GUESS?, INC. REPORTS RECORD Q3 REVENUES
AND RECORD Q3 EPS OF $0.62
RAISES FISCAL YEAR 2008 EPS GUIDANCE
PROVIDES FISCAL YEAR 2009 EPS GUIDANCE
Third Quarter Highlights
- Global revenues increased 43% to a record of $469.1 million
- European revenues up 79%
- Licensing revenues up 33%
- North American comp sales up 15.8%
- Wholesale revenues up 75%
- Operating margin improved 30 basis points to 20.4%
- Net earnings increased 32% to $58.3 million
LOS ANGELES, December 4, 2007– Guess?, Inc. (NYSE: GES) today reported financial results for the third quarter of its 2008 fiscal year, which ended November 3, 2007.
Third Quarter 2008 Results
For the third quarter of fiscal 2008, the Company reported record net earnings of $58.3 million, an increase of 32% compared to net earnings of $44.0 million for the recast quarter ended October 28, 2006. Diluted earnings per share increased 29% to $0.62 per share in the current quarter versus $0.48 per share in the prior year quarter.
Paul Marciano, Chief Executive Officer, commented, “We are very pleased with our solid financial performance this quarter. These results reflect the global strength of our Guess brand and our highly diversified business model. The investments we are making to develop and expand our business in North America, Europe and Asia are clearly yielding positive results. In the period, we increased revenues by 43% to $469.1 million and operating earnings by 45% to $95.6 million – all time records for any quarter in our Company’s history. I am particularly pleased with these results, considering that during the quarter we made significant investments to support the Company’s future growth.”
Mr. Marciano continued, “Once again, all of our business segments delivered double-digit revenue growth and all contributed to the increase in our operating earnings. Overall, this strong performance resulted in a 32% increase in earnings and marked our 17th consecutive quarter of earnings growth. We are encouraged by these results, especially in light of today’s challenging retail environment. I believe this success is due to the great product assortment developed by our teams of designers, merchants and licensees worldwide. Based on these results and our recent sales trends, we are confident that we continue to be well positioned for the holiday selling season.”
Total net revenue for the third quarter of fiscal 2008 increased 42.7% to $469.1 million from $328.8 million in the prior-year period. The Company’s retail stores in the U.S. and Canada generated revenue of $210.4 million in the third quarter of fiscal 2008, a 17.7% increase from $178.8 million in the same period a year ago. Comparable store sales increased 15.8% for the quarter ended November 3, 2007, compared to the thirteen weeks ended November 4, 2006. This represents the 19th consecutive quarter of same store sales growth in North America. The Company operated 365 retail stores in the U.S. and Canada at the end of the third quarter of fiscal 2008 versus 332 stores a year earlier.
Net revenue from the Company’s wholesale segment, which includes the Company’s Asian operations, increased 75.0% to $76.9 million in the third quarter of fiscal 2008, from $43.9 million in the prior-year period.
Net revenue from the Company’s European segment increased 78.8% to $159.4 million in the third quarter of fiscal 2008, compared to $89.1 million in the prior-year period.
Licensing segment net revenue increased 32.6% to $22.4 million in the third quarter of fiscal 2008, from $16.9 million in the prior-year period.
Operating earnings for the third quarter of fiscal 2008 increased 44.6% to $95.6 million from $66.2 million in the prior-year period. Operating margin in the third quarter improved 30 basis points to 20.4%, compared to the prior year’s quarter. This margin expansion was driven by improved leverage over occupancy costs and leverage over selling and administrative costs, partially offset set by lower product margins.
Nine-Month Period Results
For the nine months ended November 3, 2007, the Company reported net earnings of $131.3 million, an increase of 53.9% compared to net earnings of $85.3 million for the nine months ended October 28, 2006. Diluted earnings per share increased 50.5% to $1.40 per share in the first nine months of the current 2008 fiscal year versus $0.93 per share in the comparable nine-month period last year.
Total net revenue for the first nine months of fiscal 2008 increased 44.2% to $1,235.3 million from $856.4 million in the prior-year period. The Company’s retail stores in the U.S. and Canada generated revenue of $591.5 million in the first nine months of fiscal 2008, a 19.3% increase from $495.8 million in the same period a year ago. Comparable store sales increased 15.3% for the nine months ended November 3, 2007, compared to the nine months ended November 4, 2006. Net revenue from the Company’s wholesale segment, which includes the Company’s Asian operations, increased 75.6% to $193.4 million in the first nine months of fiscal 2008, from $110.1 million in the prior-year period. Net revenue from the Company’s European segment increased 88.4% to $386.2 million in the first nine months of fiscal 2008, compared to $205.0 million in the prior-year period. Licensing segment net revenue increased 41.2% to $64.3 million in the first nine months of fiscal 2008, from $45.5 million in the prior-year period.
Operating earnings for the first nine months of fiscal 2008 increased 58.8% to $212.9 million from $134.1 million in the prior-year period. Operating margin in the first nine months of fiscal 2008 improved 150 basis points to 17.2%, compared to the prior-year period.
Outlook
The Company’s expectations for the fiscal year ending February 2, 2008, are now as follows:
| - | Consolidated net revenues are expected to range from $1.68 billion to $1.70 billion. |
| - | Operating margin is expected to be about 17.5%. |
| - | Diluted earnings per share are expected to be in the range of $1.93 to $1.96. |
The fiscal year ending February 2, 2008 will include 52 weeks and a four-week January period, compared to the recast year ended February 3, 2007, which included 53 weeks and a five-week January period.
The Company also provided the following expectations for the fiscal year ending January 31, 2009:
| - | Consolidated net revenues are expected to range from $1.97 billion to $2.05 billion. |
| - | Operating margin is expected to be about 18%. |
| - | Diluted earnings per share are expected to be in the range of $2.35 to $2.45. |
Dividend
The Company also announced today that its Board of Directors has approved a quarterly cash dividend of $0.08 per share on the Company’s common stock. The dividend will be payable on January 4, 2008 to shareholders of record at the close of business on December 19, 2007.
The Company will hold a conference call at 4:30 pm (ET) on December 4, 2007 to discuss the news announced in this press release. A live webcast of the conference call will be accessible at www.guessinc.com via the “Investor’s Info” link. The webcast will be archived on the website for 30 days.
Guess?, Inc. designs, markets, distributes and licenses a lifestyle collection of contemporary apparel, denim, handbags, watches, footwear and other related consumer products. As of November 3, 2007 the Company operated 365 retail stores in the United States and Canada and 560 retail stores outside of North America, of which 56 were directly owned. The Company also distributes its products through better department and specialty stores around the world. For more information about the Company, please visit www.guessinc.com.
Except for historical information contained herein, certain matters discussed in this press release, including statements concerning the Company’s future prospects and guidance for fiscal years 2008 and 2009, 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 to differ materially from what is currently anticipated. Factors which may cause actual results in future periods to differ materially from current expectations include our ability to, among other things, anticipate consumer preferences, effectively operate our retail stores, effectively manage inventories, successfully execute our strategies, including our supply chain and international growth strategies, currency fluctuations and domestic and international general economic conditions and consumer confidence. In addition to these factors, the economic and other factors identified in the Company’s most recent annual report on Form 10-K and other filings with the Securities and Exchange Commission, including but not limited to the risk factors discussed therein, could cause actual results to differ materially from current expectations.
Source: Guess?, Inc.
