Retail

Guess Earnings and Guidance Fall Flat

Chris Lange

Published: March 17, 2016 12:15 pm

Last Updated: January 13, 2020 11:49 am

Guess? Inc. (NYSE: GES) reported its fiscal fourth-quarter financial results after the markets closed on Wednesday. The company said it had $0.57 in earnings per share (EPS) on $658.3 million in revenue, which compares to consensus estimates of $0.58 in EPS on revenue of $654.7 million. In the same period of last year, the company posted EPS of $0.63 and $696.7 million in revenue.

In the fourth quarter, retail revenues for the Americas segment decreased 3% in U.S. dollars and increased 1% in constant currency. Retail comp sales including e-commerce decreased 1% in U.S. dollars and increased 2% in constant currency. Europe revenues decreased 5% in U.S. dollars and increased 6% in constant currency. Asia revenues decreased 18% in U.S. dollars and 14% in constant currency.

In terms of the outlook for the first quarter, the company expects to have a net loss per share in the range of $0.20 to $0.17 on consolidated net revenues that are expected to decline between 1.5% and 0.5% in constant currency. Currency headwinds are expected to negatively impact consolidated revenue growth by roughly 2%, for a net decline between 3.5% and 2.5%. The consensus estimates call for $0.03 in EPS on $465.93 million in revenue.

On the books, cash and cash equivalents totaled $445.5 million at the end of the quarter, compared to $483.5 million in the same period from the previous year.

Guess CEO Victor Herrero commented on earnings:

Turning to the outlook for the next three years, based on the Strategic Initiatives that I have mentioned in the last two earnings calls, we are planning for our annual revenues to reach $3.0 billion in three years at prevailing currency rates. This $800 million increase is expected to be driven by growth in E-commerce, retail expansion and positive comp store sales. In terms of regional growth, we expect $300 million of this increase to be driven by the Americas, $300 million by Europe and $200 million by Asia. Again, assuming currencies remain at prevailing levels, we are planning for operating margin to reach 7.5% in three years, mainly driven by leverage, and for earnings per share to increase at a compound annual growth rate of 20%. Overall, more than ever, I truly believe in the potential of the Guess Brand and these three-year plans are a reflection of that.

Shares of Guess were trading down over 15% at $18.06 on Thursday, with a consensus analyst price target of $20.91 and a 52-week trading range of $16.61 to $23.45.