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Why Is Guess (GES) Down 5.8% Since Last Earnings Report?
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A month has gone by since the last earnings report for Guess (GES - Free Report) . Shares have lost about 5.8% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Guess due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Guess? reported fourth-quarter fiscal 2023 results, with both top and bottom lines increasing year over year and beating the Zacks Consensus Estimate.
Guess? posted adjusted earnings of $1.74 per share, up 52.6% from $1.14 reported in the year-ago quarter. Earnings were positively impacted by share buybacks, partly hurt by a negative impact of currency translations. The bottom line surpassed the Zacks Consensus Estimate of $1.30 per share.
Net revenues amounted to $817.8 million, surpassing the consensus mark of $772 million. The metric advanced 2% from the figure reported in the year-ago quarter. On a constant-currency (cc) basis, net revenues increased 8%, mainly led by strength of the company’s business in Europe. The company’s gross margin contracted to 44.2% from 46.3% reported in the year-ago quarter. As a percentage of sales, SG&A expenses increased to 31.1% from 30.7% in the prior-year quarter’s level.
In the fourth quarter of fiscal 2023, adjusted earnings from operations came in at $107.5 million, down 14% from $125.7 million reported in the year-ago quarter. The adjusted operating margin contracted to 2.6% from 13.1% owing to escalated costs, reduced government subsidies, increased markdowns and currency headwinds, somewhat negated by expense leverage.
Segment Performance
Revenues in the Americas Retail segment fell 1% year over year on a reported basis and at cc. Retail comp sales (including e-commerce) remained nearly flat on a reported basis and at cc. The segmental operating margin declined to 1.8% from 15.4%.
Americas Wholesale revenues fell 7% on a reported basis and at cc. The segmental operating margin came in at 20.9%, down 4.5% year over year.
The Europe segment’s revenues jumped 10% on a reported basis and rose 20% at cc. Retail comp sales (including e-commerce) climbed 1% on a reported basis and increased 10% at cc. The segmental operating margin dropped 2.6% from 16%.
Asia revenues fell 8% on a reported basis but rose 1% at cc. Retail comp sales (including e-commerce) declined 8% on a reported basis while the same increased 1% at cc. The segmental operating margin fell from 3.7% to 2.8%.
Licensing revenues tumbled 8% on a reported basis and at cc. The segmental operating margin came in at 88.2% compared with 90.5% in the year-ago quarter.
Other Updates
The company exited the quarter with cash and cash equivalents of $275.8 million and long-term debt and finance lease obligations of $95.9 million. Stockholders’ equity was $534.1 million. Net cash provided by operating activities for the fiscal year ended Jan 28, 2023, amounted to $169.2 million.
During fiscal 2023, management repurchased nearly 0.5 million shares, amounting to $11.7 million. Also, in March 2022, Guess? entered into an accelerated share repurchase agreement, as part of which it received about 8.5 million shares of common stock for $175.0 million. The company repurchased nearly 9 million shares for $186.7 million in fiscal 2023.
Guidance
For fiscal 2024, Guess? anticipates revenues to grow by 1-3%. GAAP operating margin is likely to be 8-9%. Management expects adjusted earnings per share (EPS) of $2.45-$2.80 compared with $2.74 recorded in fiscal 2023. On a GAAP basis, EPS is envisioned in the range of $2.08-$2.36 compared with $2.18 reported in fiscal 2023.
For the first quarter of fiscal 2024, management expects revenues to decrease 7-6%. On an adjusted basis, the company expects to post a loss of 31-25 cents per share. On a GAAP basis, it expects a loss per share of 25-19 cents for the first quarter of fiscal 2024.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review.
The consensus estimate has shifted -154.49% due to these changes.
VGM Scores
At this time, Guess has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Guess has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.
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Why Is Guess (GES) Down 5.8% Since Last Earnings Report?
A month has gone by since the last earnings report for Guess (GES - Free Report) . Shares have lost about 5.8% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Guess due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Guess? (GES - Free Report) Q4 Earnings, Revenue Beat Estimates
Guess? reported fourth-quarter fiscal 2023 results, with both top and bottom lines increasing year over year and beating the Zacks Consensus Estimate.
Guess? posted adjusted earnings of $1.74 per share, up 52.6% from $1.14 reported in the year-ago quarter. Earnings were positively impacted by share buybacks, partly hurt by a negative impact of currency translations. The bottom line surpassed the Zacks Consensus Estimate of $1.30 per share.
Net revenues amounted to $817.8 million, surpassing the consensus mark of $772 million. The metric advanced 2% from the figure reported in the year-ago quarter. On a constant-currency (cc) basis, net revenues increased 8%, mainly led by strength of the company’s business in Europe.
The company’s gross margin contracted to 44.2% from 46.3% reported in the year-ago quarter. As a percentage of sales, SG&A expenses increased to 31.1% from 30.7% in the prior-year quarter’s level.
In the fourth quarter of fiscal 2023, adjusted earnings from operations came in at $107.5 million, down 14% from $125.7 million reported in the year-ago quarter. The adjusted operating margin contracted to 2.6% from 13.1% owing to escalated costs, reduced government subsidies, increased markdowns and currency headwinds, somewhat negated by expense leverage.
Segment Performance
Revenues in the Americas Retail segment fell 1% year over year on a reported basis and at cc. Retail comp sales (including e-commerce) remained nearly flat on a reported basis and at cc. The segmental operating margin declined to 1.8% from 15.4%.
Americas Wholesale revenues fell 7% on a reported basis and at cc. The segmental operating margin came in at 20.9%, down 4.5% year over year.
The Europe segment’s revenues jumped 10% on a reported basis and rose 20% at cc. Retail comp sales (including e-commerce) climbed 1% on a reported basis and increased 10% at cc. The segmental operating margin dropped 2.6% from 16%.
Asia revenues fell 8% on a reported basis but rose 1% at cc. Retail comp sales (including e-commerce) declined 8% on a reported basis while the same increased 1% at cc. The segmental operating margin fell from 3.7% to 2.8%.
Licensing revenues tumbled 8% on a reported basis and at cc. The segmental operating margin came in at 88.2% compared with 90.5% in the year-ago quarter.
Other Updates
The company exited the quarter with cash and cash equivalents of $275.8 million and long-term debt and finance lease obligations of $95.9 million. Stockholders’ equity was $534.1 million. Net cash provided by operating activities for the fiscal year ended Jan 28, 2023, amounted to $169.2 million.
During fiscal 2023, management repurchased nearly 0.5 million shares, amounting to $11.7 million. Also, in March 2022, Guess? entered into an accelerated share repurchase agreement, as part of which it received about 8.5 million shares of common stock for $175.0 million. The company repurchased nearly 9 million shares for $186.7 million in fiscal 2023.
Guidance
For fiscal 2024, Guess? anticipates revenues to grow by 1-3%. GAAP operating margin is likely to be 8-9%. Management expects adjusted earnings per share (EPS) of $2.45-$2.80 compared with $2.74 recorded in fiscal 2023. On a GAAP basis, EPS is envisioned in the range of $2.08-$2.36 compared with $2.18 reported in fiscal 2023.
For the first quarter of fiscal 2024, management expects revenues to decrease 7-6%. On an adjusted basis, the company expects to post a loss of 31-25 cents per share. On a GAAP basis, it expects a loss per share of 25-19 cents for the first quarter of fiscal 2024.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review.
The consensus estimate has shifted -154.49% due to these changes.
VGM Scores
At this time, Guess has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Guess has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.