Guess swings to Q1 profit as sales recover

US fashion retailer Guess has swung to a profit in the first quarter of the year as its sales almost doubled compared to last year’s Covid-impacted levels.

The LA-based company reported net earnings of 12 million dollars for the quarter ended May 1, compared to a loss of 157.7 million dollars reported last year when the pandemic was more severely impacting the US.

For a bit of perspective, in the first quarter of 2019 - or pre-pandemic - the company reported a loss of 21.4 million dollars.

Revenue at the retailer increased 99.8 percent to 520 million dollars compared to last year - but decreased 3 percent compared to two years ago.

Americas retail revenues increased 108.5 percent, while retail comparable sales including e-commerce increased 6 percent. Wholesale revenue increased 75.6 percent.

Europe revenue increased 127.1 percent, with retail comparable sales up 44 percent, while Asia revenue increased 37.8 percent, with retail comparable sales up 32 percent.

Licensing revenues increased 66.4 percent.

The company reported a 5.1 percent operating margin which, compared to the first quarter of 2019, represented an expansion of over 900 basis points.

Guess on track to achieve operating margin target

“We are extremely pleased with our first-quarter performance, which significantly exceeded our expectations for revenues and profitability across all channels,” said CEO Carlos Alberini in a release.

Paul Marciano, co-founder and chief creative officer, added: “We firmly believe that this strong performance is a direct result of the transformational work we have done at the company.

“This transformation touched every area of our business, including initiatives to elevate our brand and our product, the acceleration of our e-commerce business, the optimization of our global footprint and brand portfolio, the reorganization of our team globally and the execution of significant cost reductions throughout our operation.”

The company said it is on track to achieve its long-term 10 percent operating margin target a year earlier than anticipated.

It now expects revenue in the second quarter to be down mid-single digits versus the second quarter of 2019.

For the full-year, “assuming no Covid-related shutdowns past the second quarter”, it expects revenue to be down mid-single digits versus 2019 and operating margin to reach approximately 8.6 percent.