Guess Inc.'s (GES) fiscal third-quarter earnings fell 45% as the
apparel company reported that currency impacts weighed on revenue
and expenses increased.
Shares were up 3.6% at $26.16 in recent after-hours trading as
the company said its board authorized a special dividend of $1.20 a
share. The increased payout to shareholders is expected to cost an
estimated $101.6 million.
However the retailer lowered its fiscal-year per-share earnings
for a third time, and now expects $2.05 to $2.15 on revenue of
$2.62 billion to $2.64 billion, compared with its prior estimate
for $2.15 to $2.30 and $2.62 billion to $2.65 billion.
For the current quarter, the company forecast per-share earnings
of 85 cents to 95 cents on revenue of $780 million to $800 million.
Analysts polled by Thomson Reuters most recently expected 95 cents
and $789 million, respectively.
The company has been struggling in recent quarters amid
declining revenue from its North American and European operations.
Guess's management also has been in flux, with its former Chief
Financial Officer Dennis Secor headed to watch and accessories
company Fossil Inc. (FOSL) and its Chief Operating Officer J.
Michael Prince also leaving the company. Guess doesn't plan to fill
the chief operating officer role, instead opting to redistribute
the responsibilities among its executive team.
In the latest period, North American retail revenue declined
1.3%. Same-store sales were down 6%. In its European business,
revenue fell 8.3%, but excluding currency rates improved by 1.7%.
Asian revenue was up 16%.
Chief Executive Paul Marciano said the latest quarter's earnings
"were consistent with our guidance but fell short of our
operational goals, as economic pressures impacted consumer
confidence in most of our markets."
"We do expect that the current market conditions in the global
economy will continue for some time and we are more cautious on
near-term customer demand trends," Mr. Marciano said.
For the quarter ended Oct. 27, Guess reported a profit of $36.6
million, or 43 cents a share, down from $66.3 million, or 71 cents
a share, a year earlier.
Revenue decreased 2.2% to $628.8 million, however excluding
currency fluctuations, revenue was up 1.2%. Guess in August
projected earnings of 42 cents to 46 cents on revenue of $620
million to $630 million, well below analysts' estimates at the
time.
Gross margin fell to 39.4% from 42.9%. Overhead costs were up
6.1%. The company's effective tax rate in the period increased to
34.8% from 32.3%.
Write to Tess Stynes at tess.stynes@dowjones.com
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