Again, European sales led revenue growth while business in the Americas was disappointing.
An array of Guess jeans. COURTESY OF GUESS INC.
Guess Inc. showed modest improvement in sales and earnings in its third-quarter financial results reported on Tuesday. But the Los Angeles-based lifestyle clothing company and retailer scaled back on its fiscal 2024 outlook.
Net revenues for the period ending Oct. 28 were $651.2 million, up 1 percent in constant currency from the year-ago period when they came in at $633.4 million. The company’s net earnings were $55.7 million, up 155 perent from last year’s third quarter. This was helped by a $31.2 million discrete tax adjustment related primarily to the consolidation of certain business functions into Switzerland.
“Overall, a strong licensing business combined with a disciplined approach to cost management offset softness in some of our direct-to-consumer businesses and drove earnings from operations for the company that were flat to last year’s performance,” said Carlos Alberini, Guess’ chief executive officer since 2019.
European revenues continued to be strong. Revenues increased 5 percent in constant currency, and same-store sales, including e-commerce, were up a healthy 7 percent over the same period last year. European wholesale revenues were solid but offset by a decline in consumer traffic.
As had been true in the past, sales in the Americas continued to be weak, due to slow customer traffic, showing an 8 percent revenue decline in the third quarter over last year. Same-store sales, including e-commerce, were off by 5 percent. “We observed contractions on men’s and women’s apparel and accessories,” the CEO said.
One bright spot in overall revenues this quarter was licensing revenues, which climbed 19 percent over last year’s third quarter. Best-performing licensing categories, Alberini said, were fragrances, handbags, watches, eyewear and footwear.
The company’s revenues in Asia remained flat in constant currency although strong performers were men’s and women’s sweaters, skirts and shorts, helped by a warmer quarter in Asia.
Alberini said revenues benefited from the company’s ad campaign employing Georgina Rodriguez, and Guess was already shooting next year’s advertising and marketing campaign with her as the principal model. For the holidays, Guess signed up Matteo Bocelli, son of Italian singer Andrea Bocelli, as the lead model for its campaign. “For the holiday, we feel the customer will be looking for value and will be sensitive to this,” Alberini said.
For the first nine months of fiscal 2024, net revenue came in at $1.89 billion, up 1 percent from $1.87 billion seen the previous year. Net earnings were up 54 percent to $82.9 million.
However, Guess’ full-year guidance for fiscal 2024 was downsized. Instead of a 2.5 to 4 percent growth in net revenues, the company now expects to see a 1.8 to 2.4 percent.
Guess was founded in 1981 by four Marciano brothers. The brand launched in Bloomingdale’s with the 3-Zip Marilyn jeans, a slim-fitting silhouette inspired by Marilyn Monroe.
Guess has turned itself into a global company, which last year had total revenues of $2.7 billion.