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Guess Inc. Logs $63 Million Quarterly Profit – WWD

Guess Inc. continues to make good points. But Wall Street keeps asking for more. 

The apparel, accessories and footwear retailer revealed earnings Wednesday after the market closed, enhancing on high and backside traces in contrast with the identical time final yr. However an outlook predicting extra downward traits to come back — and quarterly revenues beneath pre-pandemic ranges — induced firm shares to nosedive greater than 6 p.c in after-hours buying and selling. 

Nonetheless, Carlos Alberini, chief govt officer, mentioned he was happy with the corporate’s progress, which exceeded expectations.

“In comparison with the second quarter of fiscal 2020, the [like-for-like pre-pandemic] interval, we expanded working margin by over 700 foundation factors to 13.9 p.c,” Alberini mentioned in an announcement. “Our revenues for the quarter completed down 8 p.c, versus the [like-for-like pre-pandemic period in 2019.] The whole decline was on account of a timing shift of European wholesale shipments into the third quarter and the impression of everlasting retailer closures. We achieved this end result despite the pandemic and being considerably much less promotional in all of our direct-to-consumer companies. Our working revenue progress was sturdy, up 90 p.c in comparison with the [like-for-like pre-pandemic period.] This resulted in earnings per share of $0.91, versus $0.35 within the [like-for-like pre-pandemic] interval. 

“Based mostly on our progress, we now anticipate to ship our 10 p.c working margin purpose within the present yr and are elevating our expectations to achieve 12 p.c by fiscal yr 2024, which might yield a return on invested capital of over 30 p.c and adjusted earnings per share of round $3.50,” the CEO continued. “The Guess model has vital white house for income progress and we’re assured in our capability to achieve our $2.8 billion income goal by fiscal 2024. We proceed to prioritize returning worth to our shareholders and introduced at present that our board has accepted a rise of our current share buyback program to $200 million.”

For the three-month interval ending July 31, whole revenues have been $628 million, up from $398 million a yr in the past, however down from $683 million in 2019’s pre-pandemic second quarter.

Alberini mentioned the surge in revenues in the latest quarter was due to fewer promotional gross sales and extra full-priced promoting.

“We’ve diminished promotional exercise in all places,” he informed analysts on Wednesday night’s convention name. “This firm won’t ever return to the extent of promotions that it had pre-pandemic.”

Guess logged a revenue of $63.1 million, in contrast with losses of $20.6 million a yr earlier, consequently. 

In the meantime, in-store site visitors stays challenged throughout all areas, with the steepest declines in retail in Asia (down 43 p.c for the quarter, year-over-year.) Executives mentioned nearly half of the declines within the area have been brought on by retailer closures. 

“It has been difficult with site visitors,” Alberini mentioned on the decision, including that Guess is presently within the course of of constructing management adjustments in its Asian enterprise, which is concentrated in China, Japan and South Korea.

China has been a problem for us,” he mentioned. “We’re [working on] enhancing the product assortment; rather a lot much less promotional. Additionally, the shop portfolio. We’ve closed almost 70 shops in China over the past 18 months. The franchise mannequin works for us. In advertising, influencers are very troublesome and dear to do. However we’re engaged on that. E-commerce has been difficult for us, too, as a result of we determined to be rather a lot much less promotional.”

However he added, “We now have a number of confidence that we’re on the proper path.” 

Larger AURs, or common promoting costs, in addition to e-commerce all through the corporate, have helped offset losses. Different tailwinds embody the American wholesale enterprise, which was up 19 p.c, in contrast with 2019’s pre-pandemic ranges. By class, activewear, denim and knits have been progress drivers.  

The corporate anticipates revenues within the present quarter to be barely detrimental to flat, in contrast with the identical time a yr earlier. For the total fiscal yr, assuming no additional COVID-19-related shutdowns, Guess expects revenues to be down within the mid-single digits, year-over-year, with working margin reaching about 10 p.c.  

The retailer ended the quarter with 1,597 shops, almost $459 million in money and money equivalents and almost $80 million in long-term debt.  

Shares of Guess, which closed down 1.23 p.c Wednesday to $24.15 a chunk, are up roughly 114 p.c, year-over-year.

https://wwd.com/business-news/monetary/guess-inc-earnings-1234903726/ | Guess Inc. Logs $63 Million Quarterly Revenue – WWD

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