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Guess stock surges as Q4 earnings beat expectations


Prachi Singh| Thursday, March 19 2020


Shares of Guess Inc., rallied 7 percent in the extended hours on Wednesday after the company reported adjusted fiscal fourth-quarter earnings of 1.22 dollars compared to 70 cents in the fourth quarter of fiscal 2019 that were above Wall Street estimate of 1.12 dollars. Total net revenue for the quarter increased marginally by 0.6 percent to 842.3 million dollars, while in constant currency, net revenue increased by 1.8 percent.


Commenting on the results, Carlos Alberini, the company’s Chief Executive Officer, said in a statement: “I am very pleased to report that we had a strong fourth quarter performance, exceeding our guidance for earnings per share and delivering operating profit at the high end of our expectations. We closed the year with strong liquidity and a solid balance sheet, which positions us well to navigate through the current coronavirus crisis. While we hope that the crisis will be temporary, we do expect it will have a significant negative impact on our financial results for the first quarter and may impact future results, including potential disruptions in our supply chain.”


Highlights of fourth quarter results at Guess

For the fourth quarter of fiscal 2020, the company recorded GAAP net earnings of 79.6 million dollars, a 242.6 percent, while GAAP diluted earnings per share increased 321.4 percent to 1.18 dollars compared to 28 cents for the same prior-year quarter. The company recorded adjusted net earnings of 82.3 million dollars, a 41.4 percent increase, while adjusted diluted earnings per share increased 74.3 percent to 1.22 dollars, compared to 70 cents for the same prior-year quarter.


The company said, Americas retail revenues decreased 4.1 percent in U.S. dollars and 4.4 percent in constant currency, while retail comp sales including e-commerce decreased 3 percent in U.S. dollars and constant currency. Americas wholesale revenues decreased 3 percent in U.S. dollars and 3.8 percent in constant currency. Europe revenues increased 13.2 percent in U.S. dollars and 15.8 percent in constant currency, while retail comp sales including e-commerce increased 1 percent in U.S. dollars and 3 percent in constant currency. Asia revenues decreased 27.7 percent in U.S. dollars and 26.4 percent in constant currency and retail comp sales including e-commerce decreased 26 percent in U.S. dollars and 25 percent in constant currency. Licensing revenues for the quarter increased 22.7 percent in U.S. dollars.


Guess added that GAAP earnings from operations increased 44.6 percent to 96.5 million dollars and GAAP operating margin in the fourth quarter increased 350 basis points to 11.5 percent. Adjusted earnings from operations increased 32.2 percent to 101.7 million dollars, while adjusted operating margin increased 290 basis points to 12.1 percent, compared to 9.2 percent.


Review of full year results at Guess

For the fiscal year ended February 1, 2020, the Company recorded GAAP net earnings of 96 million dollars, a 580.7 percent and GAAP diluted earnings per share increase of 731.3 percent to 1.33 dollars compared to 16 cents in the prior year. Adjusted net earnings for the year of 105 million dollars increased 30.6 percent and adjusted diluted earnings per share increased 48 percent to 1.45 dollars, compared to 98 cents for the prior year. Total net revenue for fiscal 2020 increased 2.6 percent to 2.68 billion dollars, while in constant currency, net revenue increased by 5.4 percent.


Americas Retail revenues decreased 1.6 percent in U.S. dollars and 1.3 percent in constant currency, while retail comp sales including e-commerce were relatively flat in U.S. dollars and constant currency. Americas wholesale revenues increased 9.1 percent in U.S. dollars and 9.7 percent in constant currency. Europe revenues increased 9.2 percent in U.S. dollars and 14.1 percent in constant currency and retail comp sales including e-commerce were relatively flat in U.S. dollars and increased 4 percent in constant currency. Asia revenues decreased 10.8 percent in U.S. dollars and 7.5 percent in constant currency with retail comp sales including e-commerce decreasing 19 percent in U.S. dollars and 16 percent in constant currency. Licensing revenues increased 3.2 percent in U.S. dollars.


COVID-19: Guess postpones dividend declaration, draws down 212 million dollars

Commenting on the current situation amid coronavirus outbreak, the company said: “The outbreak of the coronavirus is having a material impact on the Company’s financial performance. The outbreak is ongoing and dynamic in nature and, to date, the Company has experienced temporary closures in key regions globally, along with other major retailers. The extent and duration of the crisis remains uncertain and may impact consumer purchasing activity throughout the year if disruptions continue. Given the dynamic situation, we have not provided guidance for the first quarter or the full fiscal year ending January 30, 2021.”


During March 2020, as a precautionary measure to ensure financial flexibility and maintain maximum liquidity in response to the coronavirus outbreak, the company has drawn down approximately 212 million dollars under certain of its credit facilities in the U.S., Canada and Europe. In addition, in light of the current uncertain situation, the company has decided to postpone its decision related to the potential declaration of a quarterly cash dividend for the first quarter of fiscal 2021.


Picture:Facebook/Guess

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