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Published
Dec 3, 2020
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Guess posts improved earnings in third quarter

Published
Dec 3, 2020

American fashion retailer Guess?, Inc. reported Q3 net earnings of $26.4 million, or $0.41 per diluted share, on Wednesday, up from $12.4 million, or $0.18 per diluted share, in the prior-year period.


Guess managed a significant expansion in its operating margin in Q3 - Instagram: @guess

 
The Los Angeles-based company’s total net revenue for the third quarter ended
October 31, 2020, decreased 7.6% (10.1% in constant currencies) to $569.3 million, compared to $615.9 million in the same period in the previous year.
 
However, the retailer successfully reduced occupancy costs and leveraged expenses during the quarter, leading to a significant expansion in its operating margin, which rose 410 basis points to 7.8%.

Guess’ Americas wholesale segment was the hardest hit by the ongoing Covid-19 pandemic during the quarter, seeing its revenues fall 36.2% year over year. Retail revenues in the same region decreased 26.7%, while comp sales including e-commerce declined 21%.
 
The retailer’s Asian revenues fell 24.7%, with retail comps decreasing 15%, while cross-region licensing revenues declined 12.5%.
 
In Europe, however, Guess actually saw an increase of 16% in its revenues, despite a 9% decline in retail comps.
 
“We are very pleased with our third quarter performance, which significantly exceeded our expectations, in spite of the challenging circumstances we faced due to the pandemic,” commented Guess CEO Carlos Alberini in a release. “We continue to work on transforming our business model and elevating our brand.”
 
Year to date Guess reported a net loss of $151.6 million, or $2.35 per diluted share, compared to net earnings of $16.4 million, or $0.22 per diluted share, for the same nine-month period in the previous year. Total net revenue for the period decreased 33.1% to $1.23 billion, down from $1.84 billion in the prior year, reflecting declines across the company’s geographical regions.
 
Looking to the future, in light of the uncertainty surrounding the Covid-19 pandemic, Guess has not provided detailed financial guidance for the fourth quarter. However, the company did specify that it expects revenues for the period to decrease in the low to mid-twenties. This is partly due to government-mandated store closures related to the health crisis, particularly in Europe and Canada.
 
“We are well positioned for the holiday period. While Covid-related restrictions are meaningfully impacting several markets, especially in Europe, we are confident in our brand, our product and our team’s ability to navigate the Company through these challenges,” added Alberini.
 
As of October, Guess directly operates 1,068 stores in the Americas, Europe and Asia, while its partners and distributors operate an additional 536 locations around the world. Currently, the company and its partners have operations in some 100 countries.

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