Guess Posts Drop in Earnings, Beats Expectations
Guess? Inc. saw its first-quarter net earnings for the fiscal year 2010 fall 32 percent, with a net income of $32.5 million for the quarter ending May 2—down from $47.8 million a year earlier. Revenues for the quarter fell nearly 10 percent to $441 million. Net revenues from Guess’ wholesale segment dropped more than 12 percent to $65.9 million, and licensing income decreased 6 percent to $22.1 million. Still, the manufacturer and retailer beat analyst expectations—as well as those of Guess executives.
“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,” said Paul Marciano, chief executive officer, in a statement. “As a result, we generated solid operating cash flows, further strengthening our capital structure.”
Guess said it expects its second-quarter net revenue to range from $465 million to $485 million but declined to offer a full-year forecast.
“We expect the challenging economic conditions to persist for some time,” Marciano said. “We remain committed to our international expansion strategy and continue to see opportunities in Europe and Asia, where our brand is well-known but underpenetrated. We will continue to run the business prudently and build the capabilities and infrastructure to support our growth objectives in the future. Through these efforts, we expect to emerge in an even stronger position when conditions ultimately improve.”
Guess shares closed down 95 cents, or 3.39 percent, to $27.04 on the news. —Erin Barajas
