International fashion house Guess?, Inc. (GES) said Wednesday after the markets closed that its third quarter profit fell 4% from last year, hurt by slow revenue growth and lower gross margin. The company's quarterly earnings per share also came in below analysts' expectations as did its quarterly revenue. At the same time, the company gave a down-beat forecast for the fourth quarter and cut is full year outlook.
The Los Angeles, California-based company reported net income for the third quarter of $66.3 million or $0.71 per share, compared to $69.1 million or $0.75 per share for the year-ago quarter.
On average, 14 analysts polled by Thomson Reuters expected the company to earn $0.73 per share for the third quarter.
Gross margin for the quarter declined to 43.2% from 43.4% a year ago.
Operating margin for the quarter remained flat with last year at 15.1%, as higher product margins and an improved SG&A rate offset the impact of a higher occupancy rate. Product margins improved mainly due to lower markdowns in North American Retail while the occupancy deleverage was driven by retail expansion and negative comparable store sales.
Total net revenue for the third quarter rose 4.7% to $642.80 million from $613.90 million in the same quarter last year. Twelve analysts had a consensus revenue estimate of $654.17 million for the third quarter.
The company's retail stores in North America generated third quarter revenue of $265.6 million, up 4.7% from $253.7 million a year ago. Same-store sales for the quarter decreased 4.1% in local currency and 3.5% in US dollars. At the end of the third quarter, the company operated 495 retail stores in the U.S. and Canada, compared to 473 stores a year earlier.
Third quarter revenue from the company's North American wholesale segment increased 1.9% to $57.3 million from $56.3 million in the year-ago quarter. The company's Europe revenue grew 2.3% to $221.0 million in the first quarter from $216.2 million in the prior year quarter, while its Asia revenue jumped 18.3% to $64.8 million from $54.8 million in the same quarter last year.
Licensing revenue for the quarter rose 3.2% to $34.0 million from $33.0 million a year earlier.
Paul Marciano , Chief Executive Officer of Guess, said, "We are pleased to deliver third quarter earnings consistent with our expectations, even as economic pressures have intensified and are affecting consumer confidence in many of our markets, particularly in Europe ."
The company also said that its Board of Directors has approved a quarterly cash dividend of $0.20 per share, payable on January 3, 2012 to shareholders of record at the close of business on December 14, 2011.
Looking forward to the fourth quarter, the company forecast net revenues of $780 million to $795 million and earnings of $1.03 to $1.09 per share. Analysts currently expect the company to earn $1.21 per share on revenue of $815.98 million for the fourth quarter.
For the fiscal year ending January 28, 2012, the company now forecasts net revenues of $2.70 billion to $2.71 billion, GAAP earnings of $2.85 to $2.91 per share and adjusted earnings of $3.04 to $3.10 per share. Previously, the company forecast net revenues of $2.74 billion to $2.78 billion, GAAP earnings of $3.06 to $3.16 per share and adjusted earnings of $3.25 to $3.35 per share.
Analysts currently expect the company to earn $3.27 per share on revenue of $2.74 billion for the fiscal year 2011.
Guess shares, which have traded in a range of $25.99 to $49.90 over the past year, closed Wednesday's regular trading session at $28.12, up $1.13 or 4.19%. The stock is currently losing 20 cents in after hours trading.
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