NEW YORK —?A sharp drop-off in wholesale revenues drove Guess Inc. into the red for the fourth quarter and fiscal year, but the company’s president held out hope that its growing chain of stores and new staffing on the wholesale side will lead to better results in 2003.
This story first appeared in the February 27, 2003 issue of WWD. Subscribe Today.
“There is no question that the economic environment, particularly at retail, remains uncertain,” Carlos Alberini, who is also chief operating officer, said in a conference call with stock analysts.
For the quarter ended Dec. 31, the firm posted a $4.6 million net loss, which included $8.5 million in pretax restructuring charges, and compared with $1.4 million in earnings a year earlier. Net revenue was off 8.7 percent to $167.4 million. The 11-cent-loss-per-diluted share compared with 3-cent earnings a year earlier.
Sales at the 249-store chain were up 6.8 percent to $130.9 million, thanks to the opening of 22 additional units over the course of the year. Comparable-store sales were off 0.9 percent. Operating income at the retail unit was down 8.2 percent to $10 million.
Wholesale revenue was down by about half to $26.4 million. The wholesale division took a $22.5 million operating loss compared with a $12.2 million operating loss in the same period last year.
Alberini said that the number of retailers to which the wholesale division sells dropped to 900 at the end of the year from 1,500 a year before. Alberini also said he believed the return of Nancy Schactman as president of sales in September would help to stabilize and then grow the wholesale business.
In terms of product, he said the Guess Collection and overall Guess women’s business was down for the year, although he said the young contemporary area’s performance improved in the quarter. He added that under Schactman’s direction, the wholesale division will be sharpening its merchandise presentation.
According to Alberini, Guess will cease offering specific guidance on quarterly earnings, joining a growing group of public companies who have started to cut back on the amount of information they provide investors.
However, he said, the company expects overall sales at its retail operation to be up by low-teen percentages this year, with comps up by low-single-digit percentages. He said he expects wholesale sales to be off by mid-single-digit percentages. Alberini said cost-cutting would remain a key focus over the year ahead.
For the year, the firm posted a net loss of $11.3 million or 26 cents a diluted share. That compares with earnings of $6.2 million or 14 cents a share the prior year. Overall, revenue was down 13.9 percent to $583.1 million.
Guess released its results after the close of trading. Its shares closed down 21 cents to $3.50 on the New York Stock Exchange.