Guess Cuts Outlook, Posts Disappointing Results

Guess Inc. cut its earnings guidance for the year and posted disappointing results for the latest quarter, signs the apparel maker's turnaround isn't yet taking hold amid continued weakness in the Americas.

Shares, which have tumbled 22% over the past year through Wednesday's close, dropped another 14% after hours to $13.20.

Guess is rounding out a transition year in which it has worked to cut costs, push through restructuring plans and breathe life into its struggling sales. Chief Executive Victor Herrero had said those investments were expected to start generating revenue growth in the third quarter.

But during the period, revenue rose just 2.9% to $536 million, well below the 5% to 8% growth, or roughly $554 million, the company had predicted.

Sales at stores open at least a year dropped 4.9%, worse than the 4.2% decline in the previous quarter. Guess has logged same-store sales declines since the start of 2011.

Like many other brick-and-mortar-based retailers, from specialty shops to the department stores where Guess also sells its merchandise, the company has had to contend with falling foot traffic as shoppers move online.

Mr. Herrero pointed to double-digit growth in Europe and Asia and said the company is focused on improving profitability in the Americas "where the retail environment remains challenging."

Americas retail revenue—the largest contributor to the top line—fell 4.7%. Sales in Europe and Asia, meanwhile, picked up 16% and 10%, respectively, lifted by new store openings and continued strong comparable-store sales.

In all, for the most-recent period, Guess posted a profit of $9.7 million, or 11 cents a share, down from $13.1 million, or 15 cents a share, a year earlier.

The company had projected 11 cents to 16 cents in per-share profit.

For the year ending in January, the company now expects to post 42 cents to 52 cents in adjusted earnings, down from earlier guidance of 62 cents to 75 cents a share. And Guess now anticipates revenue rising between 0.5% and 1.5%, down from an earlier—and previously lowered—view of 3% to 5%.

For the current quarter, the company projected sales increasing between 3.5% and 7.5% with earnings of 40 cents to 50 cents a share, sharply below analyst estimates for 60 cents a share, according to Thomson Reuters.

Write to Anne Steele at [e-mail]

(END) Dow Jones Newswires

November 30, 2016 17:35 ET (22:35 GMT)

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