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Press release from PR Newswire

GUESS?, INC. REPORTS RECORD RESULTS

Wednesday, March 16, 2011

GUESS?, INC. REPORTS RECORD RESULTS16:06 EDT Wednesday, March 16, 2011Q4 EPS Increased 19% to $1.11 Compared to $0.93 Last Year Fiscal Year 2011 EPS Increased 19% to $3.11 Compared to $2.61 Last Year Increases Share Repurchase Authorization to $250 Million Provides Q1 Fiscal Year 2012 EPS Guidance in the Range of $0.41 to $0.44 Provides Fiscal Year 2012 EPS Guidance in the Range of $3.30 to $3.50LOS ANGELES, March 16, 2011 /PRNewswire/ -- Guess?, Inc. (NYSE: GES) today reported financial results for the fourth quarter and fiscal year ended January 29, 2011.Fourth Quarter Fiscal 2011 HighlightsGlobal revenue increased 18% to a record of $757 millionOperating earnings increased 20%; operating margin improved from 18.8% to 19.1%European revenue increased 43% in local currency and 32% in US dollarsAsian revenue increased 23%North American revenue increased 8%; retail comp sales declined 1.1%Fiscal Year 2011 HighlightsGlobal revenue increased 17% to a record of $2.5 billionOperating earnings increased 13%; operating margin decreased from 16.9% to 16.3%European revenue increased 31% in local currency and 23% in US dollarsAsian revenue increased 36%North American revenue increased 10%; retail comp sales increased 2.9%Dividend distributions totaled $247 millionFourth Quarter Fiscal 2011 ResultsFor the fourth quarter of fiscal 2011, the Company reported record net earnings of $103.3 million, a 19.3% increase compared to net earnings of $86.6 million for the fourth quarter of fiscal 2010.  Diluted earnings per share increased 19.4%, reaching $1.11, compared to $0.93 for the prior-year quarter.  In the quarter, the Company completed an assessment of North American loyalty program breakage, which resulted in a one-time benefit to revenues of $6.7 million, or $0.05 per share.Paul Marciano, Chief Executive Officer, commented, "This has been another successful year of record results where we made substantial progress toward many important objectives.  We increased annual revenues in each of our businesses, which combined to drive double-digit revenue growth and a 19% increase in earnings per share.   Our focus on international expansion continues to pay off, with Europe and Asia contributing nearly two-thirds of our annual revenue increase.  We leveraged the tremendous global momentum of the Guess? brand, opening 237 new stores during the year.  And we strengthened our infrastructure to support our future growth around the world."Mr. Marciano continued, "We enter the new fiscal year excited and well positioned to execute on our long-term global strategies.  Our focus continues to be on our brand and on great products that resonate with our customers worldwide.  We are excited about the innovative and compelling new product designs and styles that our team has been working on for the upcoming seasons.  We also continue to build our operational platform, developing a world class infrastructure that can support our global expansion.  Our goal is to develop many strategic markets where our brand awareness is high, but we need additional distribution and infrastructure support.  These strategies, bolstered by our strong financial position, will drive us to deliver shareholder value by leveraging the full potential of the Guess? brand worldwide."Total net revenue for the fourth quarter of fiscal 2011 increased 17.9% to $756.9 million from $642.0 million in the prior-year quarter.  In constant dollars, total net revenue increased 21.0%.  The Company's retail stores in North America generated revenue of $338.6 million in the fourth quarter of fiscal 2011, a 9.4% increase from $309.4 million in the same period a year ago.  Comparable store sales decreased 1.1% in US dollars and 2.1% in local currency for the fourth quarter of fiscal 2011, compared to the same period a year ago.  