Guess (GES) Crushes Earnings Expectations
Shares of apparel retailer Guess (GES) surged last week, after the company reported strong second quarter earnings that topped analyst estimates. Guess earned $0.52 per share, a 6.1% increase from the prior year quarter, topping the consensus estimate of $0.36. Revenue rose 1% to $639 million, also topping the $625 million that analysts had expected. Top line growth also exceeded the $620 million to $635 million that the company had originally projected.
Excluding currency impacts, however, revenue actually fell 1.4% from the previous year. Daily Chart
Guess attributed its solid second quarter earnings to better cost controls and stable growth throughout its geographic regions. Sales in North America edged up 0.5% to $254.3 million, although same-store sales declined 2.0% due to unfavorable weather. E-commerce sales in the region, however, surged 25% year-on-year, boosted by the company's introduction of e-commerce fulfillment at brick-and-mortar locations during the quarter. The North American Wholesale segment reported a 0.7% decline to $41.4 million, while its Licensing segment reported nearly flat growth at $27.1 million. Sales in Europe rose 1.4% to $250.4 million (3.3% excluding currency impacts). Sales across the region were boosted by new key markets like Russia and Germany. Sales in Asia, however, declined 1.5% (3.6% excluding currency impacts) to $65.9 million, due to lower consumer spending in the nation, which has been struggling with slower GDP growth. Operating margin rose 150 basis points to 10.5%, thanks to lower selling, general and administrative (SG&A) expenses during the quarter. It also benefited from a favorable comparison to the prior year quarter, when results were weighed down by a bad debt provision. Guess' cash and equivalents also climbed from $30.6.4 million to $343.7 million. Looking forward, the company is continuing its "back to the basics" approach by highlighting its denim collections. This approach helped Guess stay ahead of other struggling retailers, such as Abercrombie & Fitch (ANF
) and Aeropostale (ARO
), which have both been reporting double-digit declines in same-store sales. Shares of Guess currently trade at 14.7 times forward earnings with a 5-year PEG ratio of 2.6, which indicates that the stock is fairly valued but faces sluggish long-term earnings growth ahead. The stock pays a quarterly dividend of $0.20 per share -- a 2.6% yield at current prices. The stock has rallied more than 16% over the past twelve months. Other News About GES Guess: Stock Price as Sexy as Its Ads
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Published on Sep 6, 2013
By Leo Sun