Guess posts rise in Q2 revenue and earnings

For the second quarter of fiscal 2017, Guess recorded GAAP net earnings of 32.3 million dollars, a 76.4 percent increase compared to 18.3 million dollars for the second quarter of fiscal 2016. GAAP diluted earnings per share increased 81 percent to 0.38 dollar compared to 0.21 dollar for the prior-year quarter. Total net revenue decreased 0.2 percent to 545 million dollars, from 546.3 million dollars in the prior-year quarter. In constant currency, total net revenue increased 0.5 percent.

Commenting on the second quarter trading, Victor Herrero, CEO of the company, said, "We are pleased to deliver second quarter earnings that exceeded our expectations both in earnings per share and operating margin. In Europe, our retail business delivered another strong quarter with comp store sales up in the low-double digits. In the Americas, our retail business in the US and Canada performed in line with our expectations with tourist doors still under-performing the chain. In Asia, we delivered positive comps in Korea, Mainland China and Japan, although Greater China was below our expectations.”

Detailed review of the quarter

Operating earnings for the second quarter decreased 40.5 percent to 15.6 million dollars including a 0.2 million dollars unfavourable currency translation impact, from 26.2 million dollars in the prior-year quarter. Operating margin decreased 190 basis points to 2.9 percent, from 4.8 percent in the prior-year quarter.

Americas retail revenues decreased 3 percent in US dollars and 1percent in constant currency; retail comp sales including e-commerce decreased 2 percent in US dollars and constant currency. Revenues in Europe increased 7 percent in US dollars and 6percent in constant currency, while Asia revenues decreased 6 percent in US dollars and 4percent in constant currency. Americas wholesale revenues decreased 8 percent in US dollars and 4 percent in constant currency. Licensing revenues decreased 13 percent in US dollars and constant currency.

Operating margin for the company's Americas retail segment decreased 300 basis points to negative 0.7 percent, while for the company's Europe segment, it decreased 20 basis points to 8.9 percent. Operating margin for the company's Asia segment decreased 830 basis points to negative 6.7 percent, while Americas wholesale segment operating margin decreased 390 basis points to 11.2 percent. Operating margin for the company's Licensing segment increased 140 basis points to 89.9 percent.

Six-month result highlights

For the six months ended July 30, 2016, the company recorded GAAP net earnings of 7.1 million dollars, a 67.2 percent decrease from 21.6 million dollars for the six months ended August 1, 2015. GAAP diluted earnings per share decreased 68 percent to 0.08 dollar from 0.25 dollar for the prior-year period.

Total net revenue decreased 3.1 percent to 993.8 million dollars, from 1.03 billion dollars in the prior-year period. In constant currency, total net revenue decreased 2.1 percent. GAAP operating loss was 13.4 million dollars including a 1.1 million dollars unfavourable currency translation impact.

The company's Board of Directors has approved a quarterly cash dividend of 0.225 dollar per share on the company's common stock.

Expects revenues to rise in the third quarter

The company's expectations for the third quarter of fiscal 2017 ending October 29, 2016, include, consolidated net revenues increase between 5 percent and 8 percent in US dollars. Currency tailwinds are expected to positively impact consolidated revenue growth by approximately 0.5 percent. Excluding the impact of currency, consolidated net revenues are expected to increase between 4.5 percent and 7.5 percent in constant currency. Diluted earnings per share are expected to be in the range of 0.11 dollar to 0.16 dollar.

For the fiscal year ending January 28, 2017, consolidated net revenues are expected to increase between 3percent and 5 percent in US dollars. Currency tailwinds are expected to positively impact consolidated revenue growth by approximately 0.5 percent. Excluding the impact of currency, consolidated net revenues are expected to increase between 2.5 percent and 4.5 percent in constant currency. GAAP diluted earnings per share are expected to be in the range of 0.79 dollar to 0.92 dollar. Adjusted diluted earnings per share are expected to be in the range of 0.62 dollar to 0.75 dollar.

Picture:Facebook/Guess

 

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