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Guess earnings decline, reveals weak outlook

Guess GAAP net earnings for the fourth quarter of 6.6 million dollars, witnessed an 86.3 percent decrease from 47.8 million dollars for the fourth quarter of fiscal 2016. GAAP diluted earnings per share decreased 86 percent to 0.08 dollar from 0.57 dollar for the prior-year quarter. For the fiscal year, GAAP net earnings of 22.8 million dollars declined 72.2 percent, while GAAP diluted earnings per share decreased 71.9 percent to 0.27 dollar from 0.96 dollar in the prior year.

"Despite continued softness in the Americas, we are pleased to report that fourth quarter revenues for the company were up 3 percent, driven by strong double digit growth in both Europe and Asia. We are encouraged by the progress we are making in these two regions and will continue to allocate the majority of our capital investment there. In the Americas Retail, where the retail environment remains challenging, we are focused on profitability improvements. We plan to close 60 stores in fiscal 2018,” said Victor Herrero, Chief Executive Officer of Guess in a statement.

Adjusted net earnings decline 27.9 percent in Q4

For the fourth quarter, the company’s adjusted net earnings of 34.6 million dollars were down 27.9 percent and adjusted diluted earnings per share decreased 28.1 percent to 0.41 dollar, from 0.57 dollar for the prior-year quarter. In addition, the company estimates the negative impact of currency on diluted earnings per share in the fourth quarter was approximately 0.01 dollar per share.

Total net revenue for the quarter increased 3.2 percent to 679.3 million dollars, while in constant currency, net revenue increased by 4.3 percent. The company said, Americas retail revenues decreased 6.4 percent in US dollars and 6.3 percent in constant currency. In the US and Canada, retail comp sales including e-commerce decreased 7 percent in US dollars and 7.4 percent in constant currency.

Europe revenues increased 11.4 percent in US dollars and 13.5 percent in constant currency, while revenues in Asia increased 26.6 percent in US dollars and 27.9 percent in constant currency.

Americas wholesale revenues increased 1 percent in US dollars and 3.7 percent in constant currency. Licensing revenues decreased 8.6 percent in US dollars and constant currency.

Guess said, operating earnings on GAAP basis decreased 70 percent to 21 million dollars (including a 2.3 million dollars unfavourable currency translation impact), from 70 million dollars in the prior-year period. GAAP operating margin in the fourth quarter decreased 750 basis points to 3.1 percent, from 10.6 percent in the prior-year quarter. Adjusted operating earnings were 53.9 million dollars and adjusted operating margin was 7.9 percent, a decrease of 270 basis points compared to the same prior-year period.

FY17 adjusted net earnings down 55.3 percent

For the fiscal year ended January 28, 2017, the company recorded adjusted net earnings of 37.2 million dollars, a 55.3 percent decrease from adjusted net earnings of 83.4 million dollars for the fiscal year ended January 30, 2016. Adjusted diluted earnings per share decreased 55.1 percent to 0.44 dollar against 0.98 dollar for the prior year. In addition, the company estimates the negative impact of currency on diluted earnings per share was approximately 0.13 dollar per share.

Total net revenue increased 0.2 percent to 2.21 billion dollars, compared to 2.20 billion dollars in the prior year. In constant currency, net revenue increased by 1 percent. Americas retail revenues decreased 4.7 percent in US dollars and 4.1 percent in constant currency. In the US and Canada, retail comp sales including e-commerce decreased 4.9 percent in US dollars and 4.5 percent in constant currency.

Europe revenues increased 8.9 percent in US dollars and 9.2 percent in constant currency. Asia revenues increased 3.6 percent in US dollars and 4.9 percent in constant currency.

Americas wholesale revenues decreased 5.9 percent in US dollars and 2.4 percent in constant currency and licensing revenues decreased 12.5 percent in US dollars and constant currency.

GAAP operating earnings for fiscal decreased 81.3 percent to 22.7 million dollars (including a 3.6 million dollars unfavourable currency translation impact), from 121.4 million dollars in the prior year. GAAP operating margin decreased 450 basis points to 1 percent, from 5.5 percent in the prior year. The negative impact of currency on operating margin for fiscal 2017 was roughly 70 basis points. Adjusted operating earnings were 63.2 million dollars and adjusted operating margin was 2.9 percent, a decrease of 270 basis points compared to the prior year.

Currency headwinds to impact revenues in Q1

According to the company's expectations for the first quarter of fiscal 2018 ending April 29, 2017, consolidated net revenues are expected to range between a decline of 0.5 percent and an increase of 1.5 percent in US dollars. Currency headwinds are expected to negatively impact consolidated revenue growth by approximately 2.5 percent. Excluding the impact of currency, consolidated net revenues are expected to increase between 2 percent and 4 percent in constant currency.

Operating margin is expected to be between minus 7 percent and minus 6 percent and includes roughly 30 basis points of currency headwind. Diluted net loss per share is expected to be in the range of 0.33 dollar to 0.30 dollar. The estimated impact on earnings per share of the currency tailwinds is approximately 0.03 dollar.

For the fiscal year ending February 3, 2018, the company expects consolidated net revenues to increase between 2 percent and 4 percent in US dollars. Currency headwinds are expected to negatively impact consolidated revenue growth by approximately 2 percent. Excluding the impact of currency, consolidated net revenues are expected to increase between 4 percent and 6 percent in constant currency.

Operating margin is expected to be between 2.2 percent and 3 percent and includes roughly 40 basis points of currency headwind. Diluted earnings per share are expected to be in the range of 0.28 dollar to 0.40 dollar. The estimated impact on earnings per share of the currency headwinds is approximately 0.08 dollar.

The company's Board of Directors has approved a quarterly cash dividend of 0.225 dollar per share on the company's common stock.

In brief

Q4 GAAP net earnings down 6.6 mn dollars
FY16 GAAP earnings down 22.8 mn dollars

Picture:Guess website