By  on November 24, 2010

Commanding sales increases at its stores in Europe and Asia helped Guess Inc. generate a 7.7 percent jump in third-quarter earnings, allowing the contemporary apparel retailer to easily beat analysts’ earnings expectations Tuesday.

The Los Angeles-based firm also provided annual earnings guidance that topped Wall Street’s predictions.

Net income for the period ended Oct. 30 grew to $70.1 million, or 75 cents a diluted share, compared with a profit of $65.1 million, or 69 cents a share, in the year-ago quarter. Net revenues spiked 17.4 percent, to $580.9 million from $495 million in the 2009 period. Wall Street forecasted EPS of 59 cents on sales of $580.4 million.

Sales at retail stores in North America increased 5.9 percent to $253.7 million as same-store sales rose 1.5 percent. Wholesale volume in North America climbed 22 percent to $59.3 million and licensing revenues expanded 18.6 percent to $33 million.

Revenue in Europe soared 28 percent, or $216.2 million, while in Asia, it jumped 35.1 percent to $54.8 million.

Higher markdowns and an increase in occupancy rates due to store opening costs caused gross margin to contract to 45.9 percent of sales in the quarter, compared with year-ago margin of 47.9 percent.

“We strive to constantly adapt ourselves while staying true to who we are,” said chief executive officer Paul Marciano on the company call. “It is this consistency of mission and vision that we repeat time after time to our partners and our customers around the world, which we also believe is our most valuable asset to succeed on a global scale.”

Management added that it expects accessories and footwear to “bolster holiday sales.”

For the nine months, Guess recorded a 19.4 percent leap in net income to $189.1 million, or $2 a diluted share, compared with income of $158.4 million, or $1.68 a share. Net sales rose 16.3 percent to $1.65 billion, from $1.41 billion in 2009.

Looking to the fourth quarter, Guess projected EPS of between $1.02 and $1.06 a share on sales in the range of $710 million to $730 million. Full-year EPS is expected to be between $3.02 and $3.06 a share on revenue in the range of $2.44 billion to $2.46 billion.

Analysts had anticipated quarterly EPS of $1.02 a share on sales of $694.6 million, and annual EPS of $2.92 on revenues of $2.39 billion.

Guess also increased its quarterly dividend 25 percent to 20 cents a share and said it would pay a special dividend of $2 a share on Dec. 23 to shareholers of record Dec. 8.

Earnings were reported after the close of the markets. Shares of Guess closed unchanged in New York Stock Exchange trading Tuesday at $45.34.

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