First Quarter Fiscal 2014 Highlights
- Asian revenues increased 10% in U.S. dollars and 8% in constant dollars
- North
American Retail revenues decreased 5%; retail comp sales declined 9.8% - European revenues decreased 13% in U.S. dollars and 12% in local currency
- Adjusted operating earnings decreased 65%; GAAP operating earnings decreased 71%
- Invested
$22.1 million to repurchase 0.9 million of our common shares
This press release contains certain non-GAAP, or adjusted, financial measures, which exclude the impact of restructuring charges (and related taxes where applicable) recorded during the first quarter of fiscal 2014. A reconciliation of reported GAAP results to comparable non-GAAP results is provided in the accompanying tables and discussed under the heading "Presentation of Non-GAAP Information" below.
First Quarter Fiscal 2014 Results
For the first quarter of fiscal 2014, the Company recorded adjusted net earnings of
Total net revenue for the first quarter of fiscal 2014 decreased 5.2% to
- The Company's retail stores in
North America generated revenue of$238.3 million in the first quarter of fiscal 2014, a 5.4% decrease from$251.8 million in the same period a year ago. Comparable store sales for the first quarter of fiscal year 2014 decreased 9.8% in U.S. dollars and 9.3% in local currency compared to the same period a year ago. The Company directly operated 511 retail stores inthe United States andCanada at the end of the first quarter of fiscal 2014 versus 503 stores a year earlier. - Net revenue from the Company's
Europe segment decreased 12.9% to$165.4 million in the first quarter of fiscal 2014, compared to$189.8 million in the prior-year period. In local currency, net revenue decreased 12.4%. - Net revenue from the Company's
Asia segment increased 9.7% to$71.1 million in the first quarter of fiscal 2014, from$64.8 million in the prior-year period. In constant dollars, net revenue increased 8.0%. - Net revenue from the Company's North American Wholesale segment was slightly down at
$43.8 million in the first quarter of fiscal 2014, compared to$43.9 million in the prior-year period. - Licensing segment net revenue increased 4.7% to
$30.3 million in the first quarter of fiscal 2014, from$28.9 million in the prior-year period.
Adjusted operating earnings for the first quarter of fiscal 2014 decreased 65.1% to
Other net income, which primarily includes net unrealized mark-to-market revaluation gains on foreign currency contracts and net unrealized gains on non-operating assets, was
The Company's first quarter fiscal 2014 effective tax rate increased to 33.0%, compared to 32.0% for the first quarter of the prior year.
Outlook
The Company updated its outlook for the fiscal year ending
- Consolidated net revenues are expected to range from
$2.57 billion to $2.61 billion . - Operating margin is expected to be between 8.5% and 9.5%.
- Diluted earnings per share are expected to be in the range of
$1.70 to $1.90 .
The Company's expectations for the second quarter of fiscal 2014 ending
- Consolidated net revenues are expected to range from
$620 million to $635 million . - Operating margin is expected to be between 7.0% and 8.0%.
- Diluted earnings per share are expected to be in the range of
$0.34 to $0.38 .
During the first quarter of fiscal 2014, the Company implemented plans to streamline its operational structure and reduce expenses. The Company's outlook excludes the impact of any restructuring charges associated with these activities.
Dividends
The Company also announced today that its Board of Directors has approved a quarterly cash dividend of
Presentation of Non-GAAP Information
The financial information presented in this release includes both GAAP and non-GAAP measures. The "non-GAAP" or "adjusted" financial measures exclude the impact of restructuring charges incurred during the first quarter of fiscal 2014.
The Company has excluded these restructuring charges, and related tax impact, from its adjusted financial measures primarily because it does not believe such charges reflect the Company's ongoing operating results or future outlook. The Company believes that these adjusted financial measures are useful as an additional means for investors to evaluate the comparability of the Company's operating results when reviewed in conjunction with the Company's GAAP financial statements. A reconciliation of reported GAAP results to comparable non-GAAP results is provided in the accompanying tables. The non-GAAP measures are provided in addition to, and not as alternatives for, the Company's reported GAAP results.
This release also includes certain constant currency financial information. Foreign currency exchange rate fluctuations affect the amount reported from translating the Company's foreign revenues and expenses into U.S. dollars. These rate fluctuations can have a significant effect on reported operating results under GAAP. The Company provides constant currency information to help investors assess how our businesses performed excluding the effects of changes in foreign currency translation rates. To calculate revenues and earnings from operations on a constant currency basis, operating results for the current-year period for entities reporting in currencies other than U.S. dollars are translated into U.S. dollars at the average exchange rates in effect during the comparable period of the prior year. The constant currency calculations do not adjust for the impact of revaluing specific transactions denominated in a currency that is different to the functional currency of that entity when exchange rates fluctuate. The constant currency information presented may not be comparable to similarly titled measures reported by other companies.
