Guess narrows losses in first quarter, revenues lift 14% on Asia, Europe

By

Benjamin Fitzgerald

Published
May 31, 2018

Guess Inc. said on Wednesday it narrowed net income losses in the first quarter, as total revenues for the US fashion brand increased more than 14% on Europe and Asia growth.

The Los Angeles-based company said the first-quarter net loss was $21.2 million, or 27 cents a diluted share, compared with the year ago loss of $21.3 million, or 26 cents, an improvement of 0.3%. However, on an adjusted basis, net loss totalled $17.8 million, a 7.9% improvement compared to $19.4 million for the first quarter of fiscal 2018. 

“I am pleased to report that our first quarter results finished above the high-end of our expectations for revenues, adjusted operating margin and adjusted earnings per share," said Victor Herrero, Guess Inc. CEO.

Net revenues recorded a vast improvement, up 14.7% to $521.3 million, compared to $454.3 million in the prior-year quarter. In constant currency, net revenue increased by 7.7%, said Guess in a statement.

By region, the Americas retail revenues decreased 2.1% in constant currency, while comp sales including e-commerce increased 1%. Wholesale revenues locally surged 11.3% in constant currency.

European revenues increased 9.1% in constant currency, while comp sales including e-commerce increased 1% and Asian revenues rose 25.1%, as comp sales including e-commerce gained 15% in constant currency

Licensing revenues increased 23.5%.

"We were also able to expand the company’s operating margin, despite cost pressures related to our transition to our new distribution center in Europe," continued Herrero.

"Operating margin in Asia improved by 430 basis points as we continue to leverage our infrastructure investments in China and Japan. Turning to the Americas, I am especially proud of the work that has been accomplished in retail where we ended the quarter with positive comps while being significantly less promotional. This translated into a 910 basis point improvement in operating margin for the Americas Retail segment.”

The company guided second-quarter EPS to between 27 cents and 30 cents, with adjusted EPS in the same range.

It expects net revenues to rise 14 to 15.5%.

For fiscal 2019, the company forecasted EPS at between 84 cents to 95 cents, with adjusted EPS at between 88 cents to 99 cents.

Revenues are expected to rise 8.5 to 9.5 percent for the year.

Guess shares closed down 1.1 percent to $24.33.