Why Shares of Guess? Are Soaring After Its Q2 Results

What happened

Shares of Guess? (NYSE: GES), an apparel retailer offering products ranging from denim and handbags, to watches and eyewear, soared over 27% Thursday morning after the company released strong second-quarter results.

So what

Net revenue during the fiscal second quarter increased 6% to $683.2 million, and that was up 9% if you exclude the impact of currency fluctuations. The result was better than analysts' estimates calling for $671.4 million. On the bottom line, Guess? reported adjusted earnings per share of $0.38, topping analysts' estimates of $0.29. A major driving force behind the company's strong second quarter was its Europe operations, which posted a 9.1% revenue increase, compared with a 0.9% increase in Americas and 0.6% increase in Asia.

Woman shopping at a clothing retailer

Image source: Getty Images.

In a press release, CEO Carlos Alberini said: "I am very pleased with our second-quarter financial performance, which delivered strong operating-profit growth. This performance exceeded our expectations and was driven by a solid top-line increase, strong margin performance, and effective expense management."

Now what

For investors, the focus now turns to the company's October presentation regarding management's business plan and strategies to boost global growth and profits. That plan will likely focus on growing its footprint internationally, as the company already gets over half of its total revenue outside of the U.S. and believes there is much room left to grow. While there might be plenty of room for growth, the landscape will remain challenging for retailers (Guess? has shed roughly 17% of its value over the past year) as they navigate escalating trade tensions and e-commerce competition. 

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Daniel Miller has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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