Guess? Inc. Reports First Quarter Results
Guess? Inc. reported financial results for the first quarter ended April 28, 2012.
For the first quarter of fiscal 2013, the Company reported net earnings of $26.6 million, a 37.6% decrease compared to net earnings of $42.7 million for the first quarter of fiscal 2012. Diluted earnings per share decreased 34.8% to $0.30, compared to $0.46 for the prior-year quarter. The prior year quarter's earnings per share included $0.08 in net non-operating charges, primarily unrealized mark-to-market charges related to foreign currency contracts and balances.
Paul Marciano, Chief Executive Officer, commented, "We are pleased to deliver first quarter financial results that exceeded both our top and bottom line expectations, even as economic conditions remained challenging in many markets. We continued to focus our efforts on growing in newer international markets, and we succeeded, expanding in key markets such as China, Germany and Russia. While we did face economic headwinds in southern Europe, our brand remains strong there and our business is stable. Our global licensing business outperformed expectations, even as our licensees encountered many of those same economic challenges."
Mr. Marciano continued, "We're off to a very encouraging start this year - a milestone year for Guess? as we celebrate our 30th anniversary. We've launched great new marketing campaigns that invoke the rich tradition of Guess? and reach consumers through both traditional and social media. We are developing innovative product designs to support our customers' lifestyle and reinforce our fashion authority. We intend to leverage the strength of our global lifestyle brand and expand in underdeveloped markets and newer concepts. As always, we will manage our business prudently from our position of financial strength and, above all, protect our most valuable asset, the Guess? brand."
Total net revenue for the first quarter of fiscal 2013 decreased 2.2% to $579.3 million from $592.2 million in the prior-year quarter. In constant dollars, total net revenue increased slightly.
- The Company's retail stores in North America generated revenue of $251.8 million in the first quarter of fiscal 2013, a 1.8% increase from $247.5 million in the same period a year ago. Comparable store sales decreased 5.5% in U.S. dollars and 5.1% in local currency for the first quarter of fiscal 2013, compared to the same period a year ago. The Company directly operated 503 retail stores in the United States and Canada at the end of the first quarter of fiscal 2013 versus 484 stores a year earlier.
- Net revenue from the Company's Europe segment decreased 9.7% to $189.8 million in the first quarter of fiscal 2013, compared to$210.2 million in the prior-year period. In local currency, net revenue decreased 4.6%.
- Net revenue from the Company's Asia segment increased 7.9% to $64.8 million in the first quarter of fiscal 2013, from $60.1 million in the prior-year period.
- Net revenue from the Company's North American Wholesale segment decreased 3.8% to $43.9 million in the first quarter of fiscal 2013, from $45.6 million in the prior-year period.
- Licensing segment net revenue increased to $28.9 million in the first quarter of fiscal 2013, from $28.8 million in the prior-year period.
Operating earnings for the first quarter of fiscal 2013 declined 44.8% to $39.1 million (including a $0.9 million unfavorable currency translation impact) from $70.9 million in the prior-year period. Operating margin in the first quarter declined 520 basis points to 6.8%, compared to the prior-year quarter. The lower operating margin primarily reflects the impact of higher professional fees, higher selling and distribution expenses and increased investments in advertising and marketing, along with the impact of negative same stores sales on the Company's fixed cost structure. Product margins increased slightly compared to the prior-year quarter, reflecting markdown improvements in North American Retail, along with the greater mix of retail business in Asia. Other net income, which primarily relates to net unrealized revaluation gains on non-operating assets, partially offset by net unrealized mark-to-market losses on foreign currency contracts and balances, was $0.6 million for the first quarter of fiscal 2013. This compares to other net expense of $10.0 million for the first quarter of fiscal 2012.
The Company's effective tax rate was 32.0% for the first quarter of fiscal 2013, compared to 29.5% for the first quarter of the prior-year.
The full report is available on Guess? Inc.'s website.