Exhibit 99.1
Guess?, Inc. Reports an 80% Increase in Second Quarter 2005 Earnings to $0.09 Per Share Versus $0.05 Last Year
LOS ANGELES, July 28 /PRNewswire-FirstCall/ -- Guess?, Inc. (NYSE: GES) today reported financial results for the second quarter ended July 2, 2005.
Second Quarter Results
For the second quarter ended July 2, 2005, the Company reported that net earnings increased by 95.4% to $4.2 million compared to net earnings of $2.1 million for the quarter ended June 26, 2004. Diluted earnings per share increased 80.0% to $0.09 per share in the current quarter versus $0.05 per share in the second quarter last year.
Maurice Marciano, Co-Chairman and Co-CEO, commented, “We are pleased with our second quarter financial performance. Our wholesale, retail and licensing operations all posted solid performance during the period. We controlled expenses effectively and operated with leaner inventories in North America, which contributed to higher margins in our wholesale segment and a better transition into the important back to school selling period in our stores. Our retail business and the licensing segment had solid results based on strong customer response to our product and our new contemporary line, Marciano, is performing ahead of plan. We are very pleased with the progress made with our European business and its integration. We believe we are well positioned for strong international expansion and remain confident about our prospects for the balance of 2005.”
Total net revenue for the second quarter of 2005 increased 15.7% to $178.2 million from $154.1 million in the second quarter of 2004. The Company’s retail stores in the U.S. and Canada generated revenue of $132.9 million in the 2005 second quarter, a 15.3% increase from $115.2 million, as reported in the prior year period. Comparable store sales increased 4.2% during the second quarter of 2005 versus the prior year period. Net revenue from the Company’s wholesale segment increased 3.5% to $26.1 million in the second quarter of 2005 from $25.3 million in the same year-ago period. Net revenue from the Company’s European operations increased 146.3% to $9.9 million in the second quarter of 2005, compared to $4.0 million in the prior year period. Licensing segment net revenue decreased 3.0% to $9.3 million in the second quarter of 2005 from $9.6 million in the prior year period. The Company operated 301 retail stores at second quarter-end 2005 versus 264 stores a year earlier.
Six Month Results
For the six months ended July 2, 2005, the Company reported that net earnings increased 327.0% to $12.3 million compared to net earnings of $2.9 million for the six months ended June 26, 2004. Diluted earnings per share increased 366.7% to $0.28 per share in the current six-month period versus $0.06 per share in the comparable period last year. The six months ended July 2, 2005 had 183 days compared to 178 days in the six months ended June 26, 2004.
Total net revenue increased 28.1% to $393.8 million in the 2005 six-month period from $307.4 million in the prior year period. The Company’s retail stores in the U.S. and Canada generated revenue of $249.4 million for the first six months of 2005, an increase of 16.1% from $214.8 million for the prior year period. Comparable store sales increased 4.4% during the first half of 2005. Net revenue from the Company’s wholesale segment in the first half of 2005 increased 7.2% to $57.1 million from $53.3 million in the first six months of 2004. Net revenue from the Company’s European operations increased 253.7% to $66.6 million in the first six months of 2005, compared to $18.8 million in the prior year period, following the acquisition of the Company’s European jeanswear licensee on January 3, 2005. Licensing segment net revenue was $20.7 million in the first six months of 2005, a 0.9% increase from $20.5 million for the same prior year period.
July Comparable Store Sales
The Company’s July fiscal month began on July 3, 2005 and will end on July 30, 2005. Based on current sales trends, the Company expects July comparable store sales to increase in the low to mid single digits on a percentage basis.
The Company will hold a conference call at 4:30 pm (ET) on July 28, 2005 to discuss the news announced in this press release. A live webcast of the conference call will be accessible at www.guess.com via the “Investor’s Info” link from the “Guess?, Inc.” section of the site. The webcast will be archived on the website for 30 days.
Guess?, Inc. designs, markets, distributes and licenses a lifestyle collection of contemporary apparel, accessories and related consumer products. At July 2, 2005, the Company operated 301 retail stores in the United States and Canada. The Company also distributes its products through better department and specialty stores around the world. For more information about the Company, please visit www.guess.com.
Except for historical information contained herein, certain matters discussed in this press release 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 acquisitions and 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, 2004, 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.