The Company owned and operated 481 retail stores in the United States and Canada at the end of the fourth quarter of fiscal 2011 versus 432 stores a year earlier.Net revenue from the Company's Europe segment increased 32.5% to $294.9 million in the fourth quarter of fiscal 2011, compared to $222.6 million in the prior-year period.  In local currency, net revenue increased 43.3%.Net revenue from the Company's Asia segment increased 23.2% to $55.4 million in the fourth quarter of fiscal 2011, from $44.9 million in the prior-year period.Net revenue from the Company's North American wholesale segment decreased 5.2% to $37.7 million in the fourth quarter of fiscal 2011, from $39.8 million in the prior-year period.Licensing segment net revenue increased 19.6% to $30.4 million in the fourth quarter of fiscal 2011, from $25.4 million in the prior-year period.Operating earnings for the fourth quarter of fiscal 2011 increased 19.6% to $144.3 million (including a $4.6 million unfavorable currency translation impact) from $120.7 million in the prior-year period.  Operating margin in the fourth quarter increased 30 basis points to 19.1%, compared to the prior-year quarter.  The improvement in operating margin primarily reflects the impact of operating expense leverage, mainly driven by lower performance based compensation, as well as the loyalty program breakage.  These favorable impacts were partially offset by lower initial markups in Europe, including the negative effect of currency on product costs, along with higher markdowns in North America retail.  Other net income, which primarily relates to net revaluation gains on foreign currency balances and contracts and net gains on non-operating assets, was $7.4 million for the fourth quarter of fiscal 2011, compared to $5.0 million in the prior-year's quarter.The Company's effective tax rate was 30.3% for the fourth quarter of fiscal 2011, compared to 29.9% for the fourth quarter of the prior year.Fiscal Year 2011 ResultsFor the fiscal year ended January 29, 2011, the Company reported net earnings of $289.5 million, an increase of 19.3% compared to net earnings of $242.8 million for the year ended January 30, 2010.  Diluted earnings per share increased 19.2% to $3.11 per share in fiscal year 2011 versus $2.61 per share in the prior year.Total net revenue for fiscal year 2011 increased 16.9% to $2.49 billion from $2.13 billion in the prior year.  In constant dollars, total net revenue increased 18.2%.  The Company's retail stores in North America generated revenue of $1.07 billion for fiscal year 2011, an 8.7% increase from $983.9 million in the prior year.  Comparable store sales for fiscal 2011 increased 2.9% in US dollars and 1.1% in local currency compared to the same period a year ago.  Net revenue from the Company's Europe segment increased 23.2% to $920.3 million in fiscal year 2011, compared to $747.2 million in the prior year.  In local currency, Europe segment revenue increased 31.0%.  Net revenue from the Company's Asia segment increased 36.4% to $200.9 million in fiscal year 2011, compared to $147.3 million in the prior year.  Net revenue from the Company's North American wholesale segment increased 18.5% to $181.0 million in fiscal 2011, from $152.7 million in the prior year.  Licensing segment net revenue increased 18.4% to $115.2 million in fiscal year 2011, from $97.4 million in the prior year.Operating earnings for fiscal year 2011 increased 12.8% to $404.6 million (including a $7.3 million unfavorable currency translation impact) from $358.8 million in the prior year.  Operating margin for fiscal year 2011 decreased 60 basis points to 16.3%.  This operating margin decline primarily resulted from the impact of currencies on product costs, increased occupancy costs due to retail expansion in Europe, lower initial markups in Europe, and higher markdowns in North America.  Other net income, which primarily relates to net revaluation gains on foreign currency balances and contracts and net gains on non-operating assets, was $16.4 million for fiscal year 2011, compared to $3.6 million for the prior year.  