[ACCESSWIRE]
Upcoming AWS Coverage on Abercrombie & Fitch Post-Earnings Results
LONDON, UK / ACCESSWIRE / December 7, 2016 / Active Wall St. announces its post-earnings coverage on Guess', Inc. (NYSE: GES). The Company reported its third quarter fiscal 2017 financial results on November 30, 2016. The Clothing Company's top- and bottom-line fell below market expectations as sales in its Americas Retail and Americas Wholesale segments declined. Register with us now for your free membership at: http://www.activewallst.com/register/.
One of Guess' competitors within the Apparel Stores space, Abercrombie & Fitch Co. (NYSE: ANF), reported on November 18, 2016, its results for third quarter ended October 29, 2016. AWS will be initiating a research report on Abercrombie & Fitch in the coming days.
Today, AWS is promoting its earnings coverage on GES; touching on ANF. Get our free coverage by signing up to:
http://www.activewallst.com/registration-3/?symbol=GES
http://www.activewallst.com/registration-3/?symbol=ANF
Earnings Reviewed
For the three months ended on October 29th, 2016, Guess' reported that total revenue increased 2.9% to $536.3 million compared to $521.0 million in the prior year's same quarter. The Company's revenue was below Wall Street's projections of $563 million.
In Q3 FY17, Guess' gross margin decreased 170 basis points to 33.6% due to the negative impact of markdowns, currency, and occupancy deleverage in the Americas. Operating margin finished down 120 basis points at 2.8% in the reported quarter, including the negative impact of foreign currency of roughly 40 basis points. The company's operating earnings for Q3 FY17 fell 27.4% to $15.1 million from $20.8 million in the prior-year's comparable quarter. Operating margin in Q3 FY17 decreased 120 basis points to 2.8% from 4.0% in Q3 FY16, driven primarily by the negative impact on the Company's fixed cost structure resulting from negative comparable store sales in Americas retail and segment mix, partially offset by lower performance-based compensation costs.
For Q3 FY17, Guess' recorded net earnings of $9.1 million, a 26.8% decrease from $12.4 million for Q3 FY16. The company's diluted earnings per share decreased 26.7% to $0.11 for the reported quarter from diluted earnings per share of $0.15 in Q3 FY16. Guess' adjusted earnings fell short of the $0.14 per share analysts' forecasted.
Segment Results
During Q3 FY17, Guess' Americas Retail revenues dropped 4.7% on a y-o-y basis to $215.86 million. Retail comp sales for the segment including e-commerce decreased 4.9%. Operating margin for the Company's Americas Retail segment decreased 400 basis points to negative 4.9% in Q3 FY17, from negative 0.9% in the prior-year same period. The decrease in operating margin was driven primarily by the negative impact on the fixed cost structure resulting from negative comparable store sales and more markdowns.
During the reported quarter, Guess' Americas Wholesale revenues fell 4.3% to $44.82 million compared to Q3 FY16. Operating margin for the Company's Americas Wholesale segment decreased 310 basis points to 17.4% in Q3 FY17 from 20.5% in Q3 FY16, due to lower gross margins and a higher SG&A rate. The company's Licensing revenues in Q3 FY17 decreased 14.3% in US dollars and constant currency to $23.77 million. Operating margin for the Company's Licensing segment decreased 480 basis points to 84.7% in the reported quarter from 89.5% in the year ago comparable quarter.
For Q3 FY17, Guess' revenue from Europe surged 16.4% on a y-o-y basis to $187.01 million. Operating margin for the Company's Europe segment increased 220 basis points to 6.0% in Q3 FY17 compared to 3.8% in Q3 FY16, driven primarily by the favorable impact on the fixed cost structure resulting from higher wholesale shipments and overall leveraging of expenses, partially offset by the unfavorable impact from currency exchange rate fluctuations.
Guess' reported that in Q3 FY17 revenue from Asia registered 9.8% in US dollars and 6.4% in constant currency at $64.86 million. Operating margin for the Company's Asia segment decreased 630 basis points to negative 1.6% in Q3 FY17 from 4.7% in the year ago comparable quarter.
Balance Sheet
For Q3 FY17, Guess' accounts receivable was up 11% in US dollars and 12% in constant currency, as the company experienced a shift in timing of receipts of non-trade receivables. Inventories were $428 million, up 15% in US dollars and constant currency versus last year's numbers. The increase is driven by timing of receipts, inventory for international new stores, and a buildup of inventory in the US and Canada. Free cash flow was an outflow of $98 million in Q3 FY17 compared to an inflow of $24 million in Q3 FY16, a decrease of $122 million. As of October 29th, 2016, Guess' reported cash and cash equivalents of $349 million compared to last year's $402 million. Cash less debt at the end of Q3 FY17 was $325 million compared to $396 million last year.
Guess' announced that the Company's Board of Directors has approved a quarterly cash dividend of $0.225 per share on its common stock. The dividend will be payable on December 30, 2016, to shareholders of record at the close of business on December 14, 2016.
Outlook
For FY17, Guess' is expecting consolidated net revenues to increase between 0.5% and 1.5% in US dollars. Currency headwinds are expected to negatively impact consolidated revenue growth by approximately 0.5%. GAAP operating margin is expected to be between 2.5% and 3.0%. The company is projecting GAAP diluted earnings per share to be in the band of $0.59 to $0.69. Currency headwinds are expected to impact earnings per share by approximately $0.14.
Stock Performance
At the close of trading session on December 06, 2016, Guess' stock price climbed 2.05% to end the day at $13.41. A total volume of 1.29 million shares were exchanged during the session. The stock currently has a market cap of $1.21 billion. The company's shares are trading at a PE ratio of 16.85 and have a dividend yield of 6.71%.
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