Exhibit 99.1
[LOGO OF GUESS?, INC.] NEWS RELEASE
- --------------------------------------------------------------------------------
For Immediate Release
Contacts: Carlos Alberini Joseph Teklits
President & Chief Operating Officer ICR
(213) 765-3582 (203) 682-8258
GUESS?, INC. REPORTS STRONG FIRST QUARTER 2006 RESULTS
------------------------------------------------------
Q1 EPS INCREASED 89% VERSUS Q1 LAST YEAR, $0.34 VERSUS $0.18
------------------------------------------------------------
EUROPE, WORLDWIDE LICENSING AND RETAIL MAIN DRIVERS OF EARNINGS GROWTH
----------------------------------------------------------------------
FIRST QUARTER HIGHLIGHTS
------------------------
- Net revenues increased 20.1% to $259.0 million
- Comp store sales up 13.9% for the quarter
- Earnings from operations up 71.6% to $26.0 million, with a 10.0%
operating margin compared to 7.0% last year
- Net earnings increased 88.6% to $15.4 million
Los Angeles, CA, May 11, 2006 - Guess?, Inc. (NYSE:GES) today reported strong
financial results for the first quarter ended April 1, 2006.
For the first quarter of 2006, the Company reported net earnings of $15.4
million, or diluted earnings of $0.34 per share, compared to net earnings of
$8.2 million, or diluted earnings of $0.18 per share, for the first quarter of
2005.
Paul Marciano, Co-Chairman and Co-CEO, commented, "Our performance in the period
exceeded our expectations and was driven by earnings growth in all of our
business segments. Our retail business' strong comp performance contributed to
significant profit growth in the period. This momentum accelerated in April with
a comp sales increase of 22.6%. Our European business delivered earnings growth
in excess of 30% for the quarter. Our licensing business also posted strong
earnings growth of over 30%, driven by the success of sales of accessories
worldwide, including incremental business in Europe. During the quarter, we
managed the business efficiently with solid margins and effective expense
control, which contributed to a significant operating margin expansion."
Paul Marciano continued, "We are pleased that our revenues and earnings continue
to become more diversified geographically as we execute our strategy to build
the Guess? brand in North America, Europe and around the world. We believe that
we are well positioned for profitable, consistent growth and we remain confident
about our future prospects."
Total net revenue for the first quarter of 2006 increased 20.1% to $259.0
million from $215.6 million in the first quarter of 2005. The Company's retail
stores in the U.S. and Canada generated revenues of $139.0 million in the 2006
first quarter, a 19.3% increase from $116.5 million reported in the same period
a year ago. Comparable store sales increased 13.9% during the first quarter of
2006 from the year-ago period. Net revenue from the Company's wholesale segment
was flat at $30.8 million in the first quarter of 2006 compared to the year-ago
period. Net revenue from the Company's European operations segment increased
32.7% to $75.2 million in the first quarter of 2006, compared to $56.6 million
in the prior-year period. Licensing segment net revenue increased 23.0% to $14.0
million in the 2006 first quarter from $11.4 million in the first quarter last
year.
The Company will hold a conference call at 4:30 pm (ET) on May 11, 2006 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 April 29,
2006, the Company operated 316 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, including statements concerning the Company's future growth
and prospects, 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, among other things, our ability to anticipate consumer preferences,
effectively operate our retail stores, effectively manage inventories,
successfully execute our strategies, including our supply chain and
international growth strategies, and 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.
