International fashion house Guess?, Inc. (GES) said Thursday after the markets closed that its first quarter profit fell 63% from last year, hurt by lower revenue and weaker margins.
However, the company's quarterly earnings per share, excluding items, came in above analysts' expectations, but its quarterly revenue fell shy of analysts' forecast.
At the same time, the company forecast current quarter earnings in-line and revenue above analysts' current consensus estimate. The company also cut its revenue outlook, but maintained its earnings forecast for the current fiscal year.
Paul Marciano, Chief Executive Officer of Guess?, saidd, "Despite the continued global economic challenges, we are pleased to deliver better than expected first quarter earnings. These earnings reflect the ongoing success within the company to globally streamline and improve productivity."
"While we are encouraged by our start to fiscal 2014, the near term outlook for consumer spending remains soft and we are planning our business accordingly. Southern Europe continues to be our main concern going forward," Marciano added.
Guess shares are currently gaining 9.7% in after hours trading after closing the day's regular trading session at $29.35, up 19 cents. The shares trade in a 52-week range of $22.48 to $34.10.
The company also said that its Board of Directors has approved a quarterly cash dividend of $0.20 per share, payable on June 28 to shareholders of record on June 12.
Guess? offers collections of denim and cotton clothing, including jeans, pants, overalls, skirts, dresses, shorts, blouses, shirts, jackets, and knitwear.
The company's retail stores in North America generated first quarter revenue of $238.3 million, down 5.4% from a year ago. Same-store sales for the quarter fell 9.8%. At the end of the first quarter, the company directly operated 511 retail stores in the U.S. and Canada, compared to 503 stores a year earlier.
First quarter revenue from the company's North American wholesale segment declined slightly to $43.8 million from $43.9 million last year.
The company's Europe revenue for the quarter slipped 12.9% from a year earlier, while its Asia revenue rose 9.7% from last year. Licensing revenue for the quarter increased 4.7% from last year.
Gross margin for the quarter narrowed to 36.0% from 40.6% a year ago.
Operating margin for the quarter shrank to 2.1% from 6.8% last year, mainly reflecting the impact of negative same store sales on the company's fixed cost structure, lower sales in its European wholesale business and more markdowns in its North American retail business.
For the first quarter ended May 4, 2013, the Los Angeles, California-based company reported net income of $9.9 million or $0.12 per share, compared to $26.6 million or $0.30 per share for he year-ago quarter.
Excluding items, adjusted net income for the latest quarter was $11.7 million or $0.14 per share.
On average, 12 analysts polled by Thomson Reuters expected the company to earn $0.08 per share for the first quarter. Analysts' estimates typically exclude special items.
Total net revenue for the first quarter fell 5.2% to $548.91 million from $579.27 million in the same quarter last year. Ten analysts had a consensus revenue estimate of $550.06 million for the first quarter.
Looking forward to the second quarter, the company forecast net revenues of $620 million to $635 million and earnings of $0.34 to $0.38 per share. Analysts currently expect the company to earn $0.36 per share on revenue of $618.43 million for the second quarter.
For the fiscal year ending February 1, 2014, the company now expects net revenues of $2.57 billion to $2.61 billion, compared to its prior guidance of $2.60 billion to $2.64 billion. However, the company continues to expect fiscal 2014 earnings to be in the range of $1.70 to $1.90 per share. Analysts currently expect the company to earn $1.79 per share on sales of $2.60 billion for the year.
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