GUESS?, INC. NEWS RELEASE |
For Immediate Release |
| Contact: | Carlos Alberini |
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| President & Chief Operating Officer |
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| Guess?, Inc. |
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| (213) 765-3582 |
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| Frederick G. Silny |
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| SVP & Chief Financial Officer |
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| (213) 765-3289 |
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| Wendi Kopsick/Molly Morse |
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| Kekst and Company |
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| (212) 521-4800 |
GUESS?, INC. REPORTS SECOND QUARTER 2003 FINANCIAL RESULTS AND JULY RETAIL SALES |
Los Angeles, CA, August 6, 2003 — Guess?, Inc. (NYSE:GES) today reported its financial results for the second quarter ended June 28, 2003 and its retail sales results for the fiscal month of July 2003. |
Second Quarter Results |
For the second quarter of 2003, the Company reported a net loss of $5.4 million, or a diluted loss of $0.13 per share, compared to a net loss of $6.4 million, or a diluted loss of $0.15 per share, for the second quarter of 2002. |
Total net revenue for the second quarter of 2003 increased 9.4% to $131.0 million from $119.8 million in the second quarter of 2002. The Company’s retail stores, including those in Canada, generated revenues of $95.7 million in the 2003 second quarter, a 19.7% increase from $79.9 million reported in the same period a year ago. Comparable store sales increased 11.7% during the second quarter of 2003 from the year-ago period. Net revenue from the Company’s wholesale segment decreased 16.9% to $27.5 million in the second quarter of 2003 from $33.1 million in the year-ago period. Licensing segment net revenue increased 16.0% to $7.8 million in the 2003 second quarter from $6.8 million in the second quarter last year. |
Carlos Alberini, President and Chief Operating Officer, commented, “We are pleased with the strong retail sales trends we are seeing in our stores and the positive impact we have experienced from our recent product offerings. However, overall results for the quarter also reflect increased operating losses in the wholesale business caused by reduced revenue and lower margins due to ongoing competitive pressures and sales to the off-price channel. We continue to work diligently to turn this business around and are encouraged by improved sell-throughs on the retail floor from our recent product deliveries.” |
Six Months Results |
For the six months ended June 28, 2003, the Company reported a net loss of $11.2 million, or a diluted loss per share of $0.26, versus a net loss of $10.0 million, or a diluted loss per share of $0.23 in the comparable 2002 period. |
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Total net revenue increased 4.9% to $270.6 million in the 2003 six-month period from $258.0 million in the same period in 2002. The Company’s retail stores, including those in Canada, generated revenue of $179.3 million for the first six months of 2003, an increase of 13.0% from $158.8 million for the same period last year. Comparable store sales increased 5.0% during the first half of 2003. Net revenue from the Company’s wholesale segment in the first six months of 2003 declined by 12.0% to $72.6 million from $82.5 million in the first six months of 2002. Licensing segment net revenue was $18.7 million for the 2003 first six months, a 12.1% increase from $16.7 million for the same period in 2002. |
July Retail Sales |
Total retail sales for the five weeks ended August 2, 2003 were $40.5 million, an increase of 18.1% from sales of $34.3 million for the five weeks ended August 3, 2002. Comparable store sales for the period increased 11.6%. |
The Company will hold a conference call at 4:30 pm (ET) on August 6, 2003 to discuss the news announced in this press release. A live webcast of the conference call will be accessible atwww.guess.com via the “Investor’s Page” link from the “About Guess, Inc.” section of the site. The webcast will be archived on the website. |
Guess?, Inc. designs, markets, distributes and licenses one of the world’s leading lifestyle collections of contemporary apparel, accessories and related consumer products. |
