Dec 5, 2011
Guess sees weak Q4, looks to Asia for growth
Dec 5, 2011
U.S. clothing maker Guess Inc (GES.N) forecast weak holiday season sales as consumers feel the pinch of shrinking disposable incomes due to rising prices amid uncertain economic conditions, particularly in Europe.
The company, which generates more than 40 percent of its sales from Europe, said it sees a challenging year ahead as the sovereign debt crisis sweeps closer to the heart of euro zone.
"In Italy and France -- we posted negative comps in the quarter in our owned retail stores," Chief Executive Paul Marciano said on a conference call.
Analysts have said the company, known for its jeans, may lose market share to rivals such as Levi Strauss & Co, VF Corp (VFC.N) and True Religion (TRLG.O) as it has cut down on markdowns and promotions.
"It is a possibility maybe, but it's a conscious decision that we made, that we cannot and we would not continue to go in that direction," CEO Marciano said, when asked about competition and price wars on a call.
Guess is now banking on store expansion in North America and growth in Asia to help drive profits and offset the weakness in Europe.
"We expect our growth to continue (in Asia) fuelled by new door expansion and positive comps in both South Korea and China," Chief Operating Officer Michael Prince said.
For the fourth quarter, it expects earnings of $1.03-$1.09 on revenue of $780-$795 million. Analysts were expecting earnings of $1.21 on revenue of $816 million, according to Thomson Reuters I/B/E/S.
Third-quarter net income came in at $66.3 million, or 71 cents a share, compared with $69.1 million, or 75 cents a share, last year.
Sales rose about 5 percent to $642.8 million.
Analysts had expected it to post a profit of 73 cents a share on revenue of $654.2 million.
Shares of the company were up slightly at $28.30 after the bell. They closed at $28.12 on Wednesday on the New York Stock Exchange.
(Reporting by Meenakshi Iyer and Ranjita Ganesan; Editing by Saumyadeb Chakrabarty)
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