WASHINGTON (dpa-AFX) - Guess Inc. (GES) Wednesday reported a drop in profit for the third quarter, hurt largely by lower revenues, especially in North America region, and weak margins. Nevertheless, the fashion apparel retailer's adjusted earnings came in ahead of Street expectations.
Moving ahead, Guess raised the lower end of its full-year adjusted earnings outlook but cut its sales forecast.
Commenting on the results, Chief Executive Paul Marciano said, 'We are pleased to report better than expected third quarter earnings. We delivered revenues within the range of our expectations and through our continued focus on cost control have been able to deliver profitability at the high end of our expectations.'
The company had taken few steps for cost cutting and streamlining its businesses after struggling with lackluster performances at its North American and European business lately.
Guess third-quarter profit dropped to $34.0 million or $0.40 per share from $36.6 million or $0.43 per share last year.
Excluding an unfavorable restructuring charge of $1.4 million, adjusted earnings were $35.4 million or $0.42 per share. On average, 15 analysts polled by Thomson Reuters expected earnings of $0.38 per share. Analysts' estimates typically exclude special items.
The Los Angeles, California-based company's revenue for the quarter decreased 2.4 percent to $613.5 million from $628.8 million last year. Analysts expected revenues of $613.56 million.
Revenues from retail stores in North America decreased 3.1 percent to $253.8 million. Guess, which operates 507 stores in the U.S. and Canada, said comparable-store sales fell 5.0 percent for the quarter. Investors consider comparable store sales an important measure of a retailer's growth.
Europe revenues for the quarter dropped 0.8 percent to $200.9 million from a year earlier, while Asia revenues slipped 2.8 percent to $72.7 million.
Gross margin for the quarter declined to 37.2 percent from 39.4 percent last year, while selling, general and administrative expenses declined to $178.4 million from $189.5 million.
Moving ahead, Marciano said, 'As we enter into the fourth quarter we are pleased with the trends we are seeing in North America, reflecting the impact of our focus on delivering a better product assortment. However, the economic climate in Southern Europe remains challenging.'
Looking forward to the fourth quarter, Guess expects earnings of $0.74 to $0.84 per share and revenues of $750 million to $770 million. Analysts currently expect earnings of $0.83 per share on revenues of $778.20 million for the quarter.
For the full year, the company now expect earnings of $1.73 to $1.83 per share, adjusted earnings of $1.82 to $1.92 per share and revenues of $2.55 billion to $2.57 billion. Analysts currently expect the company to earn $1.87 per share on sales of $2.58 billion for the year.
Earlier, Guess expected earnings of $1.70 to $1.84 per share, adjusted earnings of $1.78 to $1.92 per share and revenues of $2.56 billion to $2.59 billion.
The company also approved a dividend of $0.20 per share, payable on January 3, 2014 to shareholders of record on December 18, 2013.
GES closed Wednesday's trading at $33.34, down $0.55 or 1.62%, on the NYSE. The stock further dropped $0.39 or 1.17% in after-hours trade.
Copyright RTT News/dpa-AFX
© 2013 AFX News
