Provides Q3 EPS Guidance in the Range of $0.46 to $0.49
Increases Quarterly Dividend 25% to 12.5 Cents per Share
- Global revenues increased 1% in US dollars and 9% in constant dollars.
- Operating income increased 7% to $91 million.
- Operating margin expanded to 17.4% vs. 16.5% last year.
Second Quarter Fiscal 2010 Results
For the second quarter of fiscal 2010, the Company reported record net earnings of
Mr. Marciano continued, "It is difficult to predict when the global economy will ultimately recover. We will focus on what we can control, running our business carefully and remaining flexible to take advantage of opportunities. We are operating with an eye toward the future, developing the necessary infrastructure and capabilities today that will fuel our growth in the future. Our commitment to expand internationally remains a top priority, with
Total net revenue for the second quarter of fiscal 2010 increased 1.4% to
Net revenue from the Company's wholesale segment, which includes the Company's Asian operations, decreased 13.3% to
Net revenue from the Company's European segment increased 20.6% to
Licensing segment net revenue decreased 15.9% to
Operating earnings for the second quarter of fiscal 2010 increased 7.2% to
The Company's effective tax rate declined to 33.0% for the second quarter of fiscal 2010, from 36.0% for the second quarter of the prior year.
Six-Month Period Results
For the six months ended
Total net revenue for the first six months of fiscal 2010 decreased 4.1% to
Operating earnings for the first six months of fiscal 2010 decreased 13.5% to
Outlook
The Company's expectations for the third quarter of fiscal 2010 ending
-- Consolidated net revenues are expected to range from $465 million to
$485 million .
-- Operating margin is expected to be around 14%.
-- Diluted earnings per share are expected to be in the range of $0.46 to
$0.49 .
The Company's expectations include the unfavorable impact of a shift of European sales from the third quarter into the second quarter. The favorable impact of the shift on second quarter earnings per share was
The continued volatility in the global economy presents a substantial challenge to forecasting future consumer behavior and future financial results. Due to its limited visibility, the Company is not providing specific revenue, operating margin or diluted earnings per share guidance for the full fiscal year 2010.
Dividend
The Company also announced today that its Board of Directors has approved an increase of its quarterly cash dividend to
The Company will hold a conference call at
Except for historical information contained herein, certain matters discussed in this press release, including statements concerning the Company's future prospects and guidance for the third quarter of fiscal 2010 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 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 other things, domestic and international economic conditions, including economic and other events that could negatively impact consumer confidence and discretionary consumer spending; our ability to, among other things, anticipate consumer preferences, effectively operate our various retail concepts, effectively manage inventories and successfully execute our strategies, including our supply chain and international growth strategies; and risks associated with changes in economic, political, social and other conditions affecting our foreign operations, including currency fluctuations. In addition to these factors, the economic, litigation-related 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
Condensed Consolidated Statements of Income
(amounts in thousands, except per share data)
Three Months Ended
----------------------------------
August 1, August 2,
2009 2008
$ % $ %
-------- ---- -------- -----
Net revenue
Product sales $500,364 95.8% $488,956 94.9%
Net royalties 22,059 4.2% 26,216 5.1%
-------- ---- -------- -----
522,423 100.0% 515,172 100.0%
Cost of product sales 290,646 55.6% 283,017 54.9%
-------- ---- -------- -----
Gross profit 231,777 44.4% 232,155 45.1%
Selling, general and
administrative expenses 140,663 27.0% 147,145 28.6%
-------- ---- -------- -----
Earnings from operations 91,114 17.4% 85,010 16.5%
Other income (expense):
Interest expense (339) (0.1%) (799) (0.2%)
Interest income 447 0.1% 1,553 0.3%
Other, net (1,339) (0.2%) (724) (0.1%)
-------- ---- -------- -----
Earnings before income taxes 89,883 17.2% 85,040 16.5%
Income taxes 29,662 5.7% 30,616 6.0%
-------- ---- -------- -----
Net earnings 60,221 11.5% 54,424 10.5%
Net earnings attributable to
noncontrolling interests in
subsidiaries 661 0.1% 592 0.1%
-------- ---- -------- -----
Net earnings attributable to
Guess?, Inc. $59,560 11.4% $53,832 10.4%
======== ==== ======== =====
Earnings per common share
attributable to common stockholders:
Basic (1) $0.65 $0.57
Diluted (1) $0.64 $0.56
Weighted average common shares
outstanding attributable to
common stockholders:
Basic 90,724 93,008
Diluted (1) 91,381 93,763
Six Months Ended
----------------------------------
August 1, August 2,
2009 2008
$ % $ %
-------- ---- -------- -----
Net revenue
Product sales $919,491 95.4% $954,691 95.1%
Net royalties 44,133 4.6% 49,701 4.9%
-------- ---- -------- -----
963,624 100.0% 1,004,392 100.0%
Cost of product sales 554,344 57.5% 550,998 54.9%
-------- ---- -------- -----
Gross profit 409,280 42.5% 453,394 45.1%
Selling, general and
administrative expenses 270,132 28.1% 292,459 29.1%
-------- ---- -------- -----
Earnings from operations 139,148 14.4% 160,935 16.0%
Other income (expense):
Interest expense (945) (0.1%) (1,824) (0.2%)
Interest income 1,184 0.2% 3,086 0.3%
Other, net (73) 0.0% (1,632) (0.1%)
-------- ---- -------- -----
Earnings before
income taxes 139,314 14.5% 160,565 16.0%
Income taxes 45,974 4.8% 57,805 5.8%
-------- ---- -------- -----
Net earnings 93,340 9.7% 102,760 10.2%
Net earnings attributable to
noncontrolling interests in
subsidiaries 1,238 0.1% 1,127 0.1%
-------- ---- -------- -----
Net earnings attributable to
Guess?, Inc. $92,102 9.6% $101,633 10.1%
======== ==== ======== =====
Earnings per common
share attributable
to common stockholders:
Basic (1) $1.00 $1.07
Diluted (1) $0.99 $1.07
Weighted average common
shares outstanding
attributable to
common stockholders:
Basic 90,678 92,979
Diluted (1) 91,253 93,784
(1) The Company adopted a new accounting pronouncement in the first
quarter of fiscal 2010 that requires the Company to exclude certain
earnings and shares related to participating securities from the
computation of earnings per common share. The net earnings
attributable to participating securities were approximately $840 and
$982 in the second quarter of fiscal 2010 and fiscal 2009,
respectively, and the amount of participating shares for the same
periods were 109 and 130, respectively. The effect of the new
accounting pronouncement on diluted earnings per common share is to
reduce both the current quarter and the prior year quarter by
approximately $0.01 per share, reduce the current year-to-date period
by approximately $0.02 per share and reduce the prior year-to-date
period by approximately $0.01 per share. The prior year's earnings per
share has been adjusted to reflect the change.
Guess?, Inc. and Subsidiaries
Consolidated Segment Data
(dollars in thousands)
Three Months Ended
-------------------------
August 1, August 2, %
2009 2008 chg
-------- -------- ---
Net revenue:
Retail operations $227,460 $242,360 -6%
Wholesale operations 62,745 72,363 -13%
European operations 210,159 174,233 21%
Licensing operations 22,059 26,216 -16%
-------- --------
$522,423 $515,172 1%
======== ========
Earnings (loss) from operations:
Retail operations $30,208 $30,136 0%
Wholesale operations 9,892 10,791 -8%
European operations 52,293 40,126 30%
Licensing operations 18,672 22,530 -17%
Corporate overhead (19,951) (18,573) 7%
-------- --------
$91,114 $85,010 7%
======== ========
Operating margins:
Retail operations 13.3% 12.4%
Wholesale operations 15.8% 14.9%
European operations 24.9% 23.0%
Licensing operations 84.6% 85.9%
Total Company 17.4% 16.5%
Six Months Ended
--------------------------
August 1, August 2, %
2009 2008 chg
-------- -------- ---
Net revenue:
Retail operations $435,020 $454,297 -4%
Wholesale operations 128,614 147,497 -13%
European operations 355,857 352,897 1%
Licensing operations 44,133 49,701 -11%
-------- ----------
$963,624 $1,004,392 -4%
======== ==========
Earnings (loss) from operations:
Retail operations $48,215 $52,980 -9%
Wholesale operations 17,314 23,345 -26%
European operations 75,432 80,087 -6%
Licensing operations 37,687 42,777 -12%
Corporate overhead (39,500) (38,254) 3%
-------- ----------
$139,148 $160,935 -14%
======== ==========
Operating margins:
Retail operations 11.1% 11.7%
Wholesale operations 13.5% 15.8%
European operations 21.2% 22.7%
Licensing operations 85.4% 86.1%
Total Company 14.4% 16.0%
Guess?, Inc. and Subsidiaries
Selected Condensed Consolidated Balance Sheet Data
(in thousands)
August 1, January 31, August 2,
2009 2009 2008
---------- ---------- ----------
ASSETS
Cash and cash equivalents $329,707 $294,118 $294,481
Receivables, net 297,031 262,349 292,401
Inventories 258,612 239,675 258,888
Other current assets 82,528 98,047 59,293
Property and equipment, net 249,147 221,416 252,464
Other assets 145,781 130,961 159,763
---------- ---------- ----------
Total Assets $1,362,806 $1,246,566 $1,317,290
========== ========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current portion of borrowings and
capital lease obligations $2,968 $24,018 $40,703
Other current liabilities 329,157 311,866 390,433
Borrowing and capital lease
obligations 15,394 14,586 18,173
Other long-term liabilities 118,557 110,592 124,227
Redeemable and nonredeemable
noncontrolling interests 17,426 12,503 9,600
Guess?, Inc. stockholders' equity 879,304 773,001 734,154
---------- ---------- ----------
Total Liabilities and Stockholders'
Equity $1,362,806 $1,246,566 $1,317,290
========== ========== ==========
Guess?, Inc. and Subsidiaries
Condensed Consolidated Cash Flow Data
(in thousands)
Six Months Ended
--------------------
August 1, August 2,
2009 2008
--------- ---------
Net cash provided by operating activities $120,630 $116,181
Net cash used in investing activities (43,331) (60,070)
Net cash used in financing activities (46,408) (38,763)
Effect of exchange rates on cash 4,698 1,538
-------- --------
Net increase in cash and cash equivalents 35,589 18,886
Cash and cash equivalents at the beginning
of the year 294,118 275,595
-------- --------
Cash and cash equivalents at the end of the
period $329,707 $294,481
======== ========
Supplemental information:
Depreciation and amortization $30,535 $29,378
Rent 84,506 76,703
Guess?, Inc. and Subsidiaries
Retail Store Data
International Store Count
As of August 1, 2009
Directly
Total Operated
Region Stores Stores
------ --------
United States and
Canada 431 431
Europe and Middle East 348 68
Asia 323 26
Other 52 12
------ ------
1,154 537
====== ======
Guess?, Inc. and Subsidiaries
Retail Store Data
U.S. and Canada
Six Months Ended
---------------------
August 1, August 2,
2009 2008
--------- ----------
Number of stores at the beginning of the year 425 373
Store openings 11 35
Store closures (5) (1)
--------- ---------
Number of stores at the end of the period 431 407
========= =========
Total store square footage at the end of the
period 1,980,000 1,883,000
========= =========
SOURCE
Guess?, Inc., Investor Relations, +1-213-765-5578