Investor Conference Call
The Company will hold a conference call at
About Guess?
Forward Looking Statements
Except for historical information contained herein, certain matters discussed in this press release, including statements concerning the Company's expectations and future prospects, as well as guidance for the second quarter and full year of fiscal 2014, 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, which are frequently indicated by terms such as "expect," "will," "goal," "strategy," "believe," "continue," "outlook," "plan" and similar terms, are only expectations, and involve known and unknown risks and uncertainties, which may cause actual results in future periods to differ materially from what is currently anticipated. Factors which may cause actual results in future periods to differ materially from current expectations include, among others: our ability to maintain our brand image and reputation; domestic and international economic conditions, including economic and other events that could negatively impact consumer confidence and discretionary consumer spending; changes in the competitive marketplace and in our commercial relationships; our ability to anticipate consumer preferences, effectively operate our various retail concepts and effectively manage inventories; our ability to successfully implement our growth strategies and to continue to expand or grow our business; our ability to successfully achieve planned cost savings; unexpected obligations arising from litigation, tax and other regulatory proceedings; risks associated with our foreign operations, such as violations of laws prohibiting improper payments and the burdens of complying with a variety of foreign laws and regulations; and changes in economic, political, social and other conditions affecting our foreign operations and sourcing, including currency fluctuations, global tax rates and the current European economic crisis. In addition to these factors, the economic, technological, managerial, and other risks identified in the Company's most recent annual report on Form 10-K and other filings with the
Contact: |
Guess?, Inc. |
Investor Relations |
|
(213) 765-5578 |
Guess?, Inc. and Subsidiaries |
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Condensed Consolidated Statements of Income |
|||||||||||||||||
(amounts in thousands, except per share data) |
|||||||||||||||||
Three Months Ended |
|||||||||||||||||
May 4, 2013 |
April 28, 2012 |
||||||||||||||||
$ |
% |
$ |
% |
||||||||||||||
Product sales |
$ |
518,664 |
94.5% |
$ |
550,366 |
95.0% |
|||||||||||
Net royalties |
30,250 |
5.5% |
28,900 |
5.0% |
|||||||||||||
Net revenue |
548,914 |
100.0% |
579,266 |
100.0% |
|||||||||||||
Cost of product sales |
351,488 |
64.0% |
344,190 |
59.4% |
|||||||||||||
Gross profit |
197,426 |
36.0% |
235,076 |
40.6% |
|||||||||||||
Selling, general and administrative expenses |
183,764 |
33.5% |
195,935 |
33.8% |
|||||||||||||
Restructuring charges |
2,337 |
0.4% |
— |
0.0% |
|||||||||||||
Earnings from operations |
11,325 |
2.1% |
39,141 |
6.8% |
|||||||||||||
Other income (expense): |
|||||||||||||||||
Interest expense |
(549) |
(0.1%) |
(384) |
(0.1%) |
|||||||||||||
Interest income |
334 |
0.0% |
694 |
0.1% |
|||||||||||||
Other, net |
5,457 |
1.0% |
568 |
0.1% |
|||||||||||||
Earnings before income taxes |
16,567 |
3.0% |
40,019 |
6.9% |
|||||||||||||
Income taxes |
5,467 |
1.0% |
12,806 |
2.2% |
|||||||||||||
Net earnings |
11,100 |
2.0% |
27,213 |
4.7% |
|||||||||||||
Net earnings attributable to noncontrolling interests |
1,184 |
0.2% |
567 |
0.1% |
|||||||||||||
Net earnings attributable to Guess?, Inc. |
$ |
9,916 |
1.8% |
$ |
26,646 |
4.6% |
|||||||||||
Net earnings per common share attributable to common stockholders: |
|||||||||||||||||
Basic |
$ |
0.12 |
$ |
0.30 |
|||||||||||||
Diluted |
$ |
0.12 |
$ |
0.30 |
|||||||||||||
Weighted average common shares outstanding attributable to common stockholders: |
