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Guess Inc. late Thursday posted first-quarter results that were both lower than those of last year’s quarter and markedly better than analysts expected.
Paul Marciano, vice chairman and chief executive officer, said the company remains committed to expansion in European and Asian markets where it is “underpenetrated.”
For the three months ended May 2, income declined 31.9 percent to $32.5 million, or 35 cents a diluted share, from $47.8 million, or 50 cents, in the year-ago quarter. Revenues decreased 9.8 percent to $441.2 million from $489.2 million, including a 6 percent slip in royalty income to $22.1 million from $23.5 million.
Analysts expected earnings per share of 29 cents on sales of $436.6 million, and shares of the Los Angeles-based denim and sportswear firm rose more than 5 percent in the early stages of after-hours trading.
For the quarter, sales fell 10 percent to $419.1 million from $465.7 million, with wholesale volume, including turnover in Asia, down 12.3 percent to $65.9 million. European sales fell 18.5 percent to $145.7 million. North American retail sales dipped 2 percent to $207.6 million, while comparable-store sales fell 6 percent in local currency and 10 percent in U.S. dollars. The firm operated 429 retail sites in the U.S. and Canada.
Marciano said, despite the expectation of a “challenging” economy looking ahead, “we believe that the strength of our product lines and our diversified business model position us well in this environment. We remain committed to our international expansion strategy and continue to see opportunities in Europe and Asia where our brand is well-known but underpenetrated. We will continue to run the business prudently and build the capabilities and infrastructure to support our growth objectives in the future.”
He added the company in the quarter reduced inventory levels and capital spending and aggressively cut costs, which improved its selling, general and administrative costs.
The company expects second-quarter diluted earnings per share of between 42 cents to 45 cents, but declined to provide full-year guidance.
Marciano told Wall Street analysts in an after-market conference call that the firm “acted quickly to align our inventory position and our cost structure with a new business environment” at the first indication of slowing consumer demand, and explained that the company’s focus was on protecting its “strong capital structure and cash flows.”
He said the firm plans to open 81 stores outside North America during the remainder of the fiscal year.