Guess Slips To Loss; Details Weak Outlook

(RTTNews) - Fashion apparel retailer Guess? Inc (GES), Thursday reported a slip to loss in the first quarter, on a near five percent drop in sales as demand slackened in North America and Europe, with margins under pressure. However, loss for the quarter was lower when compared to Wall Street estimates, while sales missed expectations.

Guess provided a weak outlook for the second quarter, and for fiscal 2015, cut the top end of sales guidance.

Guess has been struggling for the past quarters, with weak traffic, soft consumer sentiment and competition in the U.S. and Europe. Guess CEO Paul Marciano earlier warned of soft sales in developed markets.

To buoy growth, Marciano had said it will sustain investment in new markets like Japan and Brazil, focus on online retail where it sees some strength, and streamline cost structure.

Los Angeles, California-based Guess posted a first-quarter net loss of $2.1 million or $0.03 per share, compared with net earnings of $9.9 million or $0.12 per share last year.

On average, 13 analysts polled by Thomson Reuters expected a loss of $0.07 per share for the quarter. Analysts' estimates typically exclude special items.

Sales for the first quarter fell 4.8 percent to to $522.5 million from $549 million last year. Eleven analysts had a consensus sales estimate of $526.4 million for the quarter.

On a constant currency basis, sales for the quarter were down 5.6 percent.

Quarterly sales from retail stores in North America declined 4.2 percent from last year, and same store sales in the region fell 3.8 percent. Guess operates 491 stores in the U.S. and Canada.

Europe sales dropped 3.8 percent from a year ago, and Asia edged down 1 percent.

Results were also impacted by gross margin that shrunk to 33.6 percent from 36 percent last year. Operating margin declined 290 basis points to negative 0.4 percent, hurt by fixed cost structure from lower wholesale shipments in Europe and negative same store sales in North America.

For the second quarter, Guess expects earnings of $0.25 to $0.30 per share and sales of $615 million to $630 million. Analysts currently expect earnings of $0.39 per share on sales of $625.06 million.

For fiscal year 2015, Guess continues to project earnings of $1.40 to $1.60 per share. Sales are now expected in the range of $2.53 billion to $2.57 billion, from prior range of $2.53 billion to $2.58 billion.

Analysts currently estimate earnings of $1.52 per share on sales of $2.54 billion for the year.

The company also announced a quarterly cash dividend of $0.225 per share.

Guess stock closed Thursday at $26.88, up $0.42 or 1.59%, on a volume of about 1 million shares on the NYSE. In after hours, the stock dropped $0.61 or 2.27%, to trade at $26.27. In the past year, the stock trended in the range of $26.14 - $34.94.