) second-quarter fiscal 2014 earnings of 52 cents per share
climbed 6.1% from the year-ago earnings of 49 cents. Earnings
also exceeded management's expectations of a range 34 cents to 38
cents per share and Zacks Consensus Estimate of 36 cents by
Profits were on the upswing mainly because of tight expense
management and cost control.
Revenues and Margins
Revenues in the quarter climbed 1% to $639 million backed by
higher sales in most of the segments. Revenues exceeded the Zacks
Consensus Estimate of $625 million and management's expectation
of a range of $620 million to $635 million. However, excluding
the currency impact, revenues slipped 1.4%.
Operating earnings climbed 16.8% to $66.9 million compared to
$57.3 million in the year-ago quarter. The operating margin
inflated 150 basis points (bps) year over year to 10.5% in the
first quarter. The gain in margin was the result of a favorable
year-over-year comparison due to lower selling, general and
administrative expenses in the second quarter and a favorable
comparable base due to a bad debt provision made in the
stores generated revenues of $254.3 million in the second
quarter, up 0.5% from the prior-year quarter. Comparable store
sales shrank 2.0% from the year-ago quarter, due to unfavorable
weather in the initial months of the quarter. E-commerce business
in North America grew 25% over the last year. Guess? started
in-store fulfillment of e-commerce orders during the quarter.
segment's revenues climbed 1.4% to $250.4 million in the fourth
quarter, on the back of strong results in key new markets like
Russia and Germany. Excluding the currency impact, segment
revenues slipped 3.3%.
segment's revenues slipped 1.5% to $65.9 million, due to weak
results in China following lower consumer spending. Excluding the
currency impact, segment's revenues slipped 3.6%.
Net revenue in the
North American Wholesale
segment slipped 0.7% to $41.4 million in the prior-year
Net revenue in the
segment remained almost flat at $27.1 million compared with the
Balance Sheet and Cash Flow
Guess? ended the second quarter of 2013 with cash and cash
equivalents of $343.7 million compared with $306.4 million in the
previous quarter. Long-term liabilities stood at $207.5 million
compared with $212.2 million in the prior quarter.
On Aug 28, 2013 Guess? approved a quarterly cash dividend of
20 cents per share payable on Sep 27, 2013 to shareholders of
record at the close of business on Sep 11, 2013.
For the third quarter of fiscal 2014, the company expects
revenues in the range of $610 million to $620 million, operating
margin in the range of 7.5% to 8.0% and adjusted earnings in the
range of 34 cents to 38 cents per share.
For 2014, the company expects earnings in the range of $1.78
to $1.92 per share, higher than the band of $1.70 to $1.90 per
share as announced previously. Operating margin is now expected
in the range of 9.0% to 9.5% instead of the previously-announced
range of 8.5% to 9.5%. The new outlook reflects the higher than
expected earnings in second-quarter due to tight cost control and
However, management lowered revenue guidance to reflect lower
consumer spending in China and ongoing macroeconomic challenges
in Southern Europe. Net revenue is expected in the range of $2.56
billion to $2.59 billion instead of the earlier range of $2.57
billion to $2.61 billion.
The Zacks Consensus Estimate is pegged at 40 cents and $1.81
per share for the second quarter and fiscal 2014,
Guess? posted a decent first quarter with the bottom line
surpassing the Zacks Consensus Estimate. However, low comparable
store sales due to macroeconomic uncertainty restricted revenue
growth in North America and Europe.
Guess? Inc. currently carries a Zacks Rank #3 (Hold). Other
stocks in the retail and wholesale sector worth considering
Micheal Kors Inc.
Columbia Sports Inc.
). While Hanesbrands and Micheal Korscarry a Zacks Rank #1
(Strong Buy), Columbia Sports carries a Zacks Rank #2 (Buy).
COLUMBIA SPORTS (COLM): Free Stock Analysis
GUESS INC (GES): Free Stock Analysis Report
HANESBRANDS INC (HBI): Free Stock Analysis
MICHAEL KORS (KORS): Free Stock Analysis
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