2
GUESS?, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(dollars in thousands, except per share data)
THREE MONTHS ENDED
-------------------------------------------------
April 1, April 2,
2006 2005
----------------------- -----------------------
$ % $ %
---------- ---------- ---------- ----------
Net revenue
Product sales $ 244,943 94.6% $ 204,194 94.7%
Net royalties 14,035 5.4% 11,414 5.3%
---------- ---------- ---------- ----------
258,978 100.0% 215,608 100.0%
Cost of product sales 155,346 60.0% 133,385 61.9%
---------- ---------- ---------- ----------
Gross profit 103,632 40.0% 82,223 38.1%
Selling, general and administrative expenses 77,623 30.0% 67,069 31.1%
---------- ---------- ---------- ----------
Earnings from operations 26,009 10.0% 15,154 7.0%
Other (income) expense:
Interest expense 1,644 0.6% 1,754 0.8%
Interest income (1,210) (0.5)% (435) (0.2)%
---------- ---------- ---------- ----------
Earnings before income taxes 25,575 9.9% 13,835 6.4%
Income taxes 10,179 4.0% 5,672 2.6%
---------- ---------- ---------- ----------
Net earnings $ 15,396 5.9% $ 8,163 3.8%
========== ========== ========== ==========
Net earnings per share:
Basic $ 0.34 $ 0.18
Diluted $ 0.34 $ 0.18
Weighted number of shares outstanding:
Basic 44,968 44,200
Diluted 45,717 44,644
3
GUESS?, INC. AND SUBSIDIARIES
CONSOLIDATED SEGMENT DATA
(in thousands)
THREE MONTHS ENDED
-------------------------
April 1, April 2,
2006 2005
----------- -----------
Net revenue:
Retail operations $ 138,958 $ 116,495
Wholesale operations 30,797 31,059
European operations 75,188 56,640
Licensing operations 14,035 11,414
----------- -----------
$ 258,978 $ 215,608
=========== ===========
Earnings (loss) from operations:
Retail operations $ 2,121 $ (3,408)
Wholesale operations 2,380 2,127
European operations 21,179 15,853
Licensing operations 12,285 9,144
Corporate overhead (11,956) (8,562)
----------- -----------
$ 26,009 $ 15,154
=========== ===========
4
GUESS?, INC. AND SUBSIDIARIES
SELECTED CONDENSED CONSOLIDATED BALANCE SHEET DATA
(in thousands)
APRIL 1, DECEMBER 31, APRIL 2,
2006 2005 2005
----------- ------------ -----------
ASSETS
Cash and cash equivalents $ 151,463 $ 171,549 $ 89,248
Receivables, net 123,245 81,762 123,007
Inventories, net 111,583 122,037 95,595
Other current assets 33,754 32,670 26,375
Property and equipment, net 148,088 144,007 117,659
Other assets 93,897 81,349 61,062
----------- ------------ -----------
Total Assets $ 662,030 $ 633,374 $ 512,946
=========== ============ ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current installments of notes $ 39,525 $ 35,051 $ 53,905
payable, long-term debt and
capital lease
Other current liabilities 169,505 182,175 140,058
Notes payable, long-term debt 50,509 53,199 53,865
and capital lease, excluding
current installments
Other liabilities 89,011 74,656 37,467
Stockholders' equity 313,480 288,293 227,651
----------- ------------ -----------
Total Liabilities and Stockholders' Equity $ 662,030 $ 633,374 $ 512,946
=========== ============ ===========
5
GUESS?, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED CASH FLOW DATA
(in thousands)
THREE MONTHS ENDED
-----------------------
APRIL 1, APRIL 2,
2006 2005
----------- ----------
Net cash used in operating activities $ (17,079) $ (2,394)
Net cash used in investing activities (10,420) (27,145)
Net cash provided by financing activities 7,145 12,966
Effect of exchange rates on cash 268 (182)
----------- ----------
Net decrease in cash and cash equivalents (20,086) (16,755)
Cash and cash equivalents at the beginning of the year 171,549 106,003
----------- ----------
Cash and cash equivalents at the end of the period $ 151,463 $ 89,248
=========== ==========
SUPPLEMENTAL INFORMATION:
Depreciation and amortization $ 8,762 $ 8,427
Rent 20,016 16,767
6
GUESS?, INC. AND SUBSIDIARIES
RETAIL STORE DATA
U.S. AND CANADA
THREE MONTHS ENDED
-----------------------
APRIL 1, APRIL 2,
2006 2005
----------- ----------
Number of stores at the beginning of the year 315 287
Store openings 5 7
Store closures (7) (5)
----------- ----------
Number of stores at the end of the period 313 289
=========== ==========
Total store square footage at the end of the period 1,547,000 1,465,000
=========== ==========
7