LOS ANGELES, May 7, 2003 (BUSINESS WIRE) -- Guess?, Inc. (NYSE:GES) today reported its financial results for the first quarter ended March 29, 2003 and its retail sales results for the fiscal month of April 2003.
First Quarter Results
For the first quarter of 2003, the Company reported a net loss of $5.8 million, or a diluted loss of $0.13 per share, compared to a net loss of $3.6 million, or a diluted loss of $0.08 per share, for the first quarter of 2002. The 2002 first quarter results include restructuring, impairment and severance charges of $0.7 million, or $0.4 million after taxes.
Total net revenue for the first quarter of 2003 increased 1.0% to $139.6 million from $138.2 million in the first quarter of 2002. The Company's retail stores, including those in Canada, generated revenues of $83.7 million in the 2003 first quarter, a 6.1% increase from $78.9 million reported in the same period a year ago. Comparable store sales decreased 1.7% during the first quarter of 2003 from the year-ago period. Net revenue from the Company's wholesale segment decreased to $45.0 million in the first quarter of 2003 compared to $49.4 million in the year-ago period. Licensing segment net revenue increased 9.5% to $10.9 million in the 2003 first quarter from $9.9 million in the first quarter last year.
Carlos Alberini, President and Chief Operating Officer, commented, "During the quarter, we experienced higher levels of promotional activity which negatively impacted our margins. Within this challenging climate, we remain vigilant in pursuing the inventory control and cost management initiatives we put in place over the course of 2002, and we continue to take actions that will contribute to improved long-term performance. Notwithstanding the impact of the later Easter holiday on March results, comparable store sales trends showed improvement during the quarter, particularly in our repositioned men's business. We are continuing to fine-tune our collections, and, in the wholesale business, are working diligently with our department and specialty store partners to enhance the appeal and price/value proposition of our assortments. While we expect the environment will remain difficult, we believe the actions we are taking will result in improved long-term performance."
April Retail Sales
Total retail sales for the five weeks ended May 3, 2003 were $36.6 million, an increase of 17.2% from sales of $31.3 million for the five weeks ended May 4, 2002. Comparable store sales for the period increased 9.3%. Comparable store sales for the Company's full priced retail stores increased 5.6% and comparable store sales for the factory outlet stores increased 19.6%.
Change in Segment Reporting
In the first quarter of 2003, the Company revised its segment reporting to better reflect how its three business segments - retail, wholesale and licensing - are managed and each segment's performance is evaluated. The earnings from operations for each segment now include those costs that are specifically related to each segment, consisting primarily of store operations, distribution, selling and merchandising, depreciation, amortization and employee compensation directly related to that business segment. In addition, the Company is continuing to allocate design and advertising charges to the business segments based on the assessed benefit derived from the respective expenditures. The new structure excludes from the segment results corporate overhead costs, which consist of shared costs of the organization. These costs are presented separately and include, among others, the following corporate costs: information technology, human resources, accounting and finance, executive compensation, facilities and legal. All amounts for 2002 have been revised to conform to the 2003 presentation and are included with this release.
The Company will hold a conference call at 4:30 pm (ET) on May 7, 2003 to discuss the news announced in this press release. A live webcast of the conference call will be accessible at www.guess.com via the "Investor's Page" link from the "Guess, Inc." section of the site. The webcast will be archived on the website.
Guess?, Inc. designs, markets, distributes and licenses one of the world's leading lifestyle collections of contemporary apparel, accessories and related consumer products.
Except for historical information contained herein, certain matters discussed in this press release including but not limited to the Company's expected results of operations and plans to reduce costs and estimated charges, are forward-looking statements that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are only expectations, and involve known and unknown risks and uncertainties, which may cause actual results in future periods and other future events to differ materially from what is currently anticipated. Factors which may cause actual results in future periods to differ from current expectations include, among other things, the continued availability of sufficient working capital, the successful integration of new stores into existing operations, the continued desirability and customer acceptance of existing and future product lines (including licensed product lines), possible cancellations of wholesale orders, the success of competitive products, and the availability of adequate sources of capital. In addition to these factors, the economic and other factors identified in the Company's most recent annual report on Form 10-K for the fiscal year ended December 31, 2002 including but not limited to the risk factors discussed therein, could affect the forward-looking statements contained herein and in the Company's other public documents.
