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Guess? (GES) Q3 Earnings Lag Estimates, Revenues Down Y/Y

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Guess? Inc. (GES - Free Report) reported third-quarter fiscal 2023 results, with the bottom line declining year over year and falling short of the Zacks Consensus Estimate. The top line fell year over year but exceeded the consensus mark.

Results in Detail

Guess? posted adjusted earnings of 44 cents per share, down 29% from the 62 cents reported in the year-ago quarter. Earnings were hurt by a negative impact of currency translations, partly compensated by a favorable impact of its share buybacks. The bottom line missed the Zacks Consensus Estimate of 55 cents per share.

Net revenues amounted to $633.4 million, surpassing the consensus mark of $614 million. The metric fell 2% from the figure reported in the year-ago quarter. On a constant-currency (cc) basis, net revenues increased 10%c, mainly led by strength of the company’s business in Europe.

The company’s gross margin contracted to 42.5% from the 45.7% reported in the year-ago quarter. As a percentage of sales, SG&A expenses contracted to 33.6% from 34.8% in the prior-year quarter’s level.

In the third quarter of fiscal 2023, earnings from operations came in at $54.8 million, down from $65.7 million reported in the year-ago quarter. The operating margin came in at 8.6%, down from the 10.2% reported in the year-ago quarter.

Guess, Inc. Price, Consensus and EPS Surprise

 

Guess, Inc. Price, Consensus and EPS Surprise

Guess, Inc. price-consensus-eps-surprise-chart | Guess, Inc. Quote

 

Segment Performance

Revenues in the Americas Retail segment fell 2% year over year on a reported basis and 1% at cc. Retail comp sales (including e-commerce) declined 1% on a reported basisand remained unchanged at cc. The segmental operating margin came in at 6.9% compared with 14.2% in the year-ago quarter.

Americas Wholesale revenues fell 10% on a reported basis and 9% at cc. The segmental operating margin came in at 19.2% compared with 29.3% in the year-ago quarter.

The Europe segment’s revenues were down 2% on a reported basis but increased 17% at cc. Retail comp sales (including e-commerce) fell 8% on a reported basis and increased 9% at cc. The segmental operating margin came in at 11.2% compared with 13.5% in the year-ago quarter.

Asia revenues increased 10% on a reported basis and 28% at cc. Retail comp sales (including e-commerce) declined 2% on a reported basis while the same increased 13% at cc. The segmental operating margin increased 4.2% to a relative breakeven point.

Licensing revenues grew 4% on a reported basis and at cc. The segmental operating margin came in at 89.6% compared with 91.8% in the year-ago quarter.

Other Updates

This Zacks Rank #3 (Hold) company exited the quarter with cash and cash equivalents of $174.1 million and long-term debt and finance lease obligations of $153.7 million. Stockholders’ equity was $418.8 million. Net cash used by operating activities for the nine months ended Oct 29, 2022 amounted to $21.4 million.

GES declared a quarterly dividend of 22.5 cents, payable on Dec 23, 2022, to shareholders on record as of Dec 7.

During the nine months ended Oct 29, 2022, management repurchased nearly 0.5 million shares, amounting to $11.7 million.

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Guidance

The company is well placed for the holiday period, with a well-chalked business plan and inventory levels. Also, the company’s updated fiscal 2023 outlook reflects the adverse impact of currency headwinds.

For fiscal 2023, Guess? anticipates revenues to grow by almost 2% on a reported basis (up 10.5% at cc). Earlier, Guess? envisioned revenues to grow roughly 1.5% (up 9.5% at cc) year over year. The adjusted operating margin is likely to be 9.7% in fiscal 2023. Earlier, the company expected an adjusted operating margin of 10% in fiscal 2023. Management now expects adjusted earnings per share (EPS) of $2.35, compared with $2.65 anticipated earlier.

For the fourth quarter of fiscal 2023, management expects revenues to be down almost 3.5% on a reported basis (up 3.5% at cc). The adjusted operating margin is likely to be 13.2% in the fourth quarter. Adjusted EPS are envisioned at $1.32 in the quarter.

Share Performance

GES’s stock has gained 18.3% in the past six months compared with the industry’s 11.5% decline.

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