NEW YORK — Strong demand for accessories and denim in Europe drove an eye-popping 980 percent surge in first-quarter profits and a 40.6 percent jump in revenues at Guess Inc.
For the three months ended April 2, the Los Angeles-based retailer earned $8.2 million, or 18 cents a share, compared with $756,000, or 2 cents, in the year-earlier period. Analysts had been calling for a profit of 3 cents.
The stellar results were partly driven by strength in its wholly owned subsidiary, Guess Italia SRL, acquired in October. The company bought 90 percent of the assets and shares of Maco Apparel SpA, the Florence-based licensee of Guess jeanswear for women and men in Europe as well as the assets of 10 European Guess stores operated by Fingen SpA for an undisclosed amount. The deal closed in early January.
“Europe as a region benefited from very robust sales of accessories and stronger-than-expected performance from the European jeanswear business we just acquired. Our domestic wholesale business and licensing operations also had improved results in the quarter,” said Carlos Alberini, president and chief operating officer of Guess, in a written statement released after the close of the stock market Wednesday.
Guess said its quarterly net income, when stated in U.S. dollars, also benefited from a strong euro.
Total revenues climbed to $215.6 million, including $26.3 million in revenue from the European acquisition, from $153.3 million in the first quarter of 2004. By division, sales in the company’s U.S. and Canadian retail operations rose 17.1 percent to $116.5 million with same-store sales up 4.5 percent. Wholesale sales, which exclude Europe, were $31.1 million, up 10.6 percent. Sales in Europe spiked 283 percent to $56.6 million and licensing sales totaled $11.4 million, an increase of 4.3 percent.
Separately, the firm said April same-store sales fell 1.2 percent, and total sales in the four weeks rose 8.4 percent to $39.4 million.
Shares of Guess closed up 0.4 percent at $14.38 in Wednesday trading on the New York Stock Exchange.