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Guess? (GES) Q1 Loss Narrower than Expected, Revenues Beat
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After delivering earnings for three straight quarters, Guess?, Inc. (GES - Free Report) began fiscal 2018 on a weak note by reporting loss per share of 24 cents in the first quarter. Although, it fared better than the Zacks Consensus Estimate of a loss of 31 cents and management’s guided loss in the range of 33–30 cents, but the loss widened by a penny from the prior-year period. Further, the bottom line in the quarter was impacted by currency tailwinds of nearly 3 cents per share.
The company posted GAAP net loss of 26 cents a share in the reported quarter compared with a loss of 30 cents recorded in the year-ago period.
Revenues and Margins
Net revenue came in at $458.6 million in the quarter that improved 2.2% and also outpaced the Zacks Consensus Estimate of $447 million. On a constant-currency basis, revenues grew 4%. In fact, this quarter marked the third straight quarter of revenue improvement. The upside came on the back of solid sales at the Europe, Asia and American Wholesale segments, somewhat offset by soft revenues across the Americas Retail and Licensing segments.
Gross profit inched up 1.3% to $144.6 million in the quarter. However, gross margin contracted 30 basis points (bps) to 31.5%.
Furthermore, the company reported adjusted operating loss of $22.8 million that inched up 0.4% in the quarter.
Notably, shares of this Zacks Rank #3 (Hold) company have plunged over 36% in the past six months compared with the Zacks categorized Textile – Apparel Manufacturing industry’s decline of 15.8%. The industry is currently placed at bottom 22% of the Zacks Classified industries (199 out of 256).
Segment Results
Starting from the second quarter of fiscal 2017, Guess? changed the names of its "North American Retail" and "North American Wholesale" segments to "Americas Retail" and "Americas Wholesale," respectively.
Revenues of $173.7 million at the Americas Retail segment were down 14.9% (14.7% on a constant-currency basis). Further, Retail comp sales including e-commerce declined 15% in both the U.S. dollars and constant-currency basis.
The Europe segment's revenues of $165.4 million were up 23.3% (29.1% on a constant currency-basis). Moreover, Retail comp sales including e-commerce improved 5% in U.S. dollars as well as 11% in constant currency.
Revenues of $63.4 million from Asia increased 16.9% (up 15.5% in constant currency). Additionally, Retail comp sales including e-commerce grew 4% in U.S. dollars and 2% on a constant-currency basis.
Net revenues of $35.9 million at the American Wholesale segment rose 5.7% (up 7.7% on a constant-currency basis).
However, net revenues of $20.3 million at the Licensing segment decreased 9.3% in both the U.S. dollars and constant currency.
Other Financial Update
Guess? exited the quarter with cash and cash equivalents of $316.4 million compared with $396.1 million in the previous quarter. The company had long-term debt of $23.3 million compared with $23.4 million in the previous quarter. Further, the stockholders’ equity as of Apr 29 was $926.1 million.
During the first quarter, the company’s board approved a quarterly cash dividend of $0.225 per share payable on Jun 23 to shareholders of record at the close of business on Jun 7, 2017. Also, it bought back 1.5 million shares worth $80 million in the quarter.
Moving ahead, capital expenditure is anticipated in the band of $85–$95 million for fiscal 2018, backed by consistent investment in the retail improvement in the Europe and Asian regions.
Guidance
For fiscal 2018, management expects consolidated net revenues to rise between 3.5–5% versus 2–4% guided earlier. Excluding the impact of currency, consolidated net revenues are anticipated to grow between 4–5.5% on a constant-currency basis, down from the previous estimate of 4–6%. The impact of 53rd week on the revenues is anticipated to rise by 1%.
Also, the company’s adjusted operating margin is projected in the band of 2.3–3% and the GAAP operating margin is expected in the range of 2.2–2.9% for the full year.
Adjusted earnings per share for fiscal 2018 are forecasted in the range of 34–44 cents. Further, the GAAP earnings are projected in the band of 32–42 cents. Earlier, earnings per share were expected in the band of 28–40 cents. Currency is likely to have a negative impact of 3 cents per share. The Zacks Consensus Estimate for fiscal 2018 is currently pegged at the lower-end of the company’s guided range.
For the second quarter of fiscal 2018, management expects consolidated net revenues to improve between 2–4%. Excluding the impact of currency, consolidated net revenues are anticipated to grow between 3.5–5.5% on a constant-currency basis.
Moreover, the company’s adjusted as well as GAAP operating margin is projected in the band of 2.2–3%.
Adjusted as well as GAAP earnings per share for the second quarter are forecasted in the range of 8–11 cents. Currency is likely to have a negative impact of 4 cents per share. The Zacks Consensus Estimate for the second quarter is currently pegged higher at 15 cents.
Stocks to Consider
Better-ranked stocks in the same industry include Cherokee Inc. , Gildan Activewear Inc. (GIL - Free Report) and PVH Corp. (PVH - Free Report) .
Gildan Activewear carries a Zacks Rank #2 (Buy) and has increased 10.3% year to date. Also, it has a long-term earnings growth rate of 12.3%.
PVH Corp., a Zacks Rank #2 stock has jumped 13.1% year to date. Also, it has a long-term earnings growth rate of 10.7%.
