GES 2009 Q1 Earnings

Following the closing bell on June 4, clothing manufacturer Guess Inc. (GES) made it known that the company’s results for the 1Q came in below corporate expectations but above market projections, as the retail environment continues to wreak havoc on countless companies within the industry.

For the recent period, Guess booked net earnings of $32.5M, or $0.35 per share, in contrast to the previous year’s 1Q profit of $47.8M, or $0.50 per share, a decrease in net income of 32%. Meanwhile, operating earnings for the quarter fell from $75.9M to $48M, nearly a 37% reduction.

Revenues, meanwhile, retreated as well, falling from $489.22M to $441.2M, a drop in sales for the quarter of nearly 10%. Analysts, within the industry, were looking for Guess Inc. to record quarterly earnings of $0.29 per share on overall revenues of $436.58M.

"Our first quarter financial results exceeded our expectations. We managed our business effectively, reducing inventory levels and capital spending. We also aggressively cut costs, which resulted in an improved SG&A rate, even with lower sales. As a result, we generated solid operating cash flows, further strengthening our capital structure," announced Paul Marciano, CEO of Guess Inc., following the company’s earnings release.

Looking further into the report, Guess posted retail sales from their North American segment of $20.7.6M, down 2% from last year’s tally of $211.9M. Same store sales within the U.S. dipped 6% as consumers curtailed their spending habits, while operating margins throughout the company’s retail operations slipped to 8.7%, down from the previous year’s 1Q margin of 10.8%.

Overall operating margins dropped to 10.9% from last year’s 1Q, as a decline in product margins in the European markets weighed heavily on quarterly results. Also contributing the decrease in margins was the increased strength of the U.S. Dollar, which cut into the company’s bottom-line.

Guess’ wholesale segment, which includes the Asian markets, witnessed revenues plunge more than 12% year-over-year to $65.9M, down from the previous year’s sales of $75.1M. Operating margins within the wholesale division receded as well, falling from 16.7% a year ago to 11.3%.

Revenues throughout the European markets plummeted nearly 19% from last year’s results, falling from $178.7M to $145.7M, with operating margins slipped from 22.4% to 15.9%. In addition, sales from the company’s licensing segment fell 6%, dropping from $23.5M to $22.1M.

Heading into the 2Q, Guess anticipates posting quarterly revenues in a range between $465M and $485M, with earnings per share coming in between $0.42 and $0.45. The company is looking to record an operating margin in the neighborhood of 14%. On average, analysts are looking for Guess to book quarterly results of $468.35M in sales and earning $0.37 per share.

Upon providing expectations for the upcoming 2Q, company officials would not release any further projections regarding the company’s performance for the 2010 fiscal year.

Over the course of a year, shares of GES have traded within a wide range, priced as high as $45.15 per share and as low as $10.26 per share. Following the company’s quarterly results after the markets closed on June 4, shares of GES jumped more than 5% in after-hours trading.

By the conclusion of June 5 trading session, shares of GES were still riding high, gaining nearly 6%, or $1.56, to end the week at $28.60 per share. With nearly 92 million shares outstanding for the company, almost 37% of the float is held by insiders, indicating a bullish stance on the stock.

By BetterTrades