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Guess meets second quarter guidance on EU sales despite weak US performance


Guess on Wednesday reported an increase in second quarter net revenue and earnings per share that met the high end of the company’s adjusted guidance expectations. Revenue in the quarter increased 5.3% to $573.7 million led by Europe revenues, which increased 20.1% and Asia revenues that increased 17.5%. Store openings, wholesale growth, and positive comp sales drove the positive revenue performances in Europe and Asia, according to CEO Victor Herrero.

Herrero added that the American business was “soft,” with retail revenues falling 11.2%. The American wholesale revenues increased 6.6% but could not be offset the retail revenues. “We have now increased revenues for four consecutive quarters and we expect consolidated revenues to continue to increase despite store closures in North America,” said Herrero. “In Europe and Asia we have seen not only strong double digits growth for several consecutive quarters but also continuing margin expansion. We have achieved meaningful cost reductions, especially in our supply chain. We are accelerating the reduction of our footprint in the US, which currently represents less than 36% of our global sales. And finally we are significantly increasing the adjusted guidance for fiscal 2018 and are now expecting to grow top-line, adjusted operating margin and adjusted earnings per share compared to last year.” Adjusted net earnings increased 30.4% to $16.1 million and adjusted diluted EPS increased 26.7% to $0.19, while GAAP net earnings decreased 52.8% to $15.2 million and GAAP diluted earnings per share fell 52.6% to $0.18. GAAP operating earnings increased 49.2% to $23.2 million and adjusted operating earnings increased 52.3% to $24.5 million. For the six months ended on July 29, 2017, Guess total revenues increased 3.9% to $1.03 billion, with the European, Asian and American wholesale revenues increasing 21.4%, 17.2%, and 6.1%, respectively. American retail revenues fell 13.0%. In addition, GAAP net loss for the period was $6.1 million, compared to net earnings of $7.1 million in the prior year, and adjusted net loss was $3.3 million, improving 52.5% from the previous year’s comparable period. Guess also issued its third quarter guidance and expects a consolidated net revenue increase between 4.0% and 6.0%, GAAP earnings per share to be in range of ($0.07) and ($0.04) and adjusted earnings per share to be between $0.08 and $0.11. Full year consolidated net revenue is expected to increase between 6.0% and 7.5%, GAAP EPS to projected to be between $0.34 and $0.42, and adjusted EPS to expected be in range of $0.52 and $0.60.


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