SEC Filing | Guess, Inc.

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a5636454.htm

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): March 19, 2008

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 March 19, 2008 announcing its financial results for the quarter and year ended February 2, 2008. 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 March 19, 2008 (financial results for the quarter and year ended February 2, 2008)

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: March 19, 2008	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 March 19, 2008 (financial results for the quarter and year ended February 2, 2008)

a5636454ex991.htm

Exhibit 99.1

GUESS?, INC.

NEWS RELEASE

	Contacts:	Carlos Alberini
		President & Chief Operating Officer
		(213) 765-3582

		Dennis R. Secor
		SVP & Chief Financial Officer
		(213) 765-3289

		Joseph Teklits
		ICR, Inc.
		(203) 682-8258

GUESS?, INC. REPORTS RECORD Q4 AND FISCAL YEAR 2008 RESULTS

REAFFIRMS FISCAL YEAR 2009 EPS GUIDANCE OF $2.35 TO $2.45

ANNOUNCES $200 MILLION SHARE REPURCHASE AUTHORIZATION

Q4 EPS Increased to a Record of $0.59 Versus $0.49 Last Year

Fourth Quarter Fiscal 2008 Highlights

-	Global revenues increased 30% to a record of $514.6 million

-	North American comp sales up 13.1%

-	Operating margin improved 70 basis points to 18.7%

-	Operating earnings increased 35% to $96.2 million

Fiscal Year 2008 Highlights

-	Global revenues increased 40% to a record of $1.75 billion

-	Operating margin improved 130 basis points to 17.7%

-	Operating earnings increased 50% to $309.1 million

-	EPS increased 40% to $1.99 versus $1.42 last year

LOS ANGELES, March 19, 2008 – Guess?, Inc. (NYSE: GES) today reported financial results for the fourth quarter and fiscal year ended February 2, 2008.

Fourth Quarter Fiscal 2008 Results

For the thirteen weeks ended February 2, 2008, the Company reported record net earnings of $55.2 million, an increase of 20.3% compared to net earnings of $45.9 million for the recast fourteen week period ended February 3, 2007. Diluted earnings per share increased 20.4% to $0.59 in the current quarter versus $0.49 for the comparable period last year. There were several items that impacted the comparability of the quarterly results. Last year’s quarter included an extra operating week, non-operating asset gains, a low tax rate and debt retirement costs, while the tax rate for this year’s fourth quarter was relatively high. Collectively, these issues negatively impacted the quarterly earnings per share comparison by about $0.08 per share.

Paul Marciano, Chief Executive Officer, commented, “We are very pleased with our strong financial performance this quarter, especially considering the current economic environment. Once again, all of our business segments contributed to our solid revenue and earnings growth in the period. Our international businesses remained the primary drivers of this growth, with Europe and Asia representing about two-thirds of the revenue increase and half of the operating profit growth in the quarter. These results marked our 18th consecutive quarter of earnings growth.”

Mr. Marciano continued, “We had another outstanding quarter which capped off yet another record-setting year in which we increased revenues by 40% and net earnings by 42%. In fiscal 2008, our international businesses accounted for more than two-thirds of our operating earnings, further solidifying our position as a true global fashion brand. This proves that the strategic investments we are making continue to yield results. Our focus remains the globalization of our brand. We continue to expand both domestically and internationally to capitalize on the strength of our brand and the power of our highly diversified business model. We are confident that we are well positioned to continue to deliver strong financial results in fiscal year 2009 and beyond.”

Total net revenue for the fourth quarter of fiscal 2008 increased 29.9% to $514.6 million from $396.2 million in the prior fourth quarter period. During the quarter, the Company’s retail stores in North America generated revenue of $270.9 million, a 10.4% increase from $245.3 million in the prior-year quarter. Comparable store sales for the thirteen week period ended February 2, 2008 increased 13.1% from the thirteen week period ended February 3, 2007. The Company’s wholesale segment, which includes its Asian operations, generated revenue of $65.1 million during the quarter, a 53.1% increase from $42.5 million in the prior-year quarter. The Company’s European segment generated revenue of $152.2 million during the quarter, an increase of 75.4% when compared to $86.8 million in the prior-year quarter. The Company’s licensing segment generated revenue of $26.5 million, a 22.4% increase from $21.6 million in the prior-year period. At the end of fiscal year 2008, the Company operated 373 retail stores in the U.S. and Canada, versus 334 stores a year earlier.

Operating earnings for the fourth quarter of fiscal year 2008 increased 34.7% to $96.2 million (including a $5.4 million favorable currency translation benefit) from $71.4 million in the fourth quarter of the prior year. Operating margin in the fourth quarter improved 70 basis points to 18.7%, compared to the prior year’s quarter. This margin expansion was driven by a gross margin increase of 70 basis points to 45.4% in the period.

The Company’s net earnings were negatively affected by a higher effective tax rate in the current quarter. For the fourth quarter, the tax rate was 42.2%, compared to 36.5% in the prior year’s quarter. The higher tax rate was due to an increase of profits in higher tax jurisdictions, the impact of tax law changes and start up activities in new markets.

Fiscal Year 2008 Results

For the fiscal year ended February 2, 2008, the Company reported record net earnings of $186.5 million, an increase of 42.2% compared to net earnings of $131.2 million for the recast year ended February 3, 2007. Diluted earnings per share increased 40.1% to $1.99 in fiscal year 2008 versus $1.42 in the prior year.

Total net revenue for fiscal year 2008 increased 39.7% to $1.75 billion from $1.25 billion in the prior year. The Company’s retail stores in North America generated revenue of $862.4 million for fiscal year 2008, an increase of 16.4% from $741.1 million in the prior year. Comparable store sales for the 52 week period ended February 2, 2008 increased 14.6% from the 52 week period ended February 3, 2007. Net revenue from the Company’s wholesale segment, which includes its Asian operations, increased 69.3% in fiscal year 2008 to $258.4 million from $152.6 million in the prior year. Net revenue from the Company’s European segment increased 84.5% to $538.4 million in fiscal year 2008, compared to $291.8 million in the prior year. Licensing segment net revenue increased 35.1% to $90.7 million in fiscal year 2008, compared to $67.1 million in the prior year.

Operating earnings for fiscal year 2008 increased 50.4% to $309.1 million (including a $14.7 million favorable currency translation benefit) from $205.5 million in the prior year. Operating margin for fiscal year 2008 improved by 130 basis points to 17.7%. This margin expansion was driven by a gross margin increase of 120 basis points to 45.3% and a decrease in the SG&A expense rate of 10 basis points to 27.6%. The Company’s effective tax rate was 39.8% for fiscal year 2008 versus 37.2% in the prior year.

Outlook

For the first quarter ending May 3, 2008, the Company’s expectations are as follows:

-	Consolidated net revenues are expected to range from $445 million to $460 million.

-	Operating margin is expected to be about 15.0%.

-	Diluted earnings per share are expected to be in the range of $0.44 to $0.46.

For the fiscal year ending January 31, 2009, the Company’s expectations are now as follows:

-	Consolidated net revenues are expected to range from $1.97 billion to $2.05 billion.

-	Operating margin is expected to be about 17.7%.

-	Diluted earnings per share are expected to be in the range of $2.35 to $2.45.

Share Repurchase

The Company announced today that its Board of Directors has authorized a program to repurchase, from time-to-time and as market and business conditions warrant, up to $200 million of its common stock. Repurchases may be made on the open market or in privately negotiated transactions, pursuant to Rule 10b5-1 trading plans or other available means. There is no minimum or maximum number of shares to be repurchased under the program and the program may be discontinued at any time, without prior notice.

Dividend

The Company also announced today that its Board of Directors has approved a quarterly cash dividend of $0.08 per share on the Company's common stock. The dividend will be payable on April 18, 2008 to shareholders of record at the close of business on April 2, 2008.

The Company will hold a conference call at 4:30 p.m. (ET) on March 19, 2008 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 February 2, 2008, the Company operated 373 retail stores in the United States and Canada and 579 free standing retail stores outside of North America, of which 60 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 future prospects and guidance for the first quarter and full year of fiscal year 2009, 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 our ability to, among other things, anticipate consumer preferences, effectively operate our various retail store concepts, effectively manage inventories, successfully execute our strategies, including our supply chain and international growth strategies, currency fluctuations and domestic and international general economic conditions and consumer confidence. In addition to these factors, the economic and other factors 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.

Source: Guess?, Inc.

Guess?, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(dollars in thousands, except per share data)


	Three Months Ended										Twelve Months Ended
	February 2,					February 3,					February 2,					February 3
	2008					2007					2008					2007
	$			%		$			%		$			%		$			%

Net revenue
Product sales	$	488,130		94.9	%	$	374,592		94.5	%	$	1,659,184		94.8	%	$	1,185,528		94.6	%
Net royalties		26,471		5.1	%		21,624		5.5	%		90,732		5.2	%		67,136		5.4	%
		514,601		100.0	%		396,216		100.0	%		1,749,916		100.0	%		1,252,664		100.0	%

Cost of product sales		281,078		54.6	%		219,179		55.3	%		957,147		54.7	%		700,155		55.9	%

Gross profit		233,523		45.4	%		177,037		44.7	%		792,769		45.3	%		552,509		44.1	%

Selling, general and administrative expenses		137,323		26.7	%		105,608		26.7	%		483,630		27.6	%		346,990		27.7	%

Earnings from operations		96,200		18.7	%		71,429		18.0	%		309,139		17.7	%		205,519		16.4	%

Other (income) expense:
Interest expense		1,243		0.2	%		2,886		0.7	%		3,442		0.2	%		7,662		0.6	%
Interest income		(2,162	)	(0.4	%)		(1,748	)	(0.5	%)		(7,546	)	(0.4	%)		(6,239	)	(0.5	%)
Other, net		2,104		0.4	%		(1,890	)	(0.5	%)		1,780		0.1	%		(4,660	)	(0.4	%)

Earnings before income taxes and minority interests		95,015		18.5	%		72,181		18.2	%		311,463		17.8	%		208,756		16.7	%

Income taxes		40,052		7.8	%		26,335		6.6	%		124,099		7.1	%		77,615		6.2	%
Minority interest		(226	)	(0.0	%)		(19	)	---			892		(0.0	%)		(31	)	---

Net earnings	$	55,189		10.7	%	$	45,865		11.6	%	$	186,472		10.7	%	$	131,172		10.5	%


Net earnings per share:

Basic	$	0.60				$	0.50				$	2.02				$	1.44

Diluted	$	0.59				$	0.49				$	1.99				$	1.42

Weighted number of shares outstanding:

Basic		92,654					91,506					92,307					90,786

Diluted		93,943					92,892					93,695					92,222

Guess?, Inc. and Subsidiaries
Consolidated Segment Data
(dollars in thousands)




	Three Months Ended									Twelve Months Ended
	February 2,			February 3,			%			February 2,			February 3,			%
	2008			2007			chg			2008			2007			chg

Net revenue:
Retail operations	$	270,872		$	245,314			10	%	$	862,381		$	741,104			16	%
Wholesale operations		65,070			42,500			53	%		258,445			152,623			69	%
European operations		152,188			86,778			75	%		538,358			291,801			84	%
Licensing operations		26,471			21,624			22	%		90,732			67,136			35	%
	$	514,601		$	396,216			30	%	$	1,749,916		$	1,252,664			40	%



Earnings (loss) from operations:
Retail operations	$	49,430		$	44,109			12	%	$	128,523		$	105,524			22	%
Wholesale operations		11,739			7,660			53	%		49,894			25,166			98	%
European operations		27,879			16,914			65	%		120,818			73,180			65	%
Licensing operations		23,508			20,421			15	%		77,941			58,656			33	%
Corporate overhead		(16,356	)		(17,675	)		-7	%		(68,037	)		(57,007	)		19	%
	$	96,200		$	71,429			35	%	$	309,139		$	205,519			50	%


Operating margins:
Retail operations		18.2	%		18.0	%					14.9	%		14.2	%
Wholesale operations		18.0	%		18.0	%					19.3	%		16.5	%
European operations		18.3	%		19.5	%					22.4	%		25.1	%
Licensing operations		88.8	%		94.4	%					85.9	%		87.4	%
Total Company		18.7	%		18.0	%					17.7	%		16.4	%

Guess?, Inc. and Subsidiaries
Selected Condensed Consolidated Balance Sheet Data
(dollars in thousands)


	February 2,		February 3,
	2008		2007

ASSETS

Cash and cash equivalents	$	275,595	$	207,617

Receivables, net		254,400		142,659

Inventories, net		232,159		173,668

Other current assets		52,585		39,523

Property and equipment, net		229,917		162,555

Other assets		141,572		117,300

Total Assets	$	1,186,228	$	843,322


LIABILITIES AND STOCKHOLDERS' EQUITY

Current portion of borrowings and capital lease obligations	$	35,254	$	20,804

Other current liabilities		353,037		258,725

Borrowings and capital lease obligations		18,724		17,336

Other long-term liabilities		116,250		103,126

Minority interest		5,989		4,607

Stockholders' equity		656,974		438,724

Total Liabilities and Stockholders' Equity	$	1,186,228	$	843,322

Guess?, Inc. and Subsidiaries
Condensed Consolidated Cash Flow Data
(dollars in thousands)



	Twelve Months Ended
	February 2,			February 3,
	2008			2007


Net cash provided by operating activities	$	175,460		$	141,738

Net cash used in investing activities		(111,858	)		(75,708	)

Net cash used in financing activities		(86	)		(25,942	)

Effect of exchange rates on cash		4,462			335

Net increase in cash and cash equivalents		67,978			40,423

Cash and cash equivalents at the beginning of the year		207,617			167,194

Cash and cash equivalents at the end of the period	$	275,595		$	207,617



Supplemental information:

Depreciation and amortization	$	50,579		$	39,599

Rent		122,305			85,368

Guess?, Inc. and Subsidiaries
Retail Store Data
U.S. and Canada



	Twelve Months Ended
	February 2,			February 3,
	2008			2007


Number of stores at the beginning of the year		334			311

Store openings		49			33

Store closures		(10	)		(10	)

Number of stores at the end of the period		373			334




Total store square footage at the end of the period		1,759,000			1,610,000