Contact: Carlos Alberini
President & Chief Operating Officer
(213) 765-3582
Frederick G. Silny
SVP & Chief Financial Officer
(213) 765-3289
Guess?, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(dollars in thousands, except per share data)
(Unaudited)
|
| Three Months Ended |
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| July 2, |
| June 26, |
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| $ |
| % |
| $ |
| % |
| ||||
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Net revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
Product sales |
| $ | 168,913 |
|
| 94.8 | % | $ | 144,489 |
|
| 93.8 | % |
Net royalties |
|
| 9,322 |
|
| 5.2 | % |
| 9,608 |
|
| 6.2 | % |
|
|
| 178,235 |
|
| 100.0 | % |
| 154,097 |
|
| 100.0 | % |
Cost of product sales |
|
| 111,757 |
|
| 62.7 | % |
| 96,307 |
|
| 62.5 | % |
Gross profit |
|
| 66,478 |
|
| 37.3 | % |
| 57,790 |
|
| 37.5 | % |
Selling, general and administrative expenses |
|
| 58,717 |
|
| 32.9 | % |
| 52,577 |
|
| 34.1 | % |
Earnings from operations |
|
| 7,761 |
|
| 4.4 | % |
| 5,213 |
|
| 3.4 | % |
Other (income) expense: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
| 2,093 |
|
| 1.2 | % |
| 1,576 |
|
| 1.0 | % |
Interest income |
|
| (1,043 | ) |
| (0.6 | )% |
| (103 | ) |
| — |
|
Earnings before income taxes |
|
| 6,711 |
|
| 3.8 | % |
| 3,740 |
|
| 2.4 | % |
Income taxes |
|
| 2,547 |
|
| 1.5 | % |
| 1,609 |
|
| 1.0 | % |
Net earnings |
| $ | 4,164 |
|
| 2.3 | % | $ | 2,131 |
|
| 1.4 | % |
Net earnings per share: |
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|
|
|
|
|
|
|
|
|
|
|
|
Basic |
| $ | 0.09 |
|
|
|
| $ | 0.05 |
|
|
|
|
Diluted |
| $ | 0.09 |
|
|
|
| $ | 0.05 |
|
|
|
|
Weighted number of shares outstanding: |
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|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
| 44,238 |
|
|
|
|
| 43,997 |
|
|
|
|
Diluted |
|
| 44,703 |
|
|
|
|
| 44,553 |
|
|
|
|
|
| Six Months Ended |
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|
| |||||||||||
|
| July 2, |
| June 26, |
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|
| $ |
| % |
| $ |
| % |
| ||||
|
|
|
|
|
| ||||||||
Net revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
Product sales |
| $ | 373,107 |
|
| 94.7 | % | $ | 286,894 |
|
| 93.3 | % |
Net royalties |
|
| 20,736 |
|
| 5.3 | % |
| 20,548 |
|
| 6.7 | % |
|
|
| 393,843 |
|
| 100.0 | % |
| 307,442 |
|
| 100.0 | % |
Cost of product sales |
|
| 245,142 |
|
| 62.2 | % |
| 197,122 |
|
| 64.1 | % |
Gross profit |
|
| 148,701 |
|
| 37.8 | % |
| 110,320 |
|
| 35.9 | % |
Selling, general and administrative expenses |
|
| 125,786 |
|
| 32.0 | % |
| 102,498 |
|
| 33.3 | % |
Earnings from operations |
|
| 22,915 |
|
| 5.8 | % |
| 7,822 |
|
| 2.6 | % |
Other (income) expense: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
| 3,847 |
|
| 1.0 | % |
| 2,961 |
|
| 1.0 | % |
Interest income |
|
| (1,478 | ) |
| (0.4 | )% |
| (205 | ) |
| — |
|
Earnings before income taxes |
|
| 20,546 |
|
| 5.2 | % |
| 5,066 |
|
| 1.6 | % |
Income taxes |
|
| 8,219 |
|
| 2.1 | % |
| 2,179 |
|
| 0.7 | % |
Net earnings |
| $ | 12,327 |
|
| 3.1 | % | $ | 2,887 |
|
| 0.9 | % |
Net earnings per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
| $ | 0.28 |
|
|
|
| $ | 0.07 |
|
|
|
|
Diluted |
| $ | 0.28 |
|
|
|
| $ | 0.06 |
|
|
|
|
Weighted number of shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
| 44,219 |
|
|
|
|
| 43,881 |
|
|
|
|
Diluted |
|
| 44,677 |
|
|
|
|
| 44,456 |
|
|
|
|
Guess?, Inc. and Subsidiaries
Consolidated Segment Data
(in thousands)
(Unaudited)
|
| Three Months Ended |
| Six Months Ended |
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| ||||||||||
|
| July 2, |
| June 26, |
| July 2, |
| June 26, |
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Net revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail operations |
