RAISES FISCAL 2009 EPS GUIDANCE TO A RANGE OF $2.47 TO $2.53
INCREASES QUARTERLY DIVIDEND 25% TO 10 CENTS PER SHARE
Second Quarter Highlights
- Global revenues increased 33% to a record of $515 million
- European revenues up 61%
- North American retail revenues up 20%; comp sales up 8.1%
- Licensing revenues up 22%
- Operating earnings increased 43% and operating margin improved
120 basis points to 16.5%
- Net earnings increased 44% to $53.8 million
LOS ANGELES, Sept. 3 /PRNewswire-FirstCall/ -- Guess?, Inc. (NYSE: GES) today reported financial results for the second quarter of its 2009 fiscal year, which ended August 2, 2008.
Second Quarter 2009 Results
For the second quarter of fiscal 2009, the Company reported record net earnings of $53.8 million, an increase of 43.6% compared to net earnings of $37.5 million for the quarter ended August 4, 2007. Diluted earnings per share increased 42.5% to $0.57 in the current quarter versus $0.40 in the prior year quarter.
Paul Marciano, Chief Executive Officer, commented, "We are very pleased with our strong performance this quarter. These results are a testament to the strength of our brand and to the successful execution of our global growth strategy. Our performance in this difficult U.S. retail environment demonstrates the power of our diversified business model to generate above average top and bottom line growth, even in challenging times. In the second quarter, each of our businesses posted double-digit revenue growth and increased operating profit. Combined, we increased our global revenues by 33% and net earnings by 44%. Our international businesses once again contributed solid revenue and earnings growth, with Europe leading all business segments with a revenue increase in excess of 60% and earnings that more than doubled. In North America, our retail business performed well, delivering 20% revenue growth and our 22nd consecutive quarter of same store sales growth."
Mr. Marciano continued, "Our business continues to grow globally as we deliver products that support the lifestyle of our customers. We continue to strengthen our assortments and have made significant improvements toward this goal with several of our product categories including denim, which is, once again, a major focus for us. We remain confident that the investments we are making around the world will support our global expansion effectively and position us well for further profitable growth."
Total net revenue for the second quarter of fiscal 2009 increased 32.7% to $515.2 million from $388.3 million in the prior-year quarter. The Company's retail stores in North America generated revenue of $242.4 million in the second quarter of fiscal 2009, a 20.2% increase from $201.6 million in the same period a year ago. Comparable store sales increased 8.1% for the second quarter of fiscal 2009, compared to the same period a year ago. The Company operated 407 retail stores in the U.S. and Canada at the end of the second quarter of fiscal 2009 versus 347 stores a year earlier.
Net revenue from the Company's wholesale segment, which includes the Company's Asian operations, increased 26.3% to $72.4 million in the second quarter of fiscal 2009, from $57.3 million in the prior-year period.
Net revenue from the Company's European segment increased 61.5% to $174.2 million in the second quarter of fiscal 2009, compared to $107.9 million in the prior-year period.
Licensing segment net revenue increased 21.7% to $26.2 million in the second quarter of fiscal 2009, from $21.5 million in the prior-year period.
Operating earnings for the second quarter of fiscal 2009 increased 43.2% to $85.0 million (including a $5.9 million favorable currency translation benefit) from $59.4 million in the prior-year period. Last year's second quarter operating results benefited from a $3.1 million cumulative gift card breakage adjustment. Operating margin in the second quarter increased 120 basis points to 16.5%, compared to the prior year's quarter. This margin expansion was the result of higher European product margins (including the impact of the strong Euro), a higher mix of European business, and operating expense leverage in North America and Europe. These were partially offset by lower North American product margins (including the impact of last year's cumulative gift card breakage adjustment), and additional expenses to support new businesses, including Asia.
The Company's effective tax rate for the second quarter of fiscal 2009 was 36.0%, down from 39.1% for the second quarter of the prior year.
Six-Month Period Results
For the six months ended August 2, 2008, the Company reported net earnings of $101.6 million, an increase of 39.2% compared to net earnings of $73.0 million for the six months ended August 4, 2007. Diluted earnings per share increased 38.5% to $1.08 per share in the first six months of the current 2009 fiscal year versus $0.78 per share in the comparable six-month period last year.
