GUESS RESTATES PROFITS, WARNS OF QUARTER LOSS
Byline: Melanie Kletter
NEW YORK — The pain continues at Guess Inc., which gave another earnings warning late Friday and said it would restate previously reported results for fiscal 2000 because of unrecorded excess inventory.
The Los Angeles-based firm has struggled with a host of problems in recent months, including weakness in basics and softness at its own retail stores, as well as inventory difficulties.
“We expect the retail environment and consumer spending to remain soft during fiscal 2001,” Maurice Marciano, co-chairman and co-chief executive officer, said in a statement. “Therefore, we are taking immediate action to limit our expansion, reduce costs and conserve capital.”
Guess had already warned that fourth quarter results would be lower than expected, and on Friday it said it now expects to report a loss of 27 to 31 cents a share for the quarter that ended Dec. 30. Analysts on average had been looking for the company to earn 7 cents a share. The results will include non-recurring charges of about $14 million, for items such as inventory write-down charges, store closings and other expenses.
Guess also lowered expectations for 2001, saying that it expects to report earnings in the range of 68 to 72 cents a share, well short of the 94 cents a share analysts had been looking for.
The company also said it will restate its previously reported financial results for the first three quarters of fiscal 2000, in part, because it failed to properly account for certain inventory when it moved a distribution facility to Louisville, Kentucky from Los Angeles.
Guess restated first-quarter earnings to 33 cents a share from its previously reported 35 cents. Second-quarter profit was revised to 15 cents from 28 cents, and third-quarter earnings were changed to 19 cents from 13 cents.
In addition, Guess said it has initiated discussions with its banks to obtain waivers since, as a result of the restatement, it is technically in violation of one its financial covenants.
Guess has had a tumultuous history. After a period of difficulties, it had been riding high in recent years as consumers snapped up its trendy fashions and its retail business picked up steam. In recent months, however, the company has faced management shake-ups and fiscal difficulties as well as inventory problems.
In September, the company’s stock fell 50 percent after it lowered third-quarter earnings, and in November, Guess reported its earnings plunged 60.4 percent. At that time, the company said it would reduce its store opening for 2001, write off inventory and look for ways to cut general and administrative costs. Later that month, Brian Fleming, the company’s chief financial officer, left the firm; earlier this month, the firm reported a 3.9 percent drop in same-store sales for December, reflecting a generally difficult holiday selling season.
The company’s stock has taken a beating in recent months. On Friday, shares closed at $7.69 on the New York Stock Exchange, down from its 52-week high of $33 last March.