The Company's full year effective tax rate improved to 30.1% for fiscal year 2011, compared to 31.9% for fiscal year 2010.OutlookThe Company's expectations for the first quarter of fiscal 2012 ending April 30, 2011, are as follows:Consolidated net revenues are expected to range from $555 million to $570 million.Operating margin is expected to be around 10.0%.Diluted earnings per share are expected to be in the range of $0.41 to $0.44.For the fiscal year ending January 28, 2012, the Company's expectations are as follows:Consolidated net revenues are expected to range from $2.72 billion to $2.82 billion.Operating margin is expected to be between 16.5% and 17.0%.Diluted earnings per share are expected to be in the range of $3.30 to $3.50.DividendThe Company also announced today that its Board of Directors has approved a quarterly cash dividend of $0.20 per share on the Company's common stock.  The dividend will be payable on April 15, 2011 to shareholders of record at the close of business on March 30, 2011.Share Repurchase The Company announced today that its Board of Directors has authorized a program to repurchase, from time-to-time and as market and business conditions warrant, up to $250 million of its common stock.  The newly authorized $250 million program includes $85 million remaining under the Company's previously authorized $200 million repurchase program.  Repurchases may be made on the open market or in privately negotiated transactions, pursuant to Rule 10b5-1 trading plans or other available means.  There is no minimum or maximum number of shares to be repurchased under the program and the program may be discontinued at any time, without prior notice.The Company will hold a conference call at 4:30 pm (ET) on March 16, 2011 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 Relations" 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 January 29, 2011, the Company owned and operated 481 retail stores in the United States and Canada and operated 892 retail stores outside of the United States and Canada, of which 188 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.guess.com. Except for historical information contained herein, certain matters discussed in this press release, including statements concerning the Company's global expansion strategy, future prospects and guidance for the first quarter and full year of fiscal 2012, 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: domestic and international economic conditions, including economic and other events that could negatively impact consumer confidence and discretionary consumer spending and result in increasingly difficult competitive conditions; our ability to, among other things, anticipate consumer preferences, protect our brand image, effectively operate our various retail concepts, manage inventories, address potential increases to product costs and successfully execute our strategies, including our supply chain and international growth strategies; and risks associated with changes in economic, political, social and other conditions affecting our global operations, including currency fluctuations and global tax rates.  In addition to these factors, the economic, technology, management, litigation-related and other risks 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.Contact:  Guess?, Inc.Maili BergmanVP Investor Relations(213) 765-5578Guess?, Inc. and SubsidiariesCondensed Consolidated Statements of Income(amounts in thousands, except per share data)Three Months EndedTwelve Months EndedJanuary 29,January 30,January 29,January 30,2011201020112010$%$%$%$%Net revenueProduct sales$ 726,51996.0%$ 616,62596.0%$ 2,372,07295.4%$ 2,031,11495.4%Net royalties30,3964.0%25,4054.0%115,2224.6%97,3524.6%756,915100.0%642,030100.0%2,487,294100.0%2,128,466100.0%Cost of product sales420,56755.6%346,71454.0%1,397,06256.2%1,186,97955.8%Gross profit336,34844.4%295,31646.0%1,090,23243.8%941,48744.2%Selling, general and administrative expenses192,05825.3%174,62227.2%679,78027.3%582,67127.3%Accelerated pension cost amortization-0.0%-0.0%5,8190.2%-0.0%Earnings from operations144,29019.1%120,69418.8%404,63316.3%358,81616.9%Other income (expense):Interest expense(442)(0.1%)(453)(0.1%)(1,217)(0.1%)(2,176)(0.1%)Interest income(32)(0.0%)2360.0%1,5530.1%1,6970.1%Other, net7,3821.0%5,0050.8%16,4080.6%3,5920.1%Earnings before income taxes151,19820.0%125,48219.5%421,37716.9%361,92917.0%Income taxes45,8196.1%37,5715.8%126,8745.1%115,5995.4%Net earnings105,37913.9%87,91113.7%294,50311.8%246,33011.6%Net earnings attributable to noncontrolling interests in subsidiaries2,0530.2%1,3220.2%4,9950.2%3,5690.2%Net earnings attributable to Guess?, Inc.