Rising sales and revenues across all business segments — with the biggest gains in Europe — spurred Guess Inc. to triple-digit earnings gains for the third quarter and first nine months of the year.
For the three months ended Sept. 30, the Los Angeles-based company reported Wednesday that earnings vaulted 133.8 percent to $48.4 million, or $1.05 a share, far outpacing Wall Street analysts’; consensus estimate of 72 cents a share. Guess reported earnings of $20.7 million, or 46 cents, in the same period a year ago.
“All our business formats across all regions of the world exceeded expectations,” Paul Marciano, co-chairman and co-chief executive officer, said during a conference call with analysts.
Revenues for the period rose 31.3 percent to $348.7 million from $265.6 million. Royalties were ahead 18.3 percent, rising to $16.4 million from $13.9 million.
Sales increased 32 percent to $332.3 million, compared with $251.7 million, driven by a strong retail performance in the company’;s stores across the U.S. and Canada. Guess stores generated $178.1 million during the quarter, an increase of 13.9 percent from the $156.3 million in the year-ago period. Marciano said Guess opened 10 stores in the U.S. and Canada during the quarter for a total of 330 units. Comparable-store sales gained 8.6 percent during the period, marking the 14th consecutive quarter of rising sales in stores open at least a year.
Maurice Marciano, co-chairman and co-ceo, said he sees ample opportunity for the company’;s denim business to expand in the U.S. and Canada, as well.
“The trend right now in denim is, it’;s going more into fashion denim…so that’;s going to give us a really good opportunity,” he said, adding that women’;s denim would present the biggest opportunity because of the greater range of product offerings available. “The trend is cleaning up. The skinny has been a big part of the business, but as far as our business is concerned, we’;ve not seen a slowdown in the boot-leg jean for women, even though the skinny has done very well.”
Guess’; European business posted the largest gains during the quarter, with revenues rising 73.1 percent to $111.5 million from $64.4 million. Management has set a target of reaching $500 million in revenues in Europe in the next four years.
This story first appeared in the November 2, 2006 issue of WWD. Subscribe Today.
For the nine months, earnings gained 134.7 percent to $77.5 million, or $1.69 a share, compared with $33 million, or 74 cents, in the same period a year ago. Revenues spiked 27.2 percent to $838.8 million from $659.4 million, with sales rising 27.2 percent to $794.8 million from $624.8 million and royalties increasing 26.8 percent to $43.9 million from $34.6 million.
Again, the company’;s European business posted the largest gains, with revenues jumping 60 percent to $209.5 million from $131 million. Wholesale revenues rose 18.4 percent to $104.3 million from $88.1 million, while retail operations generated revenue increases of 18.6 percent to $481 million from $405.7 million.
The company also announced comp-store sales results for October, with the U.S. and Canada posting 11.8 percent gains. For the month, total retail sales rose 17.6 percent to $45.5 million.
The firm has a multibrand portfolio that includes Guess, Guess by Marciano, Marciano Guess Accessories and a new retail format that will roll out in North America next year called G by Guess, which is targeted to compete with retailers such as Hollister.