Guess: operating profit down 40%

By

Olivier Guyot

Published
Dec 3, 2012

With the recent departure of J. Michael Prince and Dennis Secor - Chief Operating Officer and Chief Financial Officer respectively - from the Guess group, it was a given that the quarterly results wouldn’t be so rosy. In line with the group’s first half results, Guess has seen a decline in sales of 2% to 629 million US dollars for this quarter, in comparison to the same period last year.

Exchange rates - despite leading a 2% growth in European markets - meant an 8% decline in revenue from the US to 203 million US dollars. Licensing deals (31 million) fell by 7%, retail in North American (262 million) by 1% and overseas wholesale dropped 6%. Activity in Asia was on the up, however, with an increase of 15% to 75 million dollars.

More alarming than the sales figures, profitability is on the decrease. Operational margins fells from 15.1% to just 9.2%, with a particular blow being dealt to business in America. Operating profits fell by 67% to 9 million US dollars, representing less than the groups wholesale activity in this market (15 million). Profitability fell in all markets, including in Asia. All in all, operating profit is down 40% at 58 million dollars.

For the full year, Guess expects a turnover of between 2.62 and 2.64 billion dollars with an operating margin of between 10 and 10.5%. The final quarter should prove to be more profitable for the group; the first nine months recording an operating margin of 8.4%. Paul Marciano is expecting good results from the group’s accessories sales, ‘particularly watches and handbags’. He is also hoping to shorten the lead time on products in order to be more reactive to trends.