Fourth Quarter EPS $0.27 Compared to Loss of $0.11 Per Share
in Fourth Quarter Last Year Including Charges in Both Quarters
LOS ANGELES, Feb. 19 /PRNewswire-FirstCall/ -- Guess?, Inc. (NYSE: GES) today reported financial results for the fourth quarter and fiscal year ended December 31, 2003.
Fourth Quarter Results
For the fourth quarter of 2003, the Company reported net earnings of $11.8 million, or diluted earnings of $0.27 per share, compared to a net loss of $4.6 million, or a diluted loss of $0.11 per share, for the fourth quarter of 2002. The 2003 fourth quarter results include impairment charges of $1.6 million, or $0.9 million net of tax, or $0.02 per diluted share, of which $1.2 million relate to the Company's fourth quarter decision to close its 10 underperforming kids' stores. The 2002 fourth quarter results include restructuring, impairment and severance charges of $8.5 million, or $6.1 million net of tax, or $0.14 per diluted share, associated with various actions the Company took to lower future operating costs.
Carlos Alberini, President and Chief Operating Officer, commented, "Guess? capped off 2003 with an excellent performance in the fourth quarter. Results were driven by higher sales and a significant gross margin increase in the period coupled with continued cost control, which resulted in an SG&A rate improvement of over 500 basis points. Our retail segment generated the greatest gains, with operating income up by $15.4 million, or 160.4%, a testament to the leverage of our retail business model and its significant opportunity for growth. We have entered 2004 with an improved balance sheet. Cash and restricted cash at year-end 2003 totaled $71.7 million, inventories were down 12.7% from a year ago, and total debt was 16.6% lower than the prior year-end. We have strong business momentum and look forward to building on our progress in the future."
Total net revenue for the fourth quarter of 2003 increased 19.1% to $199.3 million from $167.4 million in the fourth quarter of 2002. The Company's retail stores, including those in Canada, generated revenues of $154.2 million in the 2003 fourth quarter, a 17.7% increase from $130.9 million reported in the same period a year ago. Comparable store sales increased 11.7% during the fourth quarter of 2003 from the year-ago period. Net revenue from the Company's wholesale segment increased 29.7% to $34.2 million in the fourth quarter of 2003 from $26.4 million in the year-ago period. Licensing segment net revenue increased 8.3% to $10.9 million in the 2003 fourth quarter from $10.1 million in the fourth quarter last year.
Full Year 2003 Results
For the full year ended December 31, 2003, the Company reported net earnings of $7.3 million, or diluted earnings of $0.17 per share, versus a net loss of $11.3 million, or a diluted loss of $0.26 per share, in the comparable 2002 period. The 2003 results include impairment and severance charges of $2.4 million, or $1.4 million net of tax, or $0.03 per diluted share. The 2002 results include litigation settlement proceeds of $4.3 million, or $2.9 million net of tax, or $0.07 per diluted share, and restructuring, impairment and severance charges of $9.2 million, or $6.2 million net of tax, or $0.14 per diluted share.
Total net revenue for 2003 increased 9.2% to $636.6 million from $583.1 million in 2002. The Company's retail stores, including those in Canada, generated revenue of $447.7 million for 2003, an increase of 16.4% from $384.5 million for last year. Comparable store sales increased 9.3% for the 2003 year. Net revenue from the Company's wholesale segment decreased 6.6% to $149.1 million in 2003 from $159.6 million in 2002. Licensing segment net revenue for 2003 increased 1.8% to $39.8 million from $39.0 million for the prior year.
The Company will hold a conference call at 4:30 pm (ET) on February 19, 2004 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.
Guess?, Inc. designs, markets, distributes and licenses one of the world's leading lifestyle collections of contemporary apparel, accessories and related consumer products.
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 availability of sufficient working capital, the successful integration of new stores into existing operations, the continued desirability and customer acceptance of existing and future product lines (including licensed product lines), possible cancellations of wholesale orders, the success of competitive products, and the availability of adequate sources of capital. In addition to these factors, the economic and other factors identified in the Company's most recent annual report on Form 10-K for the fiscal year ended December 31, 2002 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.
For further information, please contact 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.; or Wendi Kopsick, or Molly Morse, both of Kekst and Company, +1-212-521-4800, for Guess?, Inc.
