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  • Guess reports 26.8 percent dip in Q3 earnings

Guess reports 26.8 percent dip in Q3 earnings

By Prachi Singh

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Business

Guess third quarter net earnings of 9.1 million dollars decreased 26.8 percent from 12.4 million dollars for the same quarter of fiscal 2016. Diluted earnings per share decreased 26.7 percent to 0.11 dollar from 0.15 dollar for the prior-year quarter. Total net revenue increased 2.9 percent to 536.3 million dollars, compared to 521 million dollars in the prior-year quarter. In constant currency, net revenue also increased by 2.9 percent.

Commenting on the results, Victor Herrero, CEO, Guess, said, "While I recognize the challenges we are facing in the Americas, I am thrilled that, due to our various revenue enhancement initiatives, our third quarter revenues increased by 3 percent. We enjoyed strong double digit growth in Europe and in Asia, and we remain focused on improving our profitability in North America. As we reach the end of our transition year, I look forward to fiscal year 2018 with tremendous anticipation and excitement."

Important highlights of the third quarter results

Retail revenues in America decreased 4.7 percent in US dollars and 4.6 percent in constant currency and retail comp sales including e-commerce decreased 4.9 percent in US dollars and 4.8 percent in constant currency. Europe revenues increased 16.4 percent in US dollars and 16.8 percent in constant currency, while revenues in Asia increased 9.8 percent in US dollars and 6.4 percent in constant currency.

Americas wholesale revenues decreased 4.3 percent in US dollars and 2.2 percent in constant currency. Licensing revenues decreased 14.3 percent in US dollars and constant currency.

Operating earnings for the third quarter decreased 27.4 percent to 15.1 million dollars including a 0.2 million dollars unfavorable currency translation impact, from 20.8 million dollars in the prior-year quarter.

Nine-month GAAP earnings down 52.5 percent

For the nine months ended October 29, 2016, the company recorded GAAP net earnings of 16.2 million dollars, a 52.5 percent decrease from 34.1 million dollars for the nine months ended October 31, 2015. GAAP diluted earnings per share decreased 52.5 percent to 0.19 dollar for the nine months ended October 29, 2016, from 0.40 dollar for the prior-year period.

Total net revenue for the period decreased 1 percent to 1.53 billion dollars, from 1.55 billion dollars in the prior-year period. In constant currency, net revenue decreased by 0.4 percent. Americas retail revenues decreased 4 percent in US dollars and 3.1 percent in constant currency and retail comp sales including e-commerce decreased 3.9 percent in US dollars and 3.2 percent in constant currency. Europe revenues increased 7.7 percent in US dollars and 7.2 percent in constant currency, while revenues in Asia decreased 4.2 percent in US dollars and 2.9 percent in constant currency.

Americas wholesale revenues decreased 7.8 percent in US dollars and 4.1 percent in constant currency. Licensing revenues decreased 13.8 percent in US dollars and constant currency. GAAP operating earnings for the first nine months of fiscal 2017 decreased 96.6 percent to 1.7 million dollars including a 1.3 million dollars unfavorable currency translation impact, from 51.4 million dollars in the prior-year period.

The company's Board of Directors has approved a quarterly cash dividend of 0.225 dollar per share on the company's common stock.

Guess expects to post rise in Q4 revenues

The company expects consolidated net revenues to increase between 3.5 percent and 7.5 percent in US dollars. Currency headwinds are expected to negatively impact consolidated revenue growth by approximately 0.5 percent. Excluding the impact of currency, consolidated net revenues are expected to increase between 4 percent and 8 percent in constant currency. Operating margin is expected to be between 7.5 percent and 9.5 percent and includes roughly 30 basis points of currency headwind. Diluted earnings per share are expected to be in the range of 0.40 dollar to 0.50 dollar.

For the whole year, the company expects consolidated net revenues to increase between 0.5 percent and 1.5 percent in US dollars. Currency headwinds are expected to negatively impact consolidated revenue growth by approximately 0.5 percent. Excluding the impact of currency, consolidated net revenues are expected to increase between 1 percent and 2 percent in constant currency. GAAP operating margin is expected to be between 2.5 percent and 3 percent and includes roughly 60 basis points of currency headwind. Adjusted operating margin is expected to be between 3 percent and 3.5 percent. GAAP diluted earnings per share are expected to be in the range of 0.59 dollar to 0.69 dollar.

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Guess