|||||||||||||||||
Basic |
84,582 |
89,190 |
|||||||||||||||
Diluted |
84,778 |
89,510 |
|||||||||||||||
Adjusted earnings from operations 1: |
$ |
13,662 |
2.5% |
||||||||||||||
Adjusted net earnings attributable to Guess?, Inc. 1: |
$ |
11,694 |
2.1% |
||||||||||||||
Adjusted diluted earnings per common share attributable to common stockholders 1: |
$ |
0.14 |
|||||||||||||||
Notes: |
||||||||||||||||
1 |
The adjusted results reflect the exclusion of restructuring charges (and related taxes where applicable) recorded during the first quarter of fiscal 2014. No adjustments have been made to the prior-year period. A complete reconciliation of actual results to adjusted results is presented in the table entitled "Reconciliation of GAAP Results to Adjusted Results." |
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Guess?, Inc. and Subsidiaries |
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Reconciliation of GAAP Results to Adjusted Results |
|||||||||||
(amounts in thousands, except per share data) |
|||||||||||
The following table provides reconciliations of reported GAAP earnings from operations to adjusted earnings from operations and reported GAAP net earnings attributable to Guess?, Inc. to adjusted net earnings attributable to Guess?, Inc. for the three months ended May 4, 2013. |
Three Months Ended |
|||||||||||
May 4, 2013 |
|||||||||||
% of |
|||||||||||
$ |
Revenues |
||||||||||
Reported GAAP earnings from operations |
$ |
11,325 |
2.1% |
||||||||
Restructuring charges 1 |
2,337 |
||||||||||
Adjusted earnings from operations |
$ |
13,662 |
2.5% |
||||||||
Reported GAAP net earnings attributable to Guess?, Inc. |
$ |
9,916 |
1.8% |
||||||||
Restructuring charges 1 |
2,337 |
||||||||||
Income tax adjustments 2 |
(559) |
||||||||||
Total adjustments affecting net earnings attributable to Guess?, Inc. |
1,778 |
||||||||||
Adjusted net earnings attributable to Guess?, Inc. |
$ |
11,694 |
2.1% |
||||||||
Adjusted diluted earnings per common share attributable to common stockholders: |
$ |
0.14 |
|||||||||
Weighted average common shares outstanding attributable to common stockholders: |
|||||||||||
Basic |
84,582 |
||||||||||
Diluted |
84,778 |
||||||||||
Notes: |
|||||||||||
1 |
During the first quarter of fiscal 2014, the Company implemented plans to streamline its operational structure and reduce expenses in both Europe and North America which resulted in restructuring charges incurred during the three months ended May 4, 2013. No adjustments have been made to the same prior-year period. |
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2 |
The income tax effect of the restructuring charges was based on the Company's assessment of deductibility using the statutory tax rate of the tax jurisdiction in which the charges were incurred. |
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Guess?, Inc. and Subsidiaries |
||||||||||||||
Consolidated Segment Data |
||||||||||||||
(dollars in thousands) |
||||||||||||||
Three Months Ended |
||||||||||||||
May 4, |
April 28, |
% |
||||||||||||
2013 |
2012 |
chg |
||||||||||||
Net revenue: |
||||||||||||||
North American Retail |
$ |
238,311 |
$ |
251,798 |
(5%) |
|||||||||
Europe |
165,392 |
189,815 |
(13%) |
|||||||||||
Asia |
71,132 |
64,835 |
10% |
|||||||||||
North American Wholesale |
43,829 |
43,918 |
(0%) |
|||||||||||
Licensing |
30,250 |
28,900 |
5% |
|||||||||||
$ |
548,914 |
$ |
579,266 |
(5%) |
||||||||||
Earnings (loss) from operations: |
||||||||||||||
North American Retail |
$ |
(4,233) |
$ |
16,990 |
(125%) |
|||||||||
Europe |
(5,218) |
12,481 |
(142%) |
|||||||||||
Asia |
6,964 |
5,875 |
19% |
|||||||||||
North American Wholesale |
8,649 |
9,346 |
(7%) |
|||||||||||
Licensing |
26,204 |
24,586 |
7% |
|||||||||||
Corporate Overhead |
(18,704) |
(30,137) |
(38%) |
|||||||||||
Restructuring Charges |
(2,337) |
— |
||||||||||||
$ |
11,325 |
$ |
