) share price fell 2% on Dec 5, 2013. The share price fell as
management lowered its outlook for fiscal 2014 during its third
quarter earnings conference call held on Dec 4, 2013. Its
third-quarter fiscal 2014 earnings of 42 cents exceeded the Zacks
Consensus Estimate of 39 cents by 7.7%. Earnings, though,
declined 2.3% year over year, beating management's expectations
of a range 34 cents to 38 cents per share.
Lower taxes and advertising expenses made up for weaker
revenues and margins to result in better than expected earnings
performance in the quarter.
Management lowered its outlook for fiscal 2014 amid a
challenging economic environment in Europe and tough retail
Revenues and Margins
Revenues in the quarter slipped 2.4% to $613.5 million due to
soft revenue results in most of the segments. Revenues also
missed the Zacks Consensus Estimate of $617 million and were near
the lower end of management's expectation of a range of $610
million to $620 million. In constant currency, revenues fell
Operating earnings fell 14.2% to $49.8 million compared to
$58.1 million in the year-ago quarter. The operating margin
shrank 110 basis points (bps) year over year to 8.1% in the
quarter. The contraction in margin was the result of markdowns
and lower comps in North American retail and European wholesale
stores generated revenues of $253.8 million in the third quarter,
down 3.1% from the prior-year quarter. Comparable store sales
shrank 5.0% due to lower mall traffic in the U.S. and Canada.
Excluding the currency impact, segment revenues slipped 4.0%.
segment's revenues slipped 0.8% to $200.9 million in the third
quarter, due to lower wholesale business in Italy. However, the
decline in business in Italy was partly offset by improving
trends in Spain, Germany and Portugal. In constant currency,
segment revenues slipped 6.6%.
segment's revenues fell 2.8% to $72.7 million, due to weak
results in China following lower consumer spending. In constant
currency, the segment's revenues slipped 5.5%.
Net revenue in the
North American Wholesale
segment fell 7.4% to $53.6 million compared with the prior-year
period. In constant currency, the segment's revenues slipped
Net revenue in the
segment went up 3.1% to $32.4 million compared with the
Balance Sheet and Cash Flow
Guess? ended the third quarter of 2013 with cash and cash
equivalents of $350.1 million compared with $343.7 million at the
end of the previous quarter. Long-term liabilities were $200.8
million compared with $207.5 million in the prior quarter.
On Dec 4, Guess? approved a quarterly cash dividend of 20
cents per share payable on Jan 3, 2014 to shareholders of record
at the close of business on Dec 18, 2013.
Guidance for Fourth-Quarter Fiscal 2014
For the fourth quarter of fiscal 2014, the company expects
revenues in the range of $750 million to $770 million, operating
margin in the range of 13.0% to 14.5% and adjusted earnings in
the range of 74 cents to 84 cents per share. The company
expectations fall short of Zacks Consensus Estimate of an
earnings of 88 cents per share and revenue of $788 million.
Guidance for Fiscal 2014
For fiscal 2014, management lowered the revenue guidance to
reflect lower comps in North American retail and European
business, lower orders in North American wholesale business and
an order decline in Greater China. Net revenue is now expected in
the range of $2.55 billion to $2.57 billion instead of the
earlier range of $2.56 billion to $2.59 billion.
GES also narrowed and lowered its earnings outlook for fiscal
2014. Management now expects earnings in the range of $1.73 to
$1.83 per share, compared to the band of $1.70 to $1.84.
The company expectations fall short of Zacks Consensus
Estimate of an earnings of $1.89 per share and revenue of $2.6
Guess? Inc. currently carries a Zacks Rank #3 (Hold). Some
better-ranked stocks to consider in the wholesale sector include
Micheal Kors Inc.
). While Hanesbrands and Quicksilver carry a Zacks Rank #1
(Strong Buy), Micheal Kors carries a Zacks Rank #2 (Buy).
GUESS INC (GES): Free Stock Analysis Report
HANESBRANDS INC (HBI): Free Stock Analysis
MICHAEL KORS (KORS): Free Stock Analysis
QUIKSILVER INC (ZQK): Free Stock Analysis
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