Executives cite ‘challenging market condition,’ but stronger showing in Europe, its largest market
Shares of Guess Inc. fell after hours on Tuesday after the maker and retailer of clothing and other accessories forecast first-quarter and full-year profits that were below expectations, as “challenging market conditions” weighed against a stronger showing in Europe.
Guess GES, +2.90% said it expected an adjusted loss of 25 cents to 31 cents for the first quarter, compared with FactSet forecasts for a 52-cent per-share profit, based on projections from only two analysts. For the full year, Guess said it expected an adjusted per-share profit of $2.45 to $2.80, below FactSet estimates for $3.41.
Guess said it expected first-quarter revenue to fall between 6% and 7%, compared with FactSet estimates for a roughly 3.9% increase. For its full year, Guess forecast a sales increase of between 1% and 3%, compared with FactSet estimates for a 2% gain.
Shares fell 6.7% in after-hours trade.
The company reported fourth-quarter net income of $95.8 million, or $1.42 a share, compared with $68.4 million, or $1.04 a share, in the same quarter last year. Revenue rose 2% to $818 million, compared with around $800 million in the prior-year quarter.
Guess reported adjusted earnings of $1.74 a share, compared with $1.14 a share in the prior-year quarter.
Analysts polled by FactSet expected Guess to report adjusted earnings of $1.30 a share, on revenue of $772 million.
Guess said it expected an adjusted loss of 25 cents to 31 for the first quarter, compared with expectations for a 52-cent per-share profit. For the full year, Guess said it expected an adjusted per-share profit of $2.45 to $2.80, below FactSet estimates for $3.41.
Guess operated more than 1,000 retail locations around the world last year — with a large chunk of them in Europe, its biggest market, or otherwise outside the U.S. The company reported as clothing retailers try to gauge how much demand consumers still have left, after more basic needs got more expensive last year. Retailers had to cut clothing prices last year after it piled up in their inventories.
Jefferies analysts, in a note in January, cited the company’s “unique brand” as an advantage, and noted that things like handbags and its offerings geared toward children had been in demand. However, they noted the uneven global recovery from the pandemic — Europe rebounded later than the U.S. — as well as a difficult foreign-exchange backdrop.
The analysts also noted that inventories at Guess were up 19% in its third quarter. But they said that was “largely due to earlier purchasing cycles and currency impacts. Cotton and freight costs were elevated, but are softening as of recently.”
Shares of Guess are up 22.3% over the past 12 months. The S&P 500 index SPX, +1.65% is down 6.4% over that period.