Total net revenue for the first six months of fiscal 2009 increased 31.1% to $1,004.4 million from $766.2 million in the prior-year period. The Company's retail stores in North America generated revenue of $454.3 million in the first six months of fiscal 2009, a 19.2% increase from $381.1 million in the same period a year ago. Comparable store sales increased 7.6% for the six months ended August 2, 2008, compared to the six months ended August 4, 2007. Net revenue from the Company's wholesale segment, which includes the Company's Asian operations, increased 26.6% to $147.5 million in the first six months of fiscal 2009, from $116.5 million in the prior-year period. Net revenue from the Company's European segment increased 55.6% to $352.9 million in the first six months of fiscal 2009, compared to $226.8 million in the prior-year period. Licensing segment net revenue increased 18.7% to $49.7 million in the first six months of fiscal 2009, from $41.9 million in the prior-year period.
Operating earnings for the first six months of fiscal 2009 increased 37.2% to $160.9 million (including an $11.8 million favorable currency translation benefit) from $117.3 million in the prior-year period. Operating margin in the first six months of fiscal 2009 improved 70 basis points to 16.0%, compared to the prior-year period. This margin expansion was the result of higher European product margins (including the impact of the strong Euro), and a higher mix of European business, partially offset by lower North American product margins.
Outlook
The Company's expectations for the fiscal year ending January 31, 2009, are now as follows:
-- Consolidated net revenues are expected to range from $2.06 billion to
$2.11 billion.
-- Operating margin is expected to be about 17.7%.
-- Diluted earnings per share are expected to be in the range of $2.47 to
$2.53.
These expectations include the impact of 951,000 shares repurchased during the second quarter of fiscal 2009.
Dividend
The Company also announced today that its Board of Directors has approved a quarterly cash dividend of $0.10 per share on the Company's common stock, a 25% increase over its most recent quarterly dividend. This dividend will be payable on October 3, 2008 to shareholders of record at the close of business on September 17, 2008.
The Company will hold a conference call at 4:30 pm (ET) on September 3, 2008 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, denim, handbags, watches, footwear and other related consumer products. As of August 2, 2008, the Company operated 407 retail stores in the United States and Canada and 620 retail stores outside of North America, of which 71 were directly owned. 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 the full year of fiscal 2009, 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 various retail concepts, effectively manage inventories, successfully execute our strategies, including our supply chain and international growth strategies, currency fluctuations 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.
Contact: Guess?, Inc.
Investor Relations
(213) 765-5578
Guess?, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(dollars in thousands, except per share data)
Three Months Ended
August 2, August 4,
2008 2007
$ % $ %
Net revenue
Product sales $488,956 94.9% $366,739 94.5%
Net royalties 26,216 5.1% 21,548 5.5%
515,172 100.0% 388,287 100.0%
Cost of product sales 283,017 54.9% 214,935 55.4%
Gross profit 232,155 45.1% 173,352 44.6%
Selling, general and administrative
expenses 147,145 28.6% 113,991 29.3%
Earnings from operations 85,010 16.5% 59,361 15.3%
Other (income) expense:
Interest expense 799 0.2% 387 0.1%
Interest income (1,553) (0.3%) (2,036) (0.5%)
Other, net 724 0.1% (530) (0.1%)
Earnings before income taxes and
minority interests 85,040 16.5% 61,540 15.8%
Income taxes 30,616 6.0% 24,036 6.1%
Minority interest 592 0.1% 22 ---
Net earnings $53,832 10.4% $37,482 9.7%
Net earnings per share:
Basic $0.58 $0.41
Diluted $0.57 $0.40
Weighted number of shares outstanding:
Basic 93,008 92,180
Diluted 93,893 93,507
Six Months Ended
August 2, August 4,
2008 2007
$ % $ %
