Guess earnings fell 33.6 percent in the first quarter, as sales rose 14 percent to $593.5 million.
In a Nutshell: Guess Inc. said Wednesday that for the second quarter of fiscal 2023, assuming no meaningful Covid-related shutdowns, it expects revenues to be up around 1 percent versus the second quarter of fiscal 2022 and operating margin to reach approximately 7.5 percent.
For the full fiscal year 2023, given the same assumption, Guess forecast revenues to rise around 4 percent over fiscal 2022 and operations margin to reach approximately 10.1 percent.
“We have continued to make great progress in enhancing our product offering and I strongly believe that our current collections are the best they have been across all product categories,” Paul Marciano, co-founder and chief creative officer, said. “During the last few years, we have transformed our business and elevated our brands very successfully and our customers are responding well to our offerings. Today, our company is very well positioned to compete in the current marketplace and gain market share among our different product categories and territories.”
Guess reported that at quarter’s end, it directly operated 1,073 stores in the Americas, Europe and Asia, while the company’s partners and distributors operated 565 additional units worldwide.
Sales: Net revenue for the first quarter ended April 30 increased 14 percent to $593.5 million.
Americas retail revenue rose 7 percent to $166.49 million, while retail comp sales, including e-commerce, increased 3 percent. Americas wholesale revenue was up 50 percent to $68.36 million.
Europe revenue increased 14 percent to $276.01 million and retail comp sales for the region, including e-commerce, decreased 6 percent. In Asia, revenue rose 1 percent to $56.22 million and retail comp sales, including e-commerce, declined 11 percent. Licensing revenue increased 23 percent to $26.4 million.
Earnings: Net earnings for the quarter fell 33.6 percent to $8 million from $12 million for the first quarter of fiscal 2022.
Diluted earnings per share (EPS) decreased 33.3 percent to 12 cents. The company estimated a net positive impact from its adoption of new accounting guidance related to its convertible notes and share buybacks of 4 cents and a negative impact from currency of 14 cents on diluted EPS in the first quarter compared to the same prior-year period.
Operating margin in the first quarter increased 1 percent to 6.1 percent, driven primarily by overall leveraging of expenses, partially offset by higher store labor costs in Americas Retail and unfavorable currency impact. The negative impact of currency on operating margin for the quarter was approximately 100 basis points.
CEO’s Take: Carlos Alberini, CEO, said: “We are very pleased with our first quarter results, which exceeded our expectations for top line and operating performance. Our company’s revenues finished up 14 percent in U.S. dollars and 21 percent in constant currency with Europe, Americas Wholesale and Licensing performing better than expected. Overall, we delivered strong gross margin performance and leveraged expenses effectively, contributing to an expansion in operating margin and a significant increase in earnings from operations compared to the prior year.”
“As we look at the remainder of the year, we remain focused on carefully managing our business and believe we can deliver about 4 percent revenue growth and an operating margin above 10 percent for the current year, which includes a significant unfavorable currency impact versus the prior year due to the stronger U.S. dollar. While the environment remains challenging, we are well positioned to grow and capitalize on our diversified business model and the strong momentum of our Guess and Marciano brands.”