International fashion house Guess?, Inc. (GES) said Wednesday after the markets closed that its second quarter profit fell 29% from last year, hurt by lower revenue and weaker margins.
The company's quarterly earnings per share also came in below analysts' expectations. At the same time, the company forecast third quarter revenue and earnings well below analysts' current consensus estimates and cut its revenue and earnings outlooks for the full year.
Guess shares are currently losing 16.55% in after hours trading after closing the day's regular trading session at $33.54, up 44 cents or 1.33%. The shares trade in a 52-week range of $24.23 to $37.15.
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 second quarter revenue of $253.4 million, down 3.1% from a year ago. Same-store sales for the quarter fell 7.5% in local currency and 8.5% in US dollars. At the end of the second quarter, the company directly operated 511 retail stores in the U.S. and Canada, compared to 490 stores a year earlier.
Second quarter revenue from the company's North American wholesale segment decreased 5.1% to $41.6 million.
The company's Europe revenue for the quarter fell 14.5% from a year earlier, while its Asia revenue surged 20.9% from last year. Licensing revenue for the quarter declined 4 from last year.
Gross margin for the quarter narrowed to 39.6% from 43.9% a year ago.
Operating margin for the quarter declined to 9.0% from 13.8% last year, mainly reflecting the impact of negative same store sales on the company's fixed cost structure, higher occupancy and selling costs in Europe due to retail expansion, increased investments in advertising and marketing and a bad debt provision related to its Greek distributor.
In addition, product margins were lower, mainly in Europe, resulting mainly from the effect of a weaker euro.
For the second quarter ended July 28, 2012, the Los Angeles, California-based company reported net income of $42.9 million or $0.49 per share, compared to $60.7 million or $0.65 per share for the year-ago quarter.
The year-ago quarter results included a settlement charge of $19.5 million, or $17.6 million net of the related tax impact, associated with the settlement of the company's relationship with one of its former European service providers.
On average, 12 analysts polled by Thomson Reuters expected the company to earn $0.50 per share for the second quarter.
Total net revenue for the second quarter fell 6.2% to $635.39 million from $677.16 million in the same quarter last year. Eleven analysts had a consensus revenue estimate of $629.95 million for the second quarter.
During the second quarter, the company repurchased 5 million shares of its common stock for $140.1 million. The company currently has $518 million available under existing share repurchase authorizations.
The company also said that its Board of Directors has approved a quarterly cash dividend of $0.20 per share, payable on September 21 to shareholders of record on September 5.
Looking forward to the third quarter, the company forecast net revenues of $620 million to $630 million and earnings of $0.42 to $0.46 per share. Analysts currently expect the company to earn $0.64 per share on revenue of $670.67 million for the third quarter.
For the fiscal year ending February 2, 2013, the company now forecasts net revenues of $2.62 billion to $2.65 billion and earnings of $2.15 to $2.30 per share. Previously, the company forecast net revenues of $2.70 billion to $2.74 billion and earnings of $2.50 to $2.65 per share. Analysts currently expect the company to earn $2.59 per share on revenue of $2.71 billion for the fiscal year 2013.
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