Guess Inc. late Thursday posted a 54.7 percent jump in first-quarter income on a 22.2 percent revenue gain, but, faced with a weakening euro, provided guidance for the remainder of the year that fell below analysts’ expectations.
This story first appeared in the May 28, 2010 issue of WWD. Subscribe Today.
For the three months ended May 1, income was $50.3 million, or 54 cents a diluted share, up from $32.5 million, or 35 cents, in the year-ago quarter. The quarter included a $5.8 million charge for an accelerated pension cost amortization in connection with the departure of former president Carlos Alberini.
Revenues advanced to $539.3 million from $441.2 million, including a 22.6 percent increase in sales, to $514.1 million from $419.1 million, and a 14.6 percent gain in royalty income, to $25.3 million from $22.1 million. The firm’s North American retail stores generated a 13.6 percent increase in revenues to $235.8 million that included a same-store sales increase of 9.7 percent.
Paul Marciano, chief executive officer, commented, “We are very pleased with our strong performance this quarter. We achieved excellent results across all of our businesses around the world, with each of our segments delivering double-digit revenue growth and improving their profitability significantly.” Nearly 60 percent of the firm’s revenue increase in the quarter came from Europe and Asia, he noted.
The strength of the U.S. dollar against the euro is expected to lower earnings per share 16 cents for the balance of the fiscal year. Including the negative effect of currency translation, the Los Angeles-based firm said it expects second-quarter earnings of 65 cents to 68 cents a diluted share and full-year profits of between $2.80 and $2.85 a share, below analysts’ estimates of 78 cents and $2.99, respectively. Revenues in the current quarter are expected to land between $560 million and $575 million and, for the full year, between $2.35 billion and $2.4 billion. The weakness of projections versus estimates contributed to a 7.7 percent decline in Guess shares in the first hour of after-hours trading.