) reported third quarter fiscal 2013 results with earnings of 43
cents, missing the Zacks Consensus Estimate of 44 cents by 2.3%.
The results declined sharply by 39.4% from the year-ago earnings
of 71 cents due to lower consumer demand and currency headwinds.
However, earnings remained within the company's guidance range of
42 to 46 cents.
Revenues and Margins
Revenues in the quarter dropped 2.2% to $628.8 million due to
decline in comparable store sales and lower traffic in North
American stores. Revenue exceeded the Zacks Consensus Estimate of
$621 million, while it remained within management's expectation
of $620 million to $630 million. However, on a currency neutral
basis, revenues increased 1.2%.
Operating margin shrank 590 basis points year over year to
9.2% in the third 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 $262.1 million in the third quarter,
down 1.3%, due to the ongoing macroeconomic headwinds, which
resulted in lower store traffic. Comparable store sales shrank
6.0% from the year-ago quarter, due to soft accessories business,
offseting the strong performance in men's apparels.
segment's revenue slipped 8.3% to $202.6 million in the third
quarter, largely due to currency headwinds. On a currency neutral
basis, segment revenue increased 1.7%, particularly driven by
growing business in Russia and Germany.
segment's revenue increased 15.5% to $74.8 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 1.0% to $57.9 million.
Other Financial Update
During the third quarter, the company's board declared a cash
dividend of 20 cents and a special cash dividend of $1.20 per
share, both to be payable on December 28, 2012 to shareholders as
of December 12, 2012.
For the fourth quarter, the company expects revenue in the
range of $780 to $800 million, operating margin in the range of
14.5% to 15.5%, and earnings in the range of 85 to 95 cents per
Following the weak third quarter results, the company has
lowered its expectation for sales, margins and earnings per share
for fiscal 2013. The company now expects earnings in the range of
$2.05 to $2.15 per share compared with the prior range of $2.15
Net revenue is now expected to be in the range of $2.62
billion to $2.64 billion compared with the previous guidance of
$2.62 billion to $2.65 billion. Operating margin is now expected
in the range of 10.0% to 10.5% compared with 10.5% to 11.0%
The Zacks Consensus Estimate is pegged at 95 cents and $2.17
per share for the fourth quarter and fiscal 2013,
Currently, we have a Neutral recommendation on the stock.
Guess? holds a Zacks #4 Rank (short-term Sell rating) in sharp
contrast to its peer,
), which holds a Zacks #1 Rank (short-term Strong Buy
GUESS INC (GES): Free Stock Analysis Report
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