenue of $251.8 million in the first quarter of fiscal 2013, a 1.8% increase from $247.5 million in the same period a year ago.  Comparable store sales decreased 5.5% in U.S. dollars and 5.1% in local currency for the first quarter of fiscal 2013, compared to the same period a year ago.  The Company directly operated 503 retail stores in the United States and Canada at the end of the first quarter of fiscal 2013 versus 484 stores a year earlier.
  • Net revenue from the Company's Europe segment decreased 9.7% to $189.8 million in the first quarter of fiscal 2013, compared to $210.2 million in the prior-year period.  In local currency, net revenue decreased 4.6%.
  • Net revenue from the Company's Asia segment increased 7.9% to $64.8 million in the first quarter of fiscal 2013, from $60.1 million in the prior-year period.
  • Net revenue from the Company's North American Wholesale segment decreased 3.8% to $43.9 million in the first quarter of fiscal 2013, from $45.6 million in the prior-year period.
  • Licensing segment net revenue increased to $28.9 million in the first quarter of fiscal 2013, from $28.8 million in the prior-year period.

Operating earnings for the first quarter of fiscal 2013 declined 44.8% to $39.1 million (including a $0.9 million unfavorable currency translation impact) from $70.9 million in the prior-year period.  Operating margin in the first quarter declined 520 basis points to 6.8%, compared to the prior-year quarter.  The lower operating margin primarily reflects the impact of higher professional fees, higher selling and distribution expenses and increased investments in advertising and marketing, along with the impact of negative same stores sales on the Company's fixed cost structure.  Product margins increased slightly compared to the prior-year quarter, reflecting markdown improvements in North American Retail, along with the greater mix of retail business in Asia.  Other net income, which primarily relates to net unrealized revaluation gains on non-operating assets, partially offset by net unrealized mark-to-market losses on foreign currency contracts and balances, was $0.6 million for the first quarter of fiscal 2013.  This compares to other net expense of $10.0 million for the first quarter of fiscal 2012.

The Company's effective tax rate was 32.0% for the first quarter of fiscal 2013, compared to 29.5% for the first quarter of the prior-year.

Outlook

The Company updated its outlook for the fiscal year ending February 2, 2013, which is now as follows:

  • Consolidated net revenues are expected to range from $2.70 billion to $2.74 billion.
  • Operating margin is expected to be between 12.5% and 13.0%.
  • Diluted earnings per share are expected to be in the range of $2.50 to $2.65.

The Company's expectations for the second quarter of fiscal 2013 ending July 28, 2012, are as follows:

  • Consolidated net revenues are expected to range from $625 million to $635 million.
  • Operating margin is expected to be between 10.0% and 10.5%.
  • Diluted earnings per share are expected to be in the range of $0.48 to $0.52.

The Company's fiscal year 2013 will include 53 weeks, while fiscal 2012 included 52 weeks.  The Company's outlook for fiscal 2013 assumes that currently prevailing exchange rates will continue throughout the year.

Dividend

The Company also announced today that its Board of Directors has approved a quarterly cash dividend of $0.20 per share on the Company's common stock.  The dividend will be payable on June 22, 2012 to shareholders of record at the close of business on June 6, 2012.

Presentation of Non-GAAP Information

The financial information presented in this release for the first quarter ended April 28, 2012 includes both GAAP and non-GAAP measures.  The Company believes that these "non-GAAP" financial measures related to constant currency financial information are useful as an additional means for investors to evaluate the Company's operating results when reviewed in conjunction with the Company's GAAP financial statements.  The non-GAAP measures are provided in addition to, and not as alternatives for, the Company's reported GAAP results.

Foreign currency exchange rate fluctuations affect the amount reported from translating the Company's foreign revenues and expenses into U.S. dollars.  These rate fluctuations can have a significant effect on reported operating results under GAAP. The Company provides constant currency information to help investors assess how our businesses performed excluding the effects of changes in foreign currency translation rates. To calculate revenues and earnings from operations on a constant currency basis, operating results for the current year period for entities reporting in currencies other than U.S. dollars are translated into U.S. dollars at the average exchange rates in effect during the comparable period of the prior year. The constant currency calculations do not adjust for the impact of revaluing specific transactions denominated in a currency that is different to the functional currency of that entity when exchange rates fluctuate.  The constant currency information presented may not be comparable to similarly titled measures reported by other companies.

The Company will hold a conference call at 4:30 pm (ET) on May 22, 2012 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 Relations" 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, denim, handbags, watches, footwear and other related consumer products.  Guess? products are distributed through branded Guess? stores as well as better department and specialty stores around the world.  As of April 28, 2012, the Company directly operated 503 retail stores in the United States and Canada and 264 retail stores in Europe, Asia and Latin America.  The Company's licensees and distributors operated an additional 828 retail stores outside of the United States and Canada. For more information about the Company, please visit www.guess.com.

Except for historical information contained herein, certain matters discussed in this press release, including statements concerning the Company's short and long-term future prospects and guidance for the second quarter and full year of fiscal 2013, 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, among other things, domestic and international economic conditions, including economic and other events that could negatively impact consumer confidence and discretionary consumer spending and result in increasingly difficult competitive conditions; our ability to, among other things, anticipate consumer preferences, protect our brand, effectively operate our various retail concepts, effectively manage inventories and successfully execute our strategies, including our supply chain and international growth strategies; unexpected obligations arising from litigation and other regulatory proceedings, including tax proceedings, and changes in economic, political, social and other conditions affecting our foreign operations, including currency fluctuations, global tax rates and the current European economic crisis.  In addition to these factors, the economic, technological, managerial, and other risks 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.