39,141 |
(71%) |
||||||||||
Operating margins: |
||||||||||||||
North American Retail |
(1.8%) |
6.7% |
||||||||||||
Europe |
(3.2%) |
6.6% |
||||||||||||
Asia |
9.8% |
9.1% |
||||||||||||
North American Wholesale |
19.7% |
21.3% |
||||||||||||
Licensing |
86.6% |
85.1% |
||||||||||||
Total Company before restructuring charges |
2.5% |
6.8% |
||||||||||||
Total Company including restructuring charges |
2.1% |
6.8% |
Guess?, Inc. and Subsidiaries |
||||||||||||||||||
Selected Condensed Consolidated Balance Sheet Data |
||||||||||||||||||
(in thousands) |
||||||||||||||||||
May 4, |
February 2, |
April 28, |
||||||||||||||||
2013 |
2013 |
2012 |
||||||||||||||||
ASSETS |
||||||||||||||||||
Cash and cash equivalents |
$ |
306,437 |
$ |
329,021 |
$ |
480,353 |
||||||||||||
Short-term investments |
6,911 |
6,906 |
9,618 |
|||||||||||||||
Receivables, net |
251,071 |
316,863 |
326,592 |
|||||||||||||||
Inventories |
375,793 |
369,712 |
334,235 |
|||||||||||||||
Other current assets |
117,430 |
84,723 |
90,713 |
|||||||||||||||
Property and equipment, net |
346,268 |
355,729 |
354,394 |
|||||||||||||||
Other assets |
217,558 |
250,552 |
243,839 |
|||||||||||||||
Total Assets |
$ |
1,621,468 |
$ |
1,713,506 |
$ |
1,839,744 |
||||||||||||
LIABILITIES AND STOCKHOLDERS' EQUITY |
||||||||||||||||||
Current portion of borrowings and capital lease obligations |
$ |
1,931 |
$ |
1,901 |
$ |
1,967 |
||||||||||||
Other current liabilities |
340,865 |
383,065 |
387,207 |
|||||||||||||||
Capital lease obligations |
7,559 |
8,314 |
9,807 |
|||||||||||||||
Other long-term liabilities |
212,161 |
216,214 |
221,978 |
|||||||||||||||
Redeemable and nonredeemable noncontrolling interests |
18,713 |
17,020 |
31,464 |
|||||||||||||||
Guess?, Inc. stockholders' equity |
1,040,239 |
1,086,992 |
1,187,321 |
|||||||||||||||
Total Liabilities and Stockholders' Equity |
$ |
1,621,468 |
$ |
1,713,506 |
$ |
1,839,744 |
Guess?, Inc. and Subsidiaries |
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Condensed Consolidated Cash Flow Data |
||||||||||||||
(in thousands) |
||||||||||||||
Three Months Ended |
||||||||||||||
May 4, |
April 28, |
|||||||||||||
2013 |
2012 |
|||||||||||||
Net cash provided by operating activities |
$ |
31,737 |
$ |
36,653 |
||||||||||
Net cash used in investing activities |
(10,131) |
(31,384) |
||||||||||||
Net cash used in financing activities |
(37,850) |
(17,482) |
||||||||||||
Effect of exchange rates on cash |
(6,340) |
761 |
||||||||||||
Net decrease in cash and cash equivalents |
(22,584) |
(11,452) |
||||||||||||
Cash and cash equivalents at the beginning of the year |
329,021 |
491,805 |
||||||||||||
Cash and cash equivalents at the end of the period |
$ |
306,437 |
$ |
480,353 |
||||||||||
Supplemental information: |
||||||||||||||
Depreciation and amortization |
$ |
22,508 |
$ |
20,721 |
||||||||||
Rent |
$ |
68,881 |
$ |
64,262 |
Guess?, Inc. and Subsidiaries |
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Retail Store Data |
||||||||||
International Store Count |
||||||||||
As of May 4, 2013 |
As of April 28, 2012 |
|||||||||
Total |
Directly Operated |
Total |
Directly Operated |
|||||||
Region |
Stores |
Stores |
Stores |
Stores |
||||||
United States and Canada |
511 |
511 |
503 |
503 |
||||||
Europe and the Middle East |
628 |
248 |
577 |
191 |
||||||
Asia |
469 |
49 |
442 |
48 |
||||||
Central and South America |
84 |
31 |
73 |
25 |
||||||
1,692 |
839 |
1,595 |
767 |
Guess?, Inc. and Subsidiaries |
||||||||||
Retail Store Data |
||||||||||
U.S. and Canada |
||||||||||
Three Months Ended |
||||||||||
May 4, |
April 28, |
|||||||||
2013 |
2012 |
|||||||||
Number of stores at the beginning of the year |
512 |
504 |
||||||||
Store openings |
2 |
6 |
||||||||
Store closures |
(3) |
(7) |
||||||||
Number of stores at the end of the period |
511 |
503 |
||||||||
Total store square footage at the end of the period |
2,370,000 |
2,319,000 |
SOURCE