| $ | 132,908 |
| $ | 115,248 |
| $ | 249,403 |
| $ | 214,772 |
|
Wholesale operations |
|
| 26,087 |
|
| 25,214 |
|
| 57,146 |
|
| 53,303 |
|
European operations |
|
| 9,918 |
|
| 4,027 |
|
| 66,558 |
|
| 18,819 |
|
Licensing operations |
|
| 9,322 |
|
| 9,608 |
|
| 20,736 |
|
| 20,548 |
|
|
| $ | 178,235 |
| $ | 154,097 |
| $ | 393,843 |
| $ | 307,442 |
|
Earnings (loss) from operations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail operations |
| $ | 13,457 |
| $ | 12,546 |
| $ | 10,049 |
| $ | 10,868 |
|
Wholesale operations |
|
| 279 |
|
| (4,752 | ) |
| 2,406 |
|
| (5,946 | ) |
European operations |
|
| (4,853 | ) |
| (508 | ) |
| 11,000 |
|
| 4,783 |
|
Licensing operations |
|
| 7,906 |
|
| 7,065 |
|
| 17,050 |
|
| 16,048 |
|
Corporate overhead |
|
| (9,028 | ) |
| (9,138 | ) |
| (17,590 | ) |
| (17,931 | ) |
|
| $ | 7,761 |
| $ | 5,213 |
| $ | 22,915 |
| $ | 7,822 |
|
Guess?, Inc. and Subsidiaries
Selected Condensed Consolidated Balance Sheet Data
(in thousands)
(Unaudited)
|
| July 2, |
| December 31, |
| June 26, |
| |||
|
|
|
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| ||||||
ASSETS |
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
| $ | 88,273 |
| $ | 106,003 |
| $ | 50,377 |
|
Restricted cash |
|
| 3,231 |
|
| 3,660 |
|
| 4,097 |
|
Receivables, net |
|
| 74,399 |
|
| 53,915 |
|
| 38,084 |
|
Inventories, net |
|
| 113,206 |
|
| 82,329 |
|
| 96,810 |
|
Other current assets |
|
| 26,307 |
|
| 25,116 |
|
| 26,684 |
|
Property and equipment, net |
|
| 121,430 |
|
| 113,944 |
|
| 106,524 |
|
Other assets |
|
| 58,479 |
|
| 39,337 |
|
| 35,588 |
|
Total Assets |
| $ | 485,325 |
| $ | 424,304 |
| $ | 358,164 |
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
|
|
Current installments of notes payable and long-term debt |
| $ | 37,015 |
| $ | 13,430 |
| $ | 12,948 |
|
Other current liabilities |
|
| 122,659 |
|
| 119,369 |
|
| 92,510 |
|
Notes payable and long-term debt, excluding current installments |
|
| 50,848 |
|
| 41,396 |
|
| 47,773 |
|
Other liabilities |
|
| 43,938 |
|
| 29,532 |
|
| 16,353 |
|
Stockholders’ equity |
|
| 230,865 |
|
| 220,577 |
|
| 188,580 |
|
Total Liabilities and Stockholders’ Equity |
| $ | 485,325 |
| $ | 424,304 |
| $ | 358,164 |
|
Guess?, Inc. and Subsidiaries
Condensed Consolidated Cash Flow Data
(in thousands)
(Unaudited)
|
| Six Months Ended |
| ||||
|
|
| |||||
|
| July 2, |
| June 26, |
| ||
|
|
|
| ||||
Net cash provided by (used in) operating activities |
| $ | 23,937 |
| $ | (1,468 | ) |
Net cash used in investing activities |
|
| (41,389 | ) |
| (9,950 | ) |
Net cash provided by (used in) financing activities |
|
| 148 |
|
| (5,282 | ) |
Effect of exchange rates on cash |
|
| (426 | ) |
| (86 | ) |
Net decrease in cash and cash equivalents |
|
| (17,730 | ) |
| (16,786 | ) |
Cash and cash equivalents at the beginning of the year |
|
| 106,003 |
|
| 67,163 |
|
Cash and cash equivalents at the end of the period |
| $ | 88,273 |
| $ | 50,377 |
|
Supplemental information: |
|
|
|
|
|
|
|
Depreciation and amortization |
| $ | 16,985 |
| $ | 17,498 |
|
Rent |
|
| 34,433 |
|
| 30,462 |
|
Guess?, Inc. and Subsidiaries
Retail Store Data
U.S. and Canada
(Unaudited)
|
| Six Months Ended |
| ||||
|
|
| |||||
|
| July 2, |
| June 26, |
| ||
|
|
|
| ||||
Number of stores at the beginning of the year |
|
| 287 |
|
| 265 |
|
Store openings |
|
| 21 |
|
| 7 |
|
Store closures |
|
| (7 | ) |
| (8 | ) |
Number of stores at the end of the period |
|
| 301 |
|
| 264 |
|
Total store square footage at the end of the period |
|
| 1,508,000 |
|
| 1,370,000 |
|
SOURCE Guess?, Inc.
-0- 07/28/2005
/CONTACT: Carlos Alberini, President & Chief Operating Officer, +1-213-765-3582, or Frederick G. Silny, SVP & Chief Financial Officer, +1-213-765-3289, both of Guess?, Inc./
/FCMN Contact: Fredsi@guess.com /
/Web site: http://www.guess.com /