Guess?, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
(Unaudited)
Three Months Ended
December 31, December 31,
2003 2002
$ % $ %
Net revenue:
Product sales $188,371 94.5% $157,300 94.0%
Net royalties 10,914 5.5% 10,073 6.0%
199,285 100.0% 167,373 100.0%
Cost of product sales 123,062 61.8% 110,323 65.9%
Gross profit 76,223 38.2% 57,050 34.1%
Selling, general and administrative
expenses 52,366 26.2% 52,752 31.5%
Litigation settlement -- -- (250) (0.1%)
Restructuring, impairment and
severance charges 1,579 0.8% 8,524 5.1%
Earnings (loss) from operations 22,278 11.2% (3,976) (2.4%)
Other (income) expense:
Interest expense 1,595 0.8% 2,603 1.6%
Interest Income (34) -- (136) (0.1%)
Other, net -- -- (20) --
Earnings (loss) before income taxes
(benefit) 20,717 10.4% (6,423) (3.9%)
Income taxes (benefit) 8,910 4.5% (1,800) (1.1%)
Net earnings (loss) $11,807 5.9% $(4,623) (2.8%)
Net earnings (loss) per share:
Basic $0.27 $(0.11)
Diluted $0.27 $(0.11)
Weighted number of shares outstanding:
Basic 43,567 43,499
Diluted 44,149 43,499
Guess?, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
(Unaudited)
Year Ended
December 31, December 31,
2003 2002
$ % $ %
Net revenue:
Product sales $596,806 93.8% $544,081 93.3%
Net royalties 39,779 6.2% 39,058 6.7%
636,585 100.0% 583,139 100.0%
Cost of product sales 416,430 65.4% 383,806 65.8%
Gross profit 220,155 34.6% 199,333 34.2%
Selling, general and administrative
expenses 197,130 31.0% 202,930 34.8%
Litigation settlement -- -- (4,250) (0.7%)
Restructuring, impairment and
severance charges 2,425 0.4% 9,179 1.6%
Earnings (loss) from operations 20,600 3.2% (8,526) (1.5%)
Other (income) expense:
Interest expense 7,974 1.2% 9,444 1.6%
Interest Income (134) -- (313) --
Other, net (26) -- (825) (0.1%)
Earnings (loss) before income taxes
(benefit) 12,786 2.0% (16,832) (3.0%)
Income taxes (benefit) 5,500 0.9% (5,550) (1.0%)
Net earnings (loss) $7,286 1.1% $(11,282) (2.0%)
Net earnings (loss) per share:
Basic $0.17 $(0.26)
Diluted $0.17 $(0.26)
Weighted number of shares
outstanding:
Basic 43,279 43,392
Diluted 43,558 43,392
Guess?, Inc. and Subsidiaries
Consolidated Segment Data
(in thousands)
(Unaudited)
Three Months Ended Year Ended
December December December December
31, 31, 31, 31,
2003 2002 2003 2002
Net revenue:
Retail operations $154,178 $130,938 $447,693 $384,456
Wholesale operations 34,193 26,362 149,113 159,625
Licensing operations 10,914 10,073 39,779 39,058
$199,285 $167,373 $636,585 $583,139
Earnings (loss) from operations:
Retail operations $24,945 $9,578 $32,370 $4,373
Wholesale operations (3,287) (10,987) (8,976) (4,738)
Licensing operations 9,106 7,861 32,281 29,092
Corporate overhead (Note 1) (8,486) (10,428) (35,075) (37,253)
$22,278 $(3,976) $20,600 $(8,526)
Note 1: Corporate overhead is net of proceeds from a litigation
settlement of $4.3 million for the year ended December 31, 2002
and $0.3 million for the three months ended December 31, 2002.
Guess?, Inc. and Subsidiaries
Selected Condensed Consolidated Balance Sheet Data
(in thousands)
(Unaudited)
December 31, December 31,
2003 2002
ASSETS
Cash and cash equivalents $67,163 $31,753
Restricted cash 4,509 --
Receivables, net 32,602 35,437
Inventories, net 83,530 95,683
Other current assets 22,840 26,114
Property and equipment, net 114,403 128,097
Other assets 37,718 32,448
Total Assets $362,765 $349,532
LIABILITIES AND STOCKHOLDERS' EQUITY
Current installments of notes payable
and long-term debt $13,931 $80,138
Other current liabilities 96,944 87,423
Notes payable and long-term debt,
excluding current installments 54,161 1,480
Other liabilities 14,947 14,211
Stockholders' equity 182,782 166,280
Total Liabilities and Stockholders' Equity $362,765 $349,532
Guess?, Inc. and Subsidiaries
Condensed Consolidated Cash Flow Data
(in thousands)
(Unaudited)
Year Ended
December 31, December 31,
2003 2002
Net cash provided by operating activities $62,474 $29,589
Net cash used in investing activities (18,384) (22,470)
Net cash used in financing activities (9,175) (7,354)
Effect of exchange rates on cash 495 118
Net increase (decrease) in cash and
cash equivalents 35,410 (117)
Cash and cash equivalents at the
beginning of the year 31,753 31,870
Cash and cash equivalents at the end
of the period $67,163 $31,753
Supplemental information:
Depreciation and amortization $34,944 $37,979
Rent 59,151 53,147
Guess?, Inc. and Subsidiaries
Retail Store Data
Year Ended
December 31, December 31,
2003 2002
Number of stores at the beginning of the year 249 227
Store openings 20 24
Store closures (4) (2)
Number of stores at the end of the year 265 249
Total store square footage at the end
of the year 1,372,000 1,277,000
SOURCE Guess?, Inc.
-0- 02/19/2004
/CONTACT: 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.; or Wendi Kopsick, or Molly Morse, both
of Kekst and Company, +1-212-521-4800, for Guess?, Inc./
/Web site: http://www.guess.com /
(GES)
CO: Guess?, Inc.
ST: California
IN: REA FAS HOU
SU: ERN MAV CCA
AP
-- LATH062 --
3976 02/19/2004 16:00 EST http://www.prnewswire.com