Contact:   

Guess?, Inc.


Investor Relations


(213) 765-5578

Source: Guess?, Inc.

 

Guess?, Inc. and Subsidiaries

Consolidated Statements of Income

(amounts in thousands, except per share data)








Three Months Ended




April 28,


April 30,




2012


2011




$

%


$

%


















Product sales


$       550,366

95.0%


$      563,399

95.1%


Net royalties


28,900

5.0%


28,845

4.9%


Net revenue


579,266

100.0%


592,244

100.0%










Cost of product sales


344,190

59.4%


344,214

58.1%










Gross profit


235,076

40.6%


248,030

41.9%










Selling, general and administrative expenses


195,935

33.8%


177,097

29.9%










Earnings from operations


39,141

6.8%


70,933

12.0%










Other income (expense):








    Interest expense


(384)

(0.1%)


(405)

(0.1%)


    Interest income


694

0.1%


1,295

0.2%


    Other, net


568

0.1%


(10,002)

(1.7%)










Earnings before income taxes


40,019

6.9%


61,821

10.4%










Income taxes


12,806

2.2%


18,237

3.0%










Net earnings


27,213

4.7%


43,584

7.4%










Net earnings attributable to noncontrolling interests in subsidiaries


567

0.1%


902

0.2%










Net earnings attributable to Guess?, Inc.


$         26,646

4.6%


$        42,682

7.2%


















Net earnings per common share attributable to common stockholders:













    Basic


$             0.30



$            0.46











    Diluted


$             0.30



$            0.46











Weighted average common shares outstanding attributable to common stockholders:












    Basic


89,190



91,629











    Diluted


89,510



92,171














 

Guess?, Inc. and Subsidiaries

Consolidated Segment Data

(amounts in thousands)












































Three Months Ended








April 28,


April 30,


%








2012


2011


chg














Net revenue:










North American Retail


$         251,798


$         247,457


2%



Europe



189,815


210,209


-10%



Asia



64,835


60,087


8%



North American Wholesale


43,918


45,646


-4%



Licensing



28,900


28,845


0%








$         579,266


$         592,244


-2%


























Earnings (loss) from operations:









North American Retail


$           16,990


$           18,630


-9%



Europe



12,481


33,181


-62%



Asia



5,875


7,101


-17%



North American Wholesale


9,346


11,114


-16%



Licensing



24,586


25,290


-3%



Corporate Overhead


(30,137)


(24,383)


24%








$           39,141


$           70,933


-45%


























Operating margins:









North American Retail


6.7%


7.5%





Europe



6.6%


15.8%





Asia



9.1%


11.8%





North American Wholesale


21.3%


24.3%





Licensing 



85.1%


87.7%

















Total Company



6.8%


12.0%
















 

Guess?, Inc. and Subsidiaries

Selected Condensed Consolidated Balance Sheet Data

(amounts in thousands)
























April 28,


January 28, 


April 30,










2012


2012


2011
















ASSETS


















Cash and cash equivalents




$              480,353


$               491,805


$               426,774
















Short-term investments




9,618


4,060


15,035
















Receivables, net





335,517


340,602


377,432
















Inventories





334,235


328,602


300,713
















Other current assets




81,788


96,413


78,688
















Property and equipment, net




354,394


348,885


337,161
















Other assets





243,839


234,108


227,085

















Total Assets





$           1,839,744


$            1,844,475


$            1,762,888






























LIABILITIES AND STOCKHOLDERS' EQUITY


















Current portion of borrowings and capital lease obligations

$                  1,967


$                   2,030


$                   2,359
















Other current liabilities




387,207


418,006


426,352
















Capital lease obligations




9,807


10,206


12,834
















Other long-term liabilities




221,978


211,675


164,892
















Redeemable and nonredeemable noncontrolling interests

31,464


26,928


35,500
















Guess?, Inc. stockholders' equity



1,187,321


1,175,630


1,120,951

















Total Liabilities and Stockholders' Equity


$           1,839,744


$            1,844,475


$            1,762,888
















 

Guess?, Inc. and Subsidiaries

Selected Condensed Consolidated Cash Flow Data

(in thousands)
































Three Months Ended









April 28,


April 30,









2012


2011























Net cash provided by operating activities



$                   36,653


$                  47,835












Net cash used in investing activities



(31,384)


(44,081)












Net cash used in financing activities



(17,482)


(19,409)












Effect of exchange rates on cash



761


15,392












Net decrease in cash and cash equivalents


(11,452)


(263)












Cash and cash equivalents at the beginning of the year

491,805


427,037












Cash and cash equivalents at the end of the year


$                 480,353


$                426,774


































Supplemental information:


















Depreciation and amortization




$                   20,721


$                  19,894












Rent






$                   64,262


$                  60,021












 

Guess?, Inc. and Subsidiaries

Retail Store Data

International Store Count




























As of April 28, 2012


As of April 30, 2011





Total


Directly Operated


Total


Directly Operated

Region



Stores


Stores


Stores


Stores













United States and Canada

503


503


484


484













Europe and the Middle East

577


191


508


154













Asia



442


48


368


29













Central and South America

73


25


61


19
















1,595


767


1,421


686












 

Guess?, Inc. and Subsidiaries

Retail Store Data

U.S. and Canada
































Three Months Ended









April 28,


April 30,









2012


2011























Number of stores at the beginning of the year


504


481













Store openings





6


6













Store closures





(7)


(3)












Number of stores at the end of the period



503


484













































Total store square footage at the end of the period


2,319,000


2,192,000












 

 

 

 

SOURCE Guess?, Inc.