Net revenue
Product sales $954,691 95.1% $724,382 94.5%
Net royalties 49,701 4.9% 41,854 5.5%
1,004,392 100.0% 766,236 100.0%
Cost of product sales 550,998 54.9% 425,471 55.5%
Gross profit 453,394 45.1% 340,765 44.5%
Selling, general and administrative
expenses 292,459 29.1% 223,470 29.2%
Earnings from operations 160,935 16.0% 117,295 15.3%
Other (income) expense:
Interest expense 1,824 0.2% 1,311 0.2%
Interest income (3,086) (0.3%) (3,748) (0.5%)
Other, net 1,632 0.1% 361 ---
Earnings before income taxes and
minority interests 160,565 16.0% 119,371 15.6%
Income taxes 57,805 5.8% 46,399 6.1%
Minority interest 1,127 0.1% (37) ---
Net earnings $101,633 10.1% $73,009 9.5%
Net earnings per share:
Basic $1.09 $0.79
Diluted $1.08 $0.78
Weighted number of shares
outstanding:
Basic 92,979 92,033
Diluted 93,966 93,373
Guess?, Inc. and Subsidiaries
Consolidated Segment Data
(dollars in thousands)
Three Months Ended
August 2, August 4, %
2008 2007 chg
Net revenue:
Retail operations $242,360 $201,573 20%
Wholesale operations 72,363 57,278 26%
European operations 174,233 107,888 61%
Licensing operations 26,216 21,548 22%
$515,172 $388,287 33%
Earnings (loss) from operations:
Retail operations $30,136 $27,761 9%
Wholesale operations 10,791 10,193 6%
European operations 40,126 19,366 107%
Licensing operations 22,530 19,107 18%
Corporate overhead (18,573) (17,066) 9%
$85,010 $59,361 43%
Operating margins:
Retail operations 12.4% 13.8%
Wholesale operations 14.9% 17.8%
European operations 23.0% 18.0%
Licensing operations 85.9% 88.7%
Total Company 16.5% 15.3%
Six Months Ended
August 2, August 4, %
2008 2007 chg
Net revenue:
Retail operations $454,297 $381,102 19%
Wholesale operations 147,497 116,473 27%
European operations 352,897 226,807 56%
Licensing operations 49,701 41,854 19%
$1,004,392 $766,236 31%
Earnings (loss) from operations:
Retail operations $52,980 $47,653 11%
Wholesale operations 23,345 20,894 12%
European operations 80,087 47,083 70%
Licensing operations 42,777 36,464 17%
Corporate overhead (38,254) (34,799) 10%
$160,935 $117,295 37%
Operating margins:
Retail operations 11.7% 12.5%
Wholesale operations 15.8% 17.9%
European operations 22.7% 20.8%
Licensing operations 86.1% 87.1%
Total Company 16.0% 15.3%
Guess?, Inc. and Subsidiaries
Selected Condensed Consolidated Balance Sheet Data
(in thousands)
August 2, February 2, August 4,
2008 2008 2007
ASSETS
Cash and cash equivalents $294,481 $275,595 $200,456
Receivables, net 288,173 254,400 186,905
Inventories, net 258,888 232,159 226,377
Other current assets 71,307 52,585 45,993
Property and equipment, net 252,464 229,917 191,040
Other assets 151,977 141,572 138,393
Total Assets $1,317,290 $1,186,228 $989,164
LIABILITIES AND STOCKHOLDERS' EQUITY
Current portion of borrowings and
capital lease obligations $40,703 $35,254 $3,550
Other current liabilities 395,184 353,037 325,264
Borrowing and capital lease
obligations 18,173 18,724 17,669
Other long-term liabilities 119,476 116,250 104,936
Minority interest 8,465 5,989 4,570
Stockholders' equity 735,289 656,974 533,175
Total Liabilities and Stockholders'
Equity $1,317,290 $1,186,228 $989,164
Guess?, Inc. and Subsidiaries
Condensed Consolidated Cash Flow Data
(in thousands)
Six Months Ended
August 2, August 4,
2008 2007
Net cash provided by operating activities $112,122 $61,826
Net cash used in investing activities (56,011) (57,724)
Net cash used in financing activities (38,763) (13,634)
Effect of exchange rates on cash 1,538 2,371
Net increase (decrease) in cash and
cash equivalents 18,886 (7,161)
Cash and cash equivalents at the
beginning of the period 275,595 207,617
Cash and cash equivalents at the end
of the period $294,481 $200,456
Supplemental information:
Depreciation and amortization $29,378 $24,558
Rent 76,703 55,296
Guess?, Inc. and Subsidiaries
Retail Store Data
U.S. and Canada
Six Months Ended
August 2, August 4,
2008 2007
Number of stores at the beginning of the period 373 334
Store openings 35 20
Store closures (1) (7)
Number of stores at the end of the period 407 347
Total store square footage at the end
of the period 1,883,000 1,646,000
SOURCE Guess?, Inc.