Guess?, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
(Unaudited)
First Quarter Ended
-------------------------------
Mar 29, Mar 30,
2003 2002
$ % $ %
--------------- ---------------
Net revenue
Product sales $128,722 92.2% $128,261 92.8%
Net royalties 10,862 7.8% 9,918 7.2%
--------------- ---------------
139,584 100.0% 138,179 100.0%
Cost of product sales 98,235 70.4% 93,063 67.3%
--------------- ---------------
Gross profit 41,349 29.6% 45,116 32.7%
Selling, general and administrative
expenses 49,424 35.4% 48,627 35.2%
Restructuring, impairment and severance
charges -- -- 655 0.5%
--------------- ---------------
Loss from operations (8,075)(5.8%) (4,166)(3.0%)
Other (income) expense:
Interest expense, net 2,063 1.5% 2,264 1.6%
Other, net (15)(0.0%) (29)(0.0%)
--------------- ---------------
Loss before income tax benefit (10,123)(7.3%) (6,401)(4.6%)
Income tax benefit (4,350)(3.2%) (2,800)(2.0%)
--------------- ---------------
Net loss $(5,773)(4.1%) $(3,601)(2.6%)
=============== ===============
Net earnings (loss) per share:
Basic $ (0.13) $ (0.08)
Diluted $ (0.13) $ (0.08)
Weighted number of shares
outstanding:
Basic 43,140 43,525
Diluted 43,140 43,525
Guess?, Inc. and Subsidiaries
Consolidated Segment Data
(in thousands)
(Unaudited)
First Quarter Ended
---------------------------
Mar 29, Mar 30,
2003 2002
------------- -----------
Net revenue:
Retail operations $ 83,662 $ 78,866
Wholesale operations 45,060 49,395
Licensing operations 10,862 9,918
------------- -----------
$139,584 $138,179
============= ===========
Earnings (loss) from operations:
Retail operations $ (6,494) $ (4,516)
Wholesale operations 260 3,425
Licensing operations 8,920 7,591
Corporate overhead (10,761) (10,666)
------------- -----------
$ (8,075) $ (4,166)
============= ===========
Guess?, Inc. and Subsidiaries
Consolidated Balance Sheet Data
(in thousands)
(Unaudited)
Mar 29, Dec 31, Mar 30,
2003 2002 2002
---------- ----------- ----------
ASSETS
Cash and cash equivalents $ 9,036 $ 31,753 $ 25,450
Receivables, net 49,303 35,437 46,637
Inventories, net 90,976 95,683 82,202
Other current assets 29,218 26,114 22,772
Property and equipment, net 124,284 128,097 141,107
Other assets 32,841 32,448 28,426
---------- ----------- ----------
Total Assets $335,658 $349,532 $346,594
========== =========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities $ 91,074 $167,561 $ 80,715
Notes payable and long-term
debt, excluding current
installments 69,480 1,480 79,990
Other liabilities 13,648 14,211 10,276
Stockholders' equity 161,456 166,280 175,613
---------- ----------- ----------
Total Liabilities and
Stockholders' Equity $335,658 $349,532 $346,594
========== =========== ==========
Guess?, Inc. and Subsidiaries
Condensed Consolidated Cash Flow Data
(in thousands)
(Unaudited)
First Quarter Ended
-------------------
Mar 29, Mar 30,
2003 2002
---------- ---------
Net cash used by operating
activities $(21,256) $ (374)
Net cash used in investing
activities (4,165) (5,108)
Net cash provided by (used) in
financing activities 2,547 (927)
Effect of exchange rates on cash 157 (11)
---------- ---------
Net decrease in cash and cash
equivalents (22,717) (6,420)
Cash and cash equivalents at the
beginning of the year 31,753 31,870
---------- ---------
Cash and cash equivalents at the
end of the period $ 9,036 $25,450
========== =========
Supplemental information:
Depreciation and amortization $ 8,678 $ 10,049
Rent 14,376 12,664
Guess?, Inc. and Subsidiaries
Retail Store Data
First Quarter Ended
--------------------------
Mar 30, Mar 30,
2003 2002
---------- ------------
Number of stores at the beginning of
the year 249 227
Store openings --- 1
Store closures (3) ---
---------- ------------
Number of stores at the end of the
period 246 228
========== ============
Total store square footage at the end
of the period 1,262,000 1,168,000
=========== ===========
Guess?, Inc. and Subsidiaries
Consolidated Segment Data - Revised
(in thousands)
(Unaudited)
First Second Third Fourth Year
Quarter Quarter Quarter Quarter Ended
Ended Ended Ended Ended
Mar 30, Jun 29, Sep 28, Dec 31, Dec 31,
2002 2002 2002 2002 2002
-------- -------- -------- --------- ---------
Net revenue:
Retail operations $78,866 $79,892 $94,760 $130,938 $384,456
Wholesale operations 49,395 33,104 50,764 26,362 159,625
Licensing operations 9,918 6,793 12,274 10,073 39,058
-------- -------- -------- --------- ---------
138,179 119,789 157,798 167,373 583,139
======== ======== ======== ========= =========
Earnings (loss) from operations:
Retail operations $(4,516) $(2,391) $1,702 $9,578 $4,373
Wholesale operations 3,425 (688) 3,512 (10,987) (4,738)
Licensing operations 7,591 4,144 9,496 7,861 29,092
Corporate overhead (10,666) (10,504) (5,655) (10,428) (37,253)
-------- -------- -------- --------- ---------
$(4,166) $(9,439) $9,055 $(3,976) $(8,526)
======== ======== ======== ========= =========
SOURCE: Guess?, Inc.
Guess?, Inc. Carlos Alberini, 213/765-3582 or Frederick G. Silny, 213/765-3289 or Kekst and Company Wendi Kopsick, 212/521-4800 or Molly Morse, 212/521-4800
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