$ 103,32613.7%$   86,58913.5%$    289,50811.6%$    242,76111.4%Earnings per common share attributable to common stockholders:Basic $       1.12$       0.94$          3.14$          2.63Diluted$       1.11$       0.93$          3.11$          2.61Weighted average common shares outstanding attributable to common stockholders:Basic91,21691,27691,41090,893Diluted91,93492,25492,11591,592Guess?, Inc. and SubsidiariesConsolidated Segment Data(dollars in thousands)Three Months EndedTwelve Months EndedJanuary 29,January 30,%January 29,January 30,%20112010chg20112010chgNet revenue:North American retail$  338,597$  309,3659%$ 1,069,893$    983,9039%Europe294,867222,55632%920,327747,24223%Asia55,36244,93223%200,891147,28736%North American wholesale37,69339,772-5%180,961152,68219%Licensing30,39625,40520%115,22297,35218%$  756,915$  642,03018%$ 2,487,294$ 2,128,46617%Earnings (loss) from operations:North American retail$    52,575$    50,9623%$    122,583$    132,287-7%Europe65,91357,00216%193,309173,23512%Asia7,5026,29319%28,63115,82581%North American wholesale8,5349,667-12%46,15335,16631%Licensing27,67424,77712%104,16586,64020%Corporate overhead(17,908)(28,007)-36%(84,389)(84,337)0%Accelerated pension cost amortization--(5,819)-$  144,290$  120,69420%$    404,633$    358,81613%Operating margins:North American retail15.5%16.5%11.5%13.4%Europe22.4%25.6%21.0%23.2%Asia13.6%14.0%14.3%10.7%North American wholesale22.6%24.3%25.5%23.0%Licensing91.0%97.5%90.4%89.0%Total Company19.1%18.8%16.3%16.9%Guess?, Inc. and SubsidiariesSelected Condensed Consolidated Balance Sheet Data(in thousands)January 29,January 30,20112010ASSETSCash and cash equivalents$    427,037$    502,063Short-term investments15,087-Receivables, net358,482283,747Inventories294,705253,162Other current assets68,26985,191Property and equipment, net313,856255,308Other assets208,368151,778Total Assets$ 1,685,804$ 1,531,249LIABILITIES AND STOCKHOLDERS' EQUITYCurrent portion of borrowings and capital lease obligations$        2,177$        2,357Other current liabilities428,839340,396Borrowing and capital lease obligations12,21814,137Other long-term liabilities161,665134,203Redeemable and nonredeemable noncontrolling interests26,02919,945Guess?, Inc. stockholders' equity1,054,8761,020,211Total Liabilities and Stockholders' Equity$ 1,685,804$ 1,531,249Guess?, Inc. and SubsidiariesCondensed Consolidated Cash Flow Data(in thousands)Twelve Months EndedJanuary 29,January 30,20112010Net cash provided by operating activities$    346,374$    358,210Net cash used in investing activities(146,103)(90,836)Net cash used in financing activities(277,006)(61,763)Effect of exchange rates on cash1,7092,334Net increase (decrease) in cash and cash equivalents(75,026)207,945Cash and cash equivalents at the beginning of the year502,063294,118Cash and cash equivalents at the end of the period$    427,037$    502,063Supplemental information:Depreciation and amortization$      67,488$      64,374Rent217,830180,488Guess?, Inc. and SubsidiariesRetail Store DataInternational Store CountAs of January 29, 2011As of January 30, 2010TotalDirectly OperatedTotalDirectly OperatedRegionStoresStoresStoresStoresUnited States and Canada481481432432Europe and Middle East47414138884Asia3572833528Other611955131,3736691,210557Guess?, Inc. and SubsidiariesRetail Store DataU.S. and CanadaTwelve Months EndedJanuary 29,January 30,20112010Number of stores at the beginning of the year432425Store openings5918Store closures(10)(11)Number of stores at the end of the period481432Total store square footage at the end of the period2,166,0001,992,000SOURCE Guess?, Inc.For further information: Maili Bergman, VP Investor Relations of Guess?, Inc., +1-213-765-5578