) hit a 52-week low of $25.25 after reporting loss in first-quarter
fiscal 2015 and issuing a weak outlook for the second quarter, on
The apparel retailer's share price declined slightly more than
5% ever since it released the quarterly earnings.
Why the Share Price Decline?
Though better than expected, first-quarter fiscal 2015 results
declined from the year-ago quarter.
Diluted loss per share of 3 cents compared unfavorably with the
adjusted prior-year earnings of 14 cents per share due to a weak
top line against a difficult retail backdrop. However, the
first-quarter loss was better than the Zacks Consensus Estimate of
a loss of 6 cents and management's expectation of a loss of 9 to 5
cents per share due to tight expense management.
Revenues slipped 4.8% (down 5.6% on a constant currency basis)
to $522.5 million due to lower traffic in most of the company's
North American stores, as a result of severe weather conditions.
Comps declined 4% in the North American retail business. Also,
revenues declined in Europe due to lower wholesale shipments and in
Asia due to weakness in China and Korea. Though revenues beat the
Zacks Consensus Estimate of $522 million marginally, the same were
at the lower end of management's expectation of $520 to $535
Operating margin shrank 290 basis points (bps) year over year to
negative 0.4%. The margin contraction was due to the deleverage
impact of lower European wholesale shipments and negative comps in
North American retail.
With the soft traffic trend expected to continue in the second
quarter, the company expects revenues in the range of $615 to $630
million, representing a year-over-year decline. Guess? expects
operating margin in the range of 5.5% to 6.5%, much lower than
10.5% recorded in the second quarter fiscal 2014. Earnings per
share are expected in the range of 25 to 30 cents, much lower than
52 cents recorded in the prior-year quarter. Earnings expectations
also fell short of the Zacks Consensus Estimate of 41 cents. The
weak second-quarter expectations signal that revival in consumer
spending will take time.
Guess? slightly tightened the fiscal 2015 top-line expectations
from a range of $2.53-$2.58 billion to $2.53-$2.57 billion.
Operating margin is expected within 7.0% to 8.0%. Adjusted earnings
are expected in the range of $1.40 to $1.60.
Other Stocks to Consider
Guess? currently carries a Zacks Rank #4 (Sell). Some
better-ranked stocks in the apparel industry include
Columbia Sports Inc.
Michael Kors Inc.
). All these stocks carry a Zacks Rank #2 (Buy).
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COLUMBIA SPORTS (COLM): Free Stock Analysis
HANESBRANDS INC (HBI): Free Stock Analysis
GUESS INC (GES): Free Stock Analysis Report
MICHAEL KORS (KORS): Free Stock Analysis Report
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