UPDATE: Guess? (GES) Misses Q1 EPS by 4c, Lowers FY Guidance

Guess? (NYSE: GES) reported Q1 EPS of ($0.23), