Guess? Inc. (GES)

Guess? (GES - Analyst Report) reported better-than-expected results for the first half of 2010, thanks to strong North American sales, operating cost controls and smart inventory management. In addition, the company's strong cost-control efforts helped it maintain a lower operating cost structure, which in turn helped it navigate through the difficult economic conditions.

Management also issued optimistic guidance for the third quarter, although it declined to provide guidance for fiscal year 2010. For the third quarter, Guess expects revenue of $465-$485 million and EPS of 46-49 cents.

Given the company's positive outlook and strong control mechanisms, we upgrade the shares of Guess Inc. from Neutral to Outperform.