) reported its fourth quarter fiscal 2013 results with earnings
of 95 cents per share, beating the Zacks Consensus Estimate of 86
cents by 10.5%. Earnings were down 9.5% from the year-ago
earnings per share of $1.05 due to lower consumer demand and
currency headwinds. However, earnings were at the high end of the
company's guidance range of 85 to 95 cents.
Revenues and Margins
Revenues in the quarter climbed 5.1% to $815.1 million backed
by higher sales in all the segments of the company. Revenue
exceeded the Zacks Consensus Estimate of $786.0 million, while it
exceeded management's expectation of $780 million to $800
million. However, on a currency neutral basis, revenues increased
The operating margin shrank 280 basis points year over year to
14.7% in the fourth quarter, owing to increased occupancy and
selling costs in Europe, negative same store sales and increased
marketing expenses. The increase in promotional expenses in North
America and pricing changes in Canada also led to lower product
stores generated revenues of $350.0 million in the fourth
quarter, up 1.9% from the prior year quarter. Comparable store
sales shrank 6.3% from the year-ago quarter, due to weather
change and recent tax change. However, higher square footage and
strong e-commerce business offset the comparable store sales
decline and boosted growth in revenue.
segment's revenue climbed 3.2% to $300.3 million in the fourth
quarter, driven by growing business in Russia and Germany. On a
currency neutral basis, segment revenue increased 3.3%. In
Europe, Italy and France remained soft spots for the company as
shipments continued to decline.
segment's revenue increased 19.2% to $84.2 million, driven by
double-digit growth from South Korean and Greater China
businesses. On a currency neutral basis, segment revenue
Net revenue in the
North American Wholesale
segment increased 25.7% to $50.9 million.
Net revenue in the
slipped 2.1% to $29.8 million, from $30.4 million in the
Full Year Results
For the full year 2013, Guess? reported earnings of $2.15,
beating the Zacks Consensus Estimate of $2.07 by 3.9%. The
results declined by 29.5% from the year-ago earnings of $3.05.
However, earnings were in the higher limit of the company's
guidance range of $2.05 to $2.15.
Revenues and Margins
Fiscal 2013 revenues were down 1.1% to $2.66 billion. Revenue
exceeded the Zacks Consensus Estimate of $2.63 billion and
management's expectation range of $2.62-$2.64 billion. However,
on a currency neutral basis, revenues increased 1.6%.
Balance Sheet and Cash Flow
Guess? ended the fourth quarter of 2013 with cash and cash
equivalents of $329.0 million compared with $287.3 million in the
previous quarter. Long-term liabilities stood at $216.2 million
compared with $221.4 million in the prior quarter.
Net cash provided by operating activities was $172.9 million
compared with $51.3 million in the prior quarter.
In 2013, the company invested $140 million to repurchase 5
million shares and paid a special dividend of $1.20 per
For the first quarter of fiscal 2014, the company expects
revenue in the range of $545 to $560 million, operating margin in
the range of 1.0% to 2.0%, and earnings in the range of 5 to 10
cents per share.
For 2014, the company expects earnings in the range of $1.70
to $1.94 per share.
Net revenue is expected to be in the range of $2.60 billion to
$2.64 billion. Operating margin is now expected in the range of
8.5% to 9.5%.
The Zacks Consensus Estimate is pegged at 28 cents and $2.30
per share for the first quarter and fiscal 2014, respectively.
Therefore, the guidance was clearly disappointing.
Guess? posted a decent fourth quarter with the bottom line
surpassing the Zacks Consensus Estimate. Revenues also encourage
us as it exceeded our expectation. However, low comparable store
sales due to macroeconomic uncertainty restricted revenue
Guess? currently carries a Zacks Rank #2 (Buy). Other stocks
) also with a Zacks Rank #2 (Buy), are worth considering.
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