Guess Inc.’s first-quarter profits topped expectations, but fell 15.2 percent as costs related to the denim and sportswear firm’s retail expansions in Europe and the U.S. overwhelmed the benefit of stronger sales, particularly in Asia.
Paul Marciano, chief executive officer, said international expansion was the company’s “number-one priority” and that the Guess brand had room to grow given strong consumer awareness across urban markets in Germany, Spain and France. The Los Angeles-based firm is well on track to exceed $1 billion in European revenues this year.
In the first quarter, profits attributable to the firm fell to $42.7 million, or 46 cents a diluted share, from $50.3 million, or 54 cents a year earlier. Earnings were 2 cents ahead of analysts’ consensus estimate.
Revenues for the quarter ended April 30 rose 9.8 percent to $592.2 million from $539.3 million. Gross profit margins fell to 42.1 percent of revenues from 43.6 percent a year earlier and sales, general and administrative expenses rose to 30.1 percent of revenues from 29.3 percent.
Marciano told analysts on a conference call that the women’s apparel business in its retail stores was “challenging” as the firm worked through soft customer traffic and slow-moving product that was left over from the fourth quarter.
In North America, retail sales rose 5 percent to $247.5 million, with comparable-store sales down 3.1 percent. North American wholesale revenues increased 6.8 percent to $45.6 million.
European revenues increased 12.4 percent to $210.2 million.
But it was the smaller, Asian division that showed the strongest growth, with revenues up 23.7 percent to $60.1 million. The region could continue to produce much of the firm’s momentum, with 56 Guess stores slated to open in China this year.
“China, of course, is the most important strategic initiative of our company history, where the possibilities of development seem to me to be endless if properly funded, structured, strategized and executed,” Marciano said. “We have seen a dramatic result when we did exactly that in Europe in the last six years.”
Guess reaffirmed its annual profit forecast of $3.30 to $3.50 a share. The company has 484 stores in North America and 937 elsewhere.
@tradesy is turning the concept of a showroom upside down with its new space in Santa Monica. Here, the company plans to hold events, art exhibits and a showcase rare fashion pieces like this Louis Vuitton boxing set. Get all the details on Tradesy’s first showroom on WWD.com. #wwdnews
Spotted last night at the @erdem x @hm launch event: Kate Bosworth, Rashida Jones, Kirsten Dunst and Selma Blair. The party, which took place in LA, also marked the opening of their pop-up shop. “I was interested in creating a collection that wasn’t in any way disposable. It was about pieces you’d create and keep forever, things that have a permanence to it,” designer Erdem Moralioglu said. #wwdeye (📷: Katie Jones)
Renee Zellweger in yellow in 2001 and again in 2017. Chosen as one of the 12 @pantone Leading Spring Colors (and dubbed “Meadowlark”), it only makes sense that the bright hue stands the test of time and is making a resurgence this season, seen already on stars like @blakelively and @gigihadid. (📷: Donato Sardello & @rexfeatures) #wwdfashion #tbt
Dior’s 70th anniversary celebration continues with a new exhibition at the Royal Ontario Museum in Toronto. “Christian Dior,” which is scheduled to run through March 18, takes a look at the founders tenure from 1947 to 1057 and feature 40 designs. Pictured here is an evening gown from the Ailée, fall 1948-49 haute couture collection. #wwdfashion (📷: Brian Boyle)
As one of the most recognizable models in the world, Christy Turlington Burns has an insider’s view of the fashion industry and the allegations of sexual harassment swirling around it. “I can say that harassment and mistreatment have always been widely known and tolerated in the industry. The industry is surrounded by predators who thrive on the constant rejection and loneliness so many of us have experiences at some point in our careers,” Turlington told WWD, along with her suggestions for how the modeling world should protect younger women and men. Read more on WWD.com. Link in bio. (📷: Tony Palmieri) #wwdnews
@asics America has tapped a new brand ambassador: famed DJ/record producer @steveaoki. This initiative is intended to set the tone for the new brand identity and philosophy and will include partnerships with influencers and in-store and off-line activations that will continue into next year. This is Asics’ most significant marketing effort in two decades, and is expected to attract younger consumers to the brand. #wwdfashion
24-year-old Jean Prounis is redefining the rules of jewelry. Formerly a studio assistant to Jemima Kirke and a design apprentice at Ghuran, she focuses on handcrafted subtleties and ancient goldsmithing techniques. “There was a really sterile feel in the environment and I wanted to have jewelry with character that shapes how you wear it everyday,” Prounis said. Each piece is hand made in New York, either by Prounis or three other jewelers in the district. #wwdfashion
“These collections continue to build on that vision, empowering differently abled adults to express themselves through fashion,” said @tommyhilfiger of his line of adaptive apparel, which launches today. The line consists of 37 men’s and 34 women’s styles based upon the pieces from the spring Tommy Hilfiger sportswear collection. #wwdnews