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Guess? (GES) Q1 Loss Narrower than Expected, Revenues Beat
After delivering earnings for three straight quarters, Guess?, Inc. (GES - Free Report) began fiscal 2018 on a weak note by reporting loss per share of 24 cents in the first quarter. Although, it fared better than the Zacks Consensus Estimate of a loss of 31 cents and management’s guided loss in the range of 33–30 cents, but the loss widened by a penny from the prior-year period. Further, the bottom line in the quarter was impacted by currency tailwinds of nearly 3 cents per share.
Guess?, Inc. Price, Consensus and EPS Surprise
Guess?, Inc. Price, Consensus and EPS Surprise | Guess?, Inc. Quote
The company posted GAAP net loss of 26 cents a share in the reported quarter compared with a loss of 30 cents recorded in the year-ago period.
Revenues and Margins
Net revenue came in at $458.6 million in the quarter that improved 2.2% and also outpaced the Zacks Consensus Estimate of $447 million. On a constant-currency basis, revenues grew 4%. In fact, this quarter marked the third straight quarter of revenue improvement. The upside came on the back of solid sales at the Europe, Asia and American Wholesale segments, somewhat offset by soft revenues across the Americas Retail and Licensing segments.
Gross profit inched up 1.3% to $144.6 million in the quarter. However, gross margin contracted 30 basis points (bps) to 31.5%.
Furthermore, the company reported adjusted operating loss of $22.8 million that inched up 0.4% in the quarter.
Notably, shares of this Zacks Rank #3 (Hold) company have plunged over 36% in the past six months compared with the Zacks categorized Textile – Apparel Manufacturing industry’s decline of 15.8%. The industry is currently placed at bottom 22% of the Zacks Classified industries (199 out of 256).
Segment Results
Starting from the second quarter of fiscal 2017, Guess? changed the names of its "North American Retail" and "North American Wholesale" segments to "Americas Retail" and "Americas Wholesale," respectively.
Revenues of $173.7 million at the Americas Retail segment were down 14.9% (14.7% on a constant-currency basis). Further, Retail comp sales including e-commerce declined 15% in both the U.S. dollars and constant-currency basis.
The Europe segment's revenues of $165.4 million were up 23.3% (29.1% on a constant currency-basis). Moreover, Retail comp sales including e-commerce improved 5% in U.S. dollars as well as 11% in constant currency.
Revenues of $63.4 million from Asia increased 16.9% (up 15.5% in constant currency). Additionally, Retail comp sales including e-commerce grew 4% in U.S. dollars and 2% on a constant-currency basis.
Net revenues of $35.9 million at the American Wholesale segment rose 5.7% (up 7.7% on a constant-currency basis).
However, net revenues of $20.3 million at the Licensing segment decreased 9.3% in both the U.S. dollars and constant currency.
Other Financial Update
Guess? exited the quarter with cash and cash equivalents of $316.4 million compared with $396.1 million in the previous quarter. The company had long-term debt of $23.3 million compared with $23.4 million in the previous quarter. Further, the stockholders’ equity as of Apr 29 was $926.1 million.
During the first quarter, the company’s board approved a quarterly cash dividend of $0.225 per share payable on Jun 23 to shareholders of record at the close of business on Jun 7, 2017. Also, it bought back 1.5 million shares worth $80 million in the quarter.
Moving ahead, capital expenditure is anticipated in the band of $85–$95 million for fiscal 2018, backed by consistent investment in the retail improvement in the Europe and Asian regions.
Guidance
For fiscal 2018, management expects consolidated net revenues to rise between 3.5–5% versus 2–4% guided earlier. Excluding the impact of currency, consolidated net revenues are anticipated to grow between 4–5.5% on a constant-currency basis, down from the previous estimate of 4–6%. The impact of 53rd week on the revenues is anticipated to rise by 1%.
Also, the company’s adjusted operating margin is projected in the band of 2.3–3% and the GAAP operating margin is expected in the range of 2.2–2.9% for the full year.
Adjusted earnings per share for fiscal 2018 are forecasted in the range of 34–44 cents. Further, the GAAP earnings are projected in the band of 32–42 cents. Earlier, earnings per share were expected in the band of 28–40 cents. Currency is likely to have a negative impact of 3 cents per share. The Zacks Consensus Estimate for fiscal 2018 is currently pegged at the lower-end of the company’s guided range.
For the second quarter of fiscal 2018, management expects consolidated net revenues to improve between 2–4%. Excluding the impact of currency, consolidated net revenues are anticipated to grow between 3.5–5.5% on a constant-currency basis.
Moreover, the company’s adjusted as well as GAAP operating margin is projected in the band of 2.2–3%.
Adjusted as well as GAAP earnings per share for the second quarter are forecasted in the range of 8–11 cents. Currency is likely to have a negative impact of 4 cents per share. The Zacks Consensus Estimate for the second quarter is currently pegged higher at 15 cents.
Stocks to Consider
Better-ranked stocks in the same industry include Cherokee Inc. , Gildan Activewear Inc. (GIL - Free Report) and PVH Corp. (PVH - Free Report) .
Cherokee has a long-term earnings growth rate of 15% and sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Gildan Activewear carries a Zacks Rank #2 (Buy) and has increased 10.3% year to date. Also, it has a long-term earnings growth rate of 12.3%.
PVH Corp., a Zacks Rank #2 stock has jumped 13.1% year to date. Also, it has a long-term earnings growth rate of 10.7%.
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Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look. See the pot trades we're targeting>>