Except for historical information contained herein, certain matters discussed in this press release including but not limited to the Company’s plans to reduce operating losses in its wholesale business, 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 and other future events to differ materially from what is currently anticipated. Factors which may cause actual results in future periods to differ from current expectations include, among other things, the continued availability of sufficient working capital, the successful integration of new stores into existing operations, the continued desirability and customer acceptance of existing and future product lines (including licensed product lines), possible cancellations of wholesale orders, the success of competitive products, and the availability of adequate sources of capital. In addition to these factors, the economic and other factors identified in the Company’s most recent annual report on Form 10-K for the fiscal year ended December 31, 2002 including but not limited to the risk factors discussed therein, could affect the forward-looking statements contained herein and in the Company’s other public documents. |
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Guess?, Inc. and Subsidiaries | |||||||||||||||||
Condensed Consolidated Statements of Operations | |||||||||||||||||
(in thousands, except per share data) | |||||||||||||||||
(Unaudited) | |||||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||||
June 28, 2003 | June 29, 2002 | June 28, 2003 | June 29, 2002 | ||||||||||||||
$ | % | $ | % | $ | % | $ | % | ||||||||||
Net revenue | |||||||||||||||||
Product sales | $123,164 | 94.0% |
| $ 112,996 | 94.3% |
| $ 251,886 | 93.1% |
| $ 241,257 | 93.5% | ||||||
Net royalties | 7,878 | 6.0% |
| 6,793 | 5.7% |
| 18,740 | 6.9% |
| 16,711 | 6.5% | ||||||
131,042 | 100.0% |
| 119,789 | 100.0% |
| 270,626 | 100.0% |
| 257,968 | 100.0% | |||||||
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Cost of product sales | 90,055 | 68.7% |
| 79,381 | 66.3% |
| 188,290 | 69.6% |
| 172,444 | 66.8% | ||||||
Gross profit | 40,987 | 31.3% |
| 40,408 | 33.7% |
| 82,336 | 30.4% |
| 85,524 | 33.2% | ||||||
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Selling, general and administrative expenses | 47,207 | 36.0% |
| 49,847 | 41.6% |
| 96,631 | 35.7% |
| 98,474 | 38.2% | ||||||
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Restructuring, impairment and severance charges | 846 | 0.6% |
| — | 0.0% |
| 846 | 0.3% |
| 655 | 0.3% | ||||||
Loss from operations | (7,066 | ) | (5.3% | ) | (9,439 | ) | (7.9% | ) | (15,141 | ) | (5.6% | ) | (13,605 | ) | (5.3% | ) | |
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Other (income) expense: |
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Interest expense | 2,558 | 2.0% |
| 2,258 | 1.9% |
| 4,646 | 1.7% |
| 4,592 | 1.8% | ||||||
Interest Income | (58 | ) | (0.0% | ) | (83 | ) | (0.1% | ) | (83 | ) | (0.0% | ) | (153 | ) | (0.1% | ) | |
Other, net | (11 | ) | (0.0% | ) | (647 | ) | (0.5% | ) | (26 | ) | (0.0% | ) | (676 | ) | (0.3% | ) | |
Loss before income tax benefit | (9,555 | ) | (7.3% | ) | (10,967 | ) | (9.2% | ) | (19,678 | ) | (7.3% | ) | (17,368 | ) | (6.7% | ) | |
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Income tax benefit | (4,110 | ) | (3.1% | ) | (4,535 | ) | (3.8% | ) | (8,460 | ) | (3.2% | ) | (7,335 | ) | (2.8% | ) | |
Net loss | $ (5,445 | ) | (4.2% | ) | $ (6,432 | ) | (5.4% | ) | $ (11,218 | ) | (4.1% | ) | $ (10,033 | ) | (3.9% | ) | |
Net loss per share: |
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Basic and Diluted | $ (0.13 | ) |
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| $ (0.15 | ) |
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| $ (0.26 | ) |
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| $ (0.23 | ) |
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Weighted number of shares outstanding: |
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Basic and Diluted | 43,155 |
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| 43,629 |
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| 43,148 |
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| 43,578 |
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Guess?, Inc. and Subsidiaries | |||||||||||||
Consolidated Segment Data | |||||||||||||
(in thousands) | |||||||||||||
(Unaudited) | |||||||||||||
Three Months Ended |
| Six Months Ended | |||||||||||
June 28, |
| June 29, |
| June 28, |
| June 29, | |||||||
2003 |
| 2002 |
| 2003 |
| 2002 | |||||||
Net revenue: | |||||||||||||
Retail operations | $ | 95,657 |
| $ | 79,892 |
| $ | 179,319 |
| $ | 158,758 | ||
Wholesale operations | 27,507 |
| 33,104 |
| 72,567 |
| 82,499 | ||||||
Licensing operations | 7,878 |
| 6,793 |
| 18,740 |
| 16,711 | ||||||
$ | 131,042 |
| $ | 119,789 |
| $ | 270,626 |
| $ | 257,968 | |||
Earnings (loss) from operations: |
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Retail operations | $ | 4,430 |
| $ | (2,391 | ) | $ | (2,064 | ) | $ | (6,907 | ) | |
Wholesale operations | (8,388 | ) | (688 | ) | (8,128 | ) | 2,737 | ||||||
Licensing operations | 5,791 |
| 4,144 |
| 14,711 |
| 11,735 | ||||||
Corporate overhead | (8,899 | ) | (10,504 | ) | (19,660 | ) | (21,170 | ) | |||||
$ | (7,066 | ) | $ | (9,439 | ) | $ | (15,141 | ) | $ | (13,605 | ) | ||
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Guess?, Inc. and Subsidiaries | ||||||||||
Selected Condensed Consolidated Balance Sheet Data | ||||||||||
(in thousands) | ||||||||||
(Unaudited) | ||||||||||
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| June 28, | Dec 31, | June 29, |
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| 2003 | 2002 | 2002 |
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ASSETS |
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Cash and cash equivalents | $ | 7,102 | $ | 31,753 | $ | 27,133 |
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Restricted cash | 4,923 |
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Receivables, net | 36,116 |
| 35,437 |
| 33,930 |
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Inventories, net | 96,269 |
| 95,683 |
| 87,222 |
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Other current assets | 30,005 |
| 26,114 |
| 28,170 |
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Property and equipment, net | 120,911 |
| 128,097 |
| 137,378 |
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Other assets | 36,186 |
| 32,448 |
| 28,847 |
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| Total Assets | $ | 331,512 | $ | 349,532 | $ | 342,680 |
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LIABILITIES AND STOCKHOLDERS' EQUITY |
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Current liabilities | $ | 91,038 | $ | 167,561 | $ | 82,625 |
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Notes payable and long-term debt, excluding | 67,631 |
| 1,480 |
| 79,933 |
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Other liabilities | 14,584 |
| 14,211 |
| 10,424 |
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Stockholders' equity | 158,259 |
| 166,280 |
| 169,698 |
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| Total Liabilities and Stockholders' Equity | $ | 331,512 | $ | 349,532 | $ | 342,680 |
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Guess?, Inc. and Subsidiaries | ||||||
Condensed Consolidated Cash Flow Data | ||||||
(in thousands) | ||||||
(Unaudited) | ||||||
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| Six Months Ended | |||||
| June 28, |
| June 29, | |||
| 2003 |
| 2002 | |||
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Net cash (used in ) provided by operating activities | $ | (18,241 | ) | $ | 5,589 | |
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Net cash used in investing activities | (7,179 | ) | (10,683 | ) | ||
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Net cash provided by financing activities | 372 |
| 280 | |||
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Effect of exchange rates on cash | 397 |
| 77 | |||
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Net decrease in cash and cash equivalents | (24,651 | ) | (4,737 | ) | ||
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Cash and cash equivalents at the beginning of the year | 31,753 |
| 31,870 | |||
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Cash and cash equivalents at the end of the period | $ | 7,102 |
| $ | 27,133 | |
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Supplemental information: |
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Depreciation and amortization | $ | 17,508 |
| $ | 20,230 | |
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Rent | 28,802 |
| 25,591 |
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Guess?, Inc. and Subsidiaries | ||||
Retail Store Data | ||||
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| Six Months Ended | ||
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| June 28, |
| June 29, |
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| 2003 |
| 2002 |
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Number of stores at the beginning of the year | 249 |
| 227 | |
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| Store openings | 8 |
| 5 |
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| Store closures | (3 | ) | — |
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Number of stores at the end of the period | 254 |
| 232 | |
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Total store square footage at the end of the period | 1,302,000 |
| 1,189,000 | |
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