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By
Reuters
Published
Aug 29, 2013
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Guess reports uptick in North American sales, shares rise

By
Reuters
Published
Aug 29, 2013

Guess Inc's second-quarter results beat Wall Street estimates, helped by recovering sales in North America, and bucked a broader trend of falling sales for apparel retailers. Guess shares surged 18 percent in after-market trading.

Fall 2013 GUESS Denim Campaign | Source: Facebook/Guess

"I think across the board, every segment exceeded our expectations in terms of sales and profitability," Wedbush analyst Betty Chen told Reuters.

"In North America, in particular, it was really strong with comps down only 2 percent. So it shows sequential improvement in the quarter despite a very tough landscape."

The sales performance in North America, which accounts for about 40 percent of the company's revenue, was a marked improvement over the 10 percent drop reported for the region in the previous quarter.

Many apparel retailers such as Abercrombie & Fitch Co and Aeropostale have reported weak sales in the region as customers shied away from spending on discretionary items amid high taxes and gas bills. This has led to heavy discounting and aggressive competition.

Guess too resorted to discounting like its peers, but that helped drive sales of its denims and dresses in the quarter, Chief Executive Paul Marciano said on a conference call with analysts.

Overall sales rose 0.6 percent to $639 million. North American retail sales were up 1 percent.

In Europe, its second biggest market, comparable-store sales fell by mid-single-digit percentage as wholesale shipments in Italy and France declined.

The company warned that sales in the region, especially in Southern Europe, would continued to be pressured by the weak economy.

In August, however, comparable-store sales in Europe improved and are up by mid single digits, Chief Financial Officer Sandeep Reddy said on the call. Overall, the outlook for Europe was encouraging, the company said.

PROFIT BEATS

Net income fell 7 percent to $39.8 million, or 47 cents per share, from $42.9 million, or 49 cents per share, a year ago.

Excluding restructuring charges, the company earned 52 cents per share in the quarter ended August 3.

Analysts on average had expected second-quarter earnings of 36 cents per share on revenue of $622.9 million, according to Thomson Reuters estimations.

The company also forecast full-year adjusted earnings of $1.78-$1.92 per share, largely above analysts expectations of $1.79 per share.

Guess shares were up 18 percent at $32.30 in trading after the bell. They closed at $27.31 on the New York Stock Exchange on Wednesday.

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