SEC Filing | Guess, Inc.

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): May 27, 2010

GUESS?, INC.

(Exact name of registrant as specified in its charter)

Delaware

(State or other jurisdiction of incorporation)

1-11893		95-3679695
(Commission File Number)		(IRS Employer Identification No.)

1444 S. Alameda Street Los Angeles, California 90021

(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code: (213) 765-3100

Not applicable

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02. Results of Operations and Financial Condition.

Guess?, Inc. (the “Company”) issued a press release on May 27, 2010 announcing its financial results for the quarter ended May 1, 2010. A copy of the press release is being furnished as Exhibit 99.1 attached hereto.

The information in this Item 2.02 of Form 8-K is being furnished hereby and shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”), or otherwise subject to the liabilities of such section, nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

Item 9.01. Financial Statements and Exhibits.

(d)

Exhibits.

99.1	Press Release of Guess?, Inc. dated May 27, 2010 (financial results for the quarter ended May 1, 2010)

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, Guess?, Inc. has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Dated: May 27, 2010	GUESS?, INC.

	By:	/s/ Carlos Alberini

	Carlos Alberini
	President and Chief Operating Officer

EXHIBIT INDEX

Exhibit No.		Description

99.1		Press Release of Guess?, Inc. dated May 27, 2010 (financial results for the quarter ended May 1, 2010)

Unassociated Document

Exhibit 99.1

GUESS?, INC.

NEWS RELEASE

GUESS?, INC. REPORTS RECORD FIRST QUARTER RESULTS

First Quarter Revenue Increased 22% to a Record of $539 Million

First Quarter EPS Grew 54% to a Record of $0.54

Provides Second Quarter EPS Guidance in the Range of $0.65 to $0.68

Updates Full Year EPS Guidance to the Range of $2.80 to $2.85
Due to the Weakening Euro

First Quarter Fiscal 2011 Highlights

-	All business segments delivered double-digit revenue and operating earnings growth

European revenues increased 28%

North American retail revenues increased 14%; comp sales up 9.7%

Asian revenues increased 50%

-	Operating margin expanded 230 basis points to 13.2% from 10.9%

-	Net earnings increased 55% to $50.3 million

LOS ANGELES, May 27, 2010 – Guess?, Inc. (NYSE: GES) today reported financial results for the first quarter of its 2011 fiscal year, which ended May 1, 2010.

First Quarter Fiscal 2011 Results

For the first quarter of fiscal 2011, the Company reported net earnings of $50.3 million, an increase of 55% compared to net earnings of $32.5 million for the first quarter of fiscal 2010. Diluted earnings per share increased 54% to $0.54 in the current quarter, compared to $0.35 in the prior-year quarter. In the quarter, the Company recorded a $5.8 million charge, or $0.04 per share, related to the acceleration of pension cost amortization resulting from the departure of Carlos Alberini from the Company’s supplemental executive retirement plan.

Paul Marciano, Chief Executive Officer, commented, “We are very pleased with our strong performance this quarter. We achieved excellent results across all of our businesses around the world, with each of our segments delivering double-digit revenue growth and improving their profitability significantly. In North America, we posted a 9.7% same store sales increase and our international expansion drove significant growth in the period. Europe and Asia combined represented almost 60% of our quarterly revenue increase. We managed our business effectively, which resulted in an operating margin expansion of 230 basis points, even as we continued to invest in our infrastructure to support our ambitious growth initiatives.”

Mr. Marciano continued, “We remain focused on our key priorities for this year: to increase sales productivity across all businesses, to grow our European and Asian businesses and to expand our retail store base in North America. Our brand enjoys tremendous momentum worldwide and we strive to achieve its full potential as we develop our business in many markets where the brand is well known. We have a dedicated management team, a successful and diversified business model and a solid capital structure that position us well to continue to grow our business and deliver solid returns for our shareholders.”

Total net revenue for the first quarter of fiscal 2011 increased 22% to $539.3 million from $441.2 million in the prior-year quarter. The Company’s retail stores in North America generated revenue of $235.8 million in the first quarter of fiscal 2011, a 13.6% increase from $207.6 million in the same period a year ago. Comparable store sales increased 9.7% (5.8% in constant dollars) for the first quarter of fiscal 2011, compared to the same period a year ago. The Company operated 433 retail stores in the U.S. and Canada at the end of the first quarter of fiscal 2011 versus 429 stores a year earlier.

Net revenue from the Company’s North American wholesale segment increased 27.3% to $42.7 million in the first quarter of fiscal 2011, from $33.6 million in the prior-year period.

Net revenue from the Company’s Europe segment increased 28.3% to $187.0 million in the first quarter of fiscal 2011, compared to $145.7 million in the prior-year period.

Net revenue from the Company’s Asia segment increased 50.4% to $48.6 million in the first quarter of fiscal 2011, from $32.3 million in the prior-year period.

Licensing segment net revenue increased 14.6% to $25.3 million in the first quarter of fiscal 2011, from $22.1 million in the prior-year period.

Operating earnings for the first quarter of fiscal 2011 increased 48.5% to $71.3 million (including a $5.0 million favorable currency translation benefit) from $48.0 million in the prior-year period. Operating margin in the first quarter increased 230 basis points to 13.2%, compared to the prior-year’s quarter. This margin expansion was the result of higher product margins in all segments along with occupancy leverage due to the positive same store sales, partially offset by the impact of the accelerated pension cost amortization.

The Company’s effective tax rate declined to 31.0% for the first quarter of fiscal 2011, from 33.0% for the first quarter of the prior year.

Outlook

The Company’s expectations for the second quarter of fiscal 2011 ending July 31, 2010, are as follows:

Consolidated net revenues are expected to range from $560 million to $575 million.

Operating margin is expected to be around 16.0%.

Diluted earnings per share are expected to be in the range of $0.65 to $0.68.

The Company updated its outlook for the fiscal year ending January 29, 2011, which is now as follows:

Consolidated net revenues are expected to range from $2.35 billion to $2.40 billion.

Operating margin is expected to be about 16.5%.

Diluted earnings per share are expected to be in the range of $2.80 to $2.85.

Based on the continued strengthening of the US dollar against the Euro, this full year outlook includes a further negative translation and margin impact on diluted earnings per share of $0.16 for the remainder of fiscal 2011. This is in addition to the $0.12 negative translation impact that the Company had initially expected for the same period.

Dividend

The Company also announced today that its Board of Directors has approved a quarterly cash dividend of $0.16 per share on the Company’s common stock. The dividend will be payable on June 25, 2010 to shareholders of record at the close of business on June 9, 2010.

Change in Segment Reporting

In the first quarter of fiscal 2011, the Company revised its segment reporting to include its North American wholesale and Asia operations as separate segments. The Company believes this segment reporting better reflects how its five business segments – North American retail, North American wholesale, Europe, Asia and licensing – are managed and each segment’s performance is evaluated. The North American retail segment includes the Company’s retail operations in North America. The North American wholesale segment includes the Company’s wholesale operations in North America. The Europe segment includes both wholesale and retail operations in Europe. The Asia segment includes both wholesale and retail operations in Asia. The licensing segment includes the worldwide licensing operations of the Company. All amounts for fiscal 2010 have been revised to conform to the fiscal 2011 presentation and are included with this release.

The Company will hold a conference call at 5:00 pm (ET) on May 27, 2010 to discuss the news announced in this press release. A live webcast of the conference call will be accessible at www.guessinc.com via the “Investor’s Info” link. The webcast will be archived on the website for 30 days.

Guess?, Inc. designs, markets, distributes and licenses a lifestyle collection of contemporary apparel, denim, handbags, watches, footwear and other related consumer products. As of May 1, 2010, the Company operated 433 retail stores in the United States and Canada and 817 retail stores outside of North America, of which 137 were directly owned. The Company also distributes its products through better department and specialty stores around the world. For more information about the Company, please visit www.guessinc.com.

Except for historical information contained herein, certain matters discussed in this press release, including statements concerning the Company’s growth plans and future prospects, including guidance for the second quarter and full year of fiscal 2011, 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 Securities and Exchange Commission, including but not limited to the risk factors discussed therein, could cause actual results to differ materially from current expectations.

Contact:	Guess?, Inc.
	Investor Relations
	(213) 765-5578

Source: Guess?, Inc.

Guess?, Inc. and Subsidiaries

Condensed Consolidated Statements of Income

(amounts in thousands, except per share data)

	Three Months Ended
	May 1,						May 2,
	2010						2009
	$			%			$			%

Net revenue
Product sales	$	514,055			95.3	%	$	419,127			95.0	%
Net royalties		25,286			4.7	%		22,074			5.0	%
		539,341			100.0	%		441,201			100.0	%

Cost of product sales		304,090			56.4	%		263,698			59.8	%

Gross profit		235,251			43.6	%		177,503			40.2	%

Selling, general and administrative expenses		158,105			29.3	%		129,469			29.3	%
Accelerated pension cost amortization		5,819			1.1	%		—			0.0	%

Earnings from operations		71,327			13.2	%		48,034			10.9	%

Other income (expense):
Interest expense		(195	)		(0.0	)%		(606	)		(0.1	)%
Interest income		301			0.1	%		737			0.2	%
Other, net		3,428			0.6	%		1,266			0.2	%

Earnings before income taxes		74,861			13.9	%		49,431			11.2	%

Income taxes		23,207			4.4	%		16,312			3.7	%

Net earnings		51,654			9.5	%		33,119			7.5	%

Net earnings attributable to noncontrolling interests in subsidiaries		1,319			0.2	%		577			0.1	%

Net earnings attributable to Guess?, Inc.	$	50,335			9.3	%	$	32,542			7.4	%

Earnings per common share attributable to common stockholders:

Basic	$	0.54					$	0.35

Diluted	$	0.54					$	0.35

Weighted average common shares outstanding attributable to common stockholders:

Basic		91,902						90,631

Diluted		92,768						91,158

Guess?, Inc. and Subsidiaries

Consolidated Segment Data

(dollars in thousands)

	Three Months Ended
	May 1,			May 2,			%
	2010			2009			chg

Net revenue:
North American retail	$	235,773		$	207,560			14	%
North American wholesale		42,728			33,573			27	%
Europe		186,968			145,698			28	%
Asia		48,586			32,296			50	%
Licensing		25,286			22,074			15	%
	$	539,341		$	441,201			22	%

Earnings (loss) from operations:
North American retail	$	24,372		$	18,007			35	%
North American wholesale		10,211			4,926			107	%
Europe		34,482			23,139			49	%
Asia		7,137			2,496			186	%
Licensing		21,860			19,015			15	%
Corporate overhead		(20,916	)		(19,549	)		7	%
Accelerated pension cost amortization		(5,819	)		—
	$	71,327		$	48,034			48	%

Operating margins:
North American retail		10.3	%		8.7	%
North American wholesale		23.9	%		14.7	%
Europe		18.4	%		15.9	%
Asia		14.7	%		7.7	%
Licensing		86.5	%		86.1	%

Total Company		13.2	%		10.9	%

Guess?, Inc. and Subsidiaries

Selected Condensed Consolidated Balance Sheet Data

(in thousands)

	May 1,		January 30,		May 2,
	2010		2010		2009

ASSETS

Cash and cash equivalents	$	517,705	$	502,063	$	312,630

Receivables, net		282,535		283,747		270,996

Inventories		245,836		253,162		210,954

Other current assets		82,079		85,191		92,696

Property and equipment, net		256,962		255,308		235,607

Other assets		169,651		151,778		137,502

Total Assets	$	1,554,768	$	1,531,249	$	1,260,385

LIABILITIES AND STOCKHOLDERS' EQUITY

Current portion of borrowings and capital lease obligations	$	2,707	$	2,357	$	30,645

Other current liabilities		311,992		340,396		277,650

Capital lease obligations		12,752		14,137		14,327

Other long-term liabilities		141,136		134,203		114,979

Redeemable and nonredeemable noncontrolling interests		20,608		19,945		18,095

Guess?, Inc. stockholders' equity		1,065,573		1,020,211		804,689

Total Liabilities and Stockholders' Equity	$	1,554,768	$	1,531,249	$	1,260,385

Guess?, Inc. and Subsidiaries

Condensed Consolidated Cash Flow Data

(in thousands)

	Three Months Ended
	May 1,			May 2,
	2010			2009

Net cash provided by operating activities	$	47,784		$	44,801

Net cash used in investing activities		(23,459	)		(18,265	)

Net cash used in financing activities		(6,655	)		(9,142	)

Effect of exchange rates on cash		(2,028	)		1,118

Net increase in cash and cash equivalents		15,642			18,512

Cash and cash equivalents at the beginning of the year		502,063			294,118

Cash and cash equivalents at the end of the period	$	517,705		$	312,630

Supplemental information:

Depreciation and amortization	$	15,751		$	14,547

Rent		50,345			41,691

Guess?, Inc. and Subsidiaries

Retail Store Data

International Store Count

As of May 1, 2010

	Total		Directly Operated
Region	Stores		Stores

United States and Canada		433		433

Europe and the Middle East		418		96

Asia		344		28

Other		55		13

		1,250		570

Guess?, Inc. and Subsidiaries

Retail Store Data

U.S. and Canada

	Three Months Ended
	May 1,			May 2,
	2010			2009

Number of stores at the beginning of the year		432			425

Store openings		4			6

Store closures		(3	)		(2	)

Number of stores at the end of the period		433			429

Total store square footage at the end of the period		2,002,000			1,969,000

Guess?, Inc. and Subsidiaries

Consolidated Segment Data - Revised

(in thousands)

(Unaudited)

	First Quarter Ended			Second Quarter Ended			Third Quarter Ended			Fourth Quarter Ended			Year Ended
	May 2, 2009			Aug 1, 2009			Oct 31, 2009			Jan 30, 2010			Jan 30, 2010
Net revenue:
North American retail	$	207,560		$	227,460		$	239,518		$	309,365		$	983,903
North American wholesale		33,573			33,213			46,124			39,772			152,682
Europe		145,698			210,159			168,829			222,556			747,242
Asia		32,296			29,532			40,527			44,932			147,287
Licensing		22,074			22,059			27,814			25,405			97,352
	$	441,201		$	522,423		$	522,812		$	642,030		$	2,128,466

Earnings (loss) from operations:
North American retail	$	18,007		$	30,208		$	33,110		$	50,962		$	132,287
North American wholesale		4,926			8,328			12,245			9,667			35,166
Europe		23,139			52,293			40,801			57,002			173,235
Asia		2,496			1,564			5,472			6,293			15,825
Licensing		19,015			18,672			24,176			24,777			86,640
Corporate overhead		(19,549	)		(19,951	)		(16,830	)		(28,007	)		(84,337	)
	$	48,034		$	91,114		$	98,974		$	120,694		$	358,816