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Guess Beats Q2 Street; Signals End of “Transition Period”

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Shares of Guess Inc.soared nearly 23 percent during Thursday morning trading on news that the company had beat analyst expectations during its second quarter.

The denim and apparel company reported net income totaled $32.3 million during the quarter, or 38 cents per share, up from $18.3 million (21 cents per share) during the same period last year. Adjusted earnings were 14 cents per share, beating the 6 cents consensus by analysts at FactSet.

Same-store sales (including e-commerce) fell 2 percent during the quarter, which the company blamed on the continued strength of the U.S. dollar and weak tourism. The decline wasn’t as bad as the 4.3% drop FactSet analysts had anticipated.

Thursday’s rally comes as welcome news for the company. Earlier this year, CEO Victor Herrero said that Guess was entering a period of transition. Today, he signaled the end of said transition.

“This transition is now behind us and the investments we have made so far are expected to start generating revenue growth for the company in the third quarter, accelerating into the fourth quarter,” he said.

Still, the company faces some headwinds. The brand, which is expanding its presence in greater China, said sales in Asia dropped 6 percent, driven by slowness in its Greater China business. This was partially offset by its European business, which reported positive sales growth of 7 percent.

Guess said it anticipates a third-quarter sales bump of between 5 and 8 percent, with EPS in the range of 11-16 cents.