Just a little over a month ago Guess inc. delivered double-digit revenue and operating earnings growth - European revenues increased 28% - North American retail revenues increased 14%; comp sales up 9.7% - Asian revenues increased 50% - Operating margin expanded 230 basis points to 13.2% from 10.9% - Net earnings increased 55% to $50.3 millionGuess?, Inc. Reports Record First Quarter Results--First Quarter Revenue Increased 22% to a Record of $539 Million --First Quarter EPS Grew 54% to a Record of $0.54 --Provides Second Quarter EPS Guidance in the Range of $0.65 to $0.68 --Updates Full Year EPS Guidance to the Range of $2.80 to $2.85
LOS ANGELES, May 27, 2010 /PRNewswire via COMTEX/ -- Guess?, Inc. (GES 33.23, -0.14, -0.42%) today reported financial results for the first quarter of its 2011 fiscal year, which ended May 1, 2010.
First Quarter Fiscal 2011 Results
For the first quarter of fiscal 2011, the Company reported net earnings of $50.3 million, an increase of 55% compared to net earnings of $32.5 million for the first quarter of fiscal 2010. Diluted earnings per share increased 54% to $0.54 in the current quarter, compared to $0.35 in the prior-year quarter. In the quarter, the Company recorded a $5.8 million charge, or $0.04 per share, related to the acceleration of pension cost amortization resulting from the departure of Carlos Alberini from the Company's supplemental executive retirement plan.
Paul Marciano, Chief Executive Officer, commented, "We are very pleased with our strong performance this quarter. We achieved excellent results across all of our businesses around the world, with each of our segments delivering double-digit revenue growth and improving their profitability significantly. In North America, we posted a 9.7% same store sales increase and our international expansion drove significant growth in the period. Europe and Asia combined represented almost 60% of our quarterly revenue increase. We managed our business effectively, which resulted in an operating margin expansion of 230 basis points, even as we continued to invest in our infrastructure to support our ambitious growth initiatives."
Mr. Marciano continued, "We remain focused on our key priorities for this year: to increase sales productivity across all businesses, to grow our European and Asian businesses and to expand our retail store base in North America. Our brand enjoys tremendous momentum worldwide and we strive to achieve its full potential as we develop our business in many markets where the brand is well known. We have a dedicated management team, a successful and diversified business model and a solid capital structure that position us well to continue to grow our business and deliver solid returns for our shareholders."
Total net revenue for the first quarter of fiscal 2011 increased 22% to $539.3 million from $441.2 million in the prior-year quarter. The Company's retail stores in North America generated revenue of $235.8 million in the first quarter of fiscal 2011, a 13.6% increase from $207.6 million in the same period a year ago. Comparable store sales increased 9.7% (5.8% in constant dollars) for the first quarter of fiscal 2011, compared to the same period a year ago. The Company operated 433 retail stores in the U.S. and Canada at the end of the first quarter of fiscal 2011 versus 429 stores a year earlier.
Net revenue from the Company's North American wholesale segment increased 27.3% to $42.7 million in the first quarter of fiscal 2011, from $33.6 million in the prior-year period.
Net revenue from the Company's Europe segment increased 28.3% to $187.0 million in the first quarter of fiscal 2011, compared to $145.7 million in the prior-year period.
Net revenue from the Company's Asia segment increased 50.4% to $48.6 million in the first quarter of fiscal 2011, from $32.3 million in the prior-year period.
Licensing segment net revenue increased 14.6% to $25.3 million in the first quarter of fiscal 2011, from $22.1 million in the prior-year period.
Operating earnings for the first quarter of fiscal 2011 increased 48.5% to $71.3 million (including a $5.0 million favorable currency translation benefit) from $48.0 million in the prior-year period. Operating margin in the first quarter increased 230 basis points to 13.2%, compared to the prior-year's quarter. This margin expansion was the result of higher product margins in all segments along with occupancy leverage due to the positive same store sales, partially offset by the impact of the accelerated pension cost amortization.
The Company's effective tax rate declined to 31.0% for the first quarter of fiscal 2011, from 33.0% for the first quarter of the prior year.
The Company's expectations for the second quarter of fiscal 2011 ending July 31, 2010, are as follows:
Consolidated net revenues are expected to range from $560 million to $575 million.
Operating margin is expected to be around 16.0%.
Diluted earnings per share are expected to be in the range of $0.65 to $0.68.
The Company updated its outlook for the fiscal year ending January 29, 2011, which is now as follows:
Consolidated net revenues are expected to range from $2.35 billion to $2.40 billion.
Operating margin is expected to be about 16.5%.
Diluted earnings per share are expected to be in the range of $2.80 to $2.85.
Based on the continued strengthening of the US dollar against the Euro, this full year outlook includes a further negative translation and margin impact on diluted earnings per share of $0.16 for the remainder of fiscal 2011. This is in addition to the $0.12 negative translation impact that the Company had initially expected for the same period.
The Company also announced today that its Board of Directors has approved a quarterly cash dividend of $0.16 per share on the Company's common stock. The dividend will be payable on June 25, 2010 to shareholders of record at the close of business on June 9, 2010.