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Guess posts positive Q1 earnings, while revenues decline

By Prachi Singh

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For the first quarter of fiscal 2016, Guess reported net earnings of 3.3 million dollars, compared to a net loss of 2.1 million dollars for the first quarter of fiscal 2015. Diluted earnings per share were 0.04 dollars, compared to diluted loss per share of 0.03 dollars for the prior-year quarter, an increase of 0.07 dollars per share.

"Overall first quarter results were better than our expectations, mainly driven by tight expense management. In North America, we saw improvements in the women's category, and Marciano delivered another quarter of good performance with comp sales up in the mid-single digits. Our e-commerce business continued to experience solid top-line growth of almost 14 percent. In Europe, our retail stores performed above expectations and delivered positive comps," exclaimed Paul Marciano, Chief Executive Officer.

Total net revenue for the first quarter of fiscal 2016 decreased 8.4 percent to 478.8 million dollars, from 522.5 million dollars in the prior-year quarter. In constant currency, total net revenue was roughly flat compared to the same prior-year period. The company's retail stores and e-commerce sites in North America generated revenue of 214.2 million dollars, a 6.2 percent decrease from 228.3 million dollars in the same period a year ago. Comparable store sales including the results of e-commerce sites decreased 5.9 percent in U.S. dollars and 3.8 percent in constant currency.

Net revenue from the company's Europe segment decreased 13.7 percent to 137.4 million dollars. In constant currency, net revenue increased 7.5 percent. Net revenue from the Asia segment decreased 8.7 percent to 64 million dollars in the first quarter of fiscal 2016, from 70.1 million dollars in the prior-year period. In constant currency, net revenue decreased 6 percent.

Net revenue from the North American wholesale segment decreased 5.2 percent to 37.3 million dollars from 39.3 million dollars in the prior-year period. In constant currency, net revenue increased 1.4 percent. Licensing segment net revenue increased 1 percent. Operating earnings for the first quarter were 4.4 million dollars compared to an operating loss of 2 million dollars in the prior-year period, an increase of 6.3 million dollars. Operating margin in the first quarter increased 130 basis points to 0.9 percent, compared to negative 0.4 percent in the prior-year quarter.

The company expects consolidated net revenues to decline between 3.5 percent and 1.5 percent in constant currency. Currency headwinds are expected to negatively impact consolidated revenue growth by approximately 9.5 percent, for a net decline between 13 percent and 11 percent. Diluted earnings per share are expected to be in the range of 0.12 dollars to 0.16 dollars.

Consolidated net revenues for the full year are expected to range between a decline of 1.5 percent and an increase of 0.5 percent in constant currency. Currency headwinds are expected to negatively impact consolidated revenue growth by approximately 7 percent, for a net decline between 8.5 percent and 6.5 percent. Diluted earnings per share are expected to be in the range of 0.86 dollars to 1.02 dollars. The estimated impact on earnings per share of the currency headwinds is roughly 0.45 dollars. The company also announced a quarterly cash dividend of 0.225 dollars per share on the company's common stock.

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