Guess Inc. Raises Lower End of Earnings Forecast
25 August 2016 - 08:10AM
Dow Jones News
Guess Inc. offered an optimistic earnings view for the year as
the apparel maker's restructuring efforts begin to pay off, though
it signaled sales would improve at a slower-than-expected clip.
Shares jumped 7.3% in after-hours trading. Through Wednesday's
close, the stock had tumbled 21% this year.
Chief Executive Victor Herrero had earlier said the first six
months of this year would be a transition period, as the company
worked to cut costs, push through restructuring plans and breathe
life into its flagging sales. "This transition is now behind us,"
he said Wednesday, "and the investments we have made so far are
expected to start generating revenue growth...in the third quarter,
accelerating into the fourth quarter."
In the second quarter, sales slipped 0.2% to $545 million,
edging in below the $550.5 million analysts projected. The decline
came as sales at stores open at least a year fell 2.5%, but that
slide was less steep than the 4.2% drop investors expected and it
marks an improvement from recent quarters. Guess has logged
same-store sales declines since the start of 2011.
Like many other retailers, from specialty shops to the
department stores where Guess also sells its merchandise, the
company has had to contend with falling foot traffic as shoppers
move online. At the same time, Guess has been hurt by the strong
U.S. dollar's negative impact on pricing abroad and on foreign
visitors' spending in the U.S.
As evidence that turnaround efforts are starting to materialize,
Guess lifted the low end of its full-year earnings forecast. For
the year ending in January, the company expects to post 62 cents to
75 cents in adjusted earnings per share, compared with earlier
guidance of 55 cents to 75 cents a share and above the 60 cents
analysts have predicted.
The company said revenue would rise between 3% and 5%, or
between 2.5% and 4.5% on a currency-adjusted basis, translating to
about $2.29 billion and roughly in line with analysts' average
estimate. The range is down from an earlier view of 5% to 7%
adjusted sales growth, and it is expected to be driven by strength
in Europe in Asia, offsetting continued softness in domestic
markets.
For the current quarter, Guess projects 11 cents to 16 cents in
per-share profit, compared with the 16 cents analysts have been
looking for, on 5% to 8% revenue growth that translates to roughly
$554 million. Analysts have estimated $568.8 million in
third-quarter sales.
In all for the most-recent period, Guess reported a profit of
$32.3 million, or 38 cents a share, up from $18.3 million, or 21
cents a share, a year earlier. The most recent period included a
$22.3 million gain stemming from the sale of a minority interest
investment, which lifted earnings by 24 cents a share.
Analysts projected seven cents in adjusted earnings per
share.
Write to Lisa Beilfuss at lisa.beilfuss@wsj.com
(END) Dow Jones Newswires
August 24, 2016 17:55 ET (21:55 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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