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Guess? (GES) Hurt by High Costs & Americas Retail Business
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Guess? Inc. (GES - Free Report) is witnessing a dynamic and complex environment, which includes rising costs. Weakness in the Americas retail business is a concern. The apparel and accessories company’s international presence exposes it to risks related to unfavorable currency rates.
Let’s discuss in detail all the factors that are hurting Guess?’s performance.
High Costs Hurt
The company is operating in a volatile global shopping environment stemming from geopolitical issues and reduced consumer confidence. Escalated operating costs and expenses are major concerns for Guess?. In third-quarter fiscal 2024, adjusted SG&A increased 10% to $233 million. The rise in performance-based compensation remained a headwind. Also, management witnessed inflationary pressures on its cost structure. Escalated selling expenses across retail stores and investments in infrastructure led to a rise in costs.
Image Source: Zacks Investment Research
Weak Americas Retail Unit: A Hurdle
Guess? is witnessing persistent weakness across its Americas retail business amid a dynamic macroeconomic environment. The trend continued in the third quarter of fiscal 2024, with revenues in the Americas Retail segment falling 7% on softness in customer traffic amid a soft consumer spending environment. Management witnessed contractions across all major categories, like women's and men's apparel and accessories, thanks to drab customer traffic. Persistent weakness in the Americas Retail business is likely to remain a threat to the top line.
Unfavorable Currency Headwinds
The company’s international presence exposes it to the risk of adverse currency fluctuations. Unfavorable currency rates may affect net revenues, operating income and earnings. In the fiscal third quarter, unfavorable foreign currency affected the adjusted operating profit by $7 million and the adjusted operating margin by 120 basis points.
Final Thoughts
Guess? is benefiting from a focus on three key factors to drive long-term growth, which includes global brand awareness. Management is on track to progress in its customer-centric initiatives, including omnichannel capabilities and advanced data analytics.
Let’s see if these upsides can help the company counter the hurdles mentioned above.
The Zacks Rank #5 (Sell) company’s shares have dropped 0.3% in the past year against the industry’s growth of 6.1%.
GIII Apparel, an accessories dealer, sports a Zacks Rank #1 (Strong Buy) at present. GIII has a trailing four-quarter earnings surprise of 541.8%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for GIII Apparel’s current financial-year earnings suggests growth of 39.3%, respectively, from the year-ago corresponding figure.
lululemon athletica is a yoga-inspired athletic apparel company. LULU carries a Zacks Rank #2 (Buy) at present.
The Zacks Consensus Estimate for lululemon athletica’s current financial-year sales and earnings suggests growth of 18.4% and 23.7%, respectively, from the year-ago corresponding figures. LULU has a trailing four-quarter earnings surprise of 9.2%, on average.
PVH Corp specializes in designing and marketing branded dress shirts, neckwear, sportswear, jeanswear, intimate apparel, swim products, footwear, handbags and related products. It currently carries a Zacks Rank #2. PVH has a trailing four-quarter earnings surprise of 18.9%, on average.
The Zacks Consensus Estimate for PVH’s current financial-year sales and earnings suggests growth of 1.2% and 16.6%, respectively, from the year-ago period’s actuals.
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Guess? (GES) Hurt by High Costs & Americas Retail Business
Guess? Inc. (GES - Free Report) is witnessing a dynamic and complex environment, which includes rising costs. Weakness in the Americas retail business is a concern. The apparel and accessories company’s international presence exposes it to risks related to unfavorable currency rates.
Let’s discuss in detail all the factors that are hurting Guess?’s performance.
High Costs Hurt
The company is operating in a volatile global shopping environment stemming from geopolitical issues and reduced consumer confidence. Escalated operating costs and expenses are major concerns for Guess?. In third-quarter fiscal 2024, adjusted SG&A increased 10% to $233 million. The rise in performance-based compensation remained a headwind. Also, management witnessed inflationary pressures on its cost structure. Escalated selling expenses across retail stores and investments in infrastructure led to a rise in costs.
Image Source: Zacks Investment Research
Weak Americas Retail Unit: A Hurdle
Guess? is witnessing persistent weakness across its Americas retail business amid a dynamic macroeconomic environment. The trend continued in the third quarter of fiscal 2024, with revenues in the Americas Retail segment falling 7% on softness in customer traffic amid a soft consumer spending environment. Management witnessed contractions across all major categories, like women's and men's apparel and accessories, thanks to drab customer traffic. Persistent weakness in the Americas Retail business is likely to remain a threat to the top line.
Unfavorable Currency Headwinds
The company’s international presence exposes it to the risk of adverse currency fluctuations. Unfavorable currency rates may affect net revenues, operating income and earnings. In the fiscal third quarter, unfavorable foreign currency affected the adjusted operating profit by $7 million and the adjusted operating margin by 120 basis points.
Final Thoughts
Guess? is benefiting from a focus on three key factors to drive long-term growth, which includes global brand awareness. Management is on track to progress in its customer-centric initiatives, including omnichannel capabilities and advanced data analytics.
Let’s see if these upsides can help the company counter the hurdles mentioned above.
The Zacks Rank #5 (Sell) company’s shares have dropped 0.3% in the past year against the industry’s growth of 6.1%.
Eye These Solid Picks
Some better-ranked companies are GIII Apparel (GIII - Free Report) , lululemon athletica (LULU - Free Report) and PVH Corporation (PVH - Free Report) .
GIII Apparel, an accessories dealer, sports a Zacks Rank #1 (Strong Buy) at present. GIII has a trailing four-quarter earnings surprise of 541.8%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for GIII Apparel’s current financial-year earnings suggests growth of 39.3%, respectively, from the year-ago corresponding figure.
lululemon athletica is a yoga-inspired athletic apparel company. LULU carries a Zacks Rank #2 (Buy) at present.
The Zacks Consensus Estimate for lululemon athletica’s current financial-year sales and earnings suggests growth of 18.4% and 23.7%, respectively, from the year-ago corresponding figures. LULU has a trailing four-quarter earnings surprise of 9.2%, on average.
PVH Corp specializes in designing and marketing branded dress shirts, neckwear, sportswear, jeanswear, intimate apparel, swim products, footwear, handbags and related products. It currently carries a Zacks Rank #2. PVH has a trailing four-quarter earnings surprise of 18.9%, on average.
The Zacks Consensus Estimate for PVH’s current financial-year sales and earnings suggests growth of 1.2% and 16.6%, respectively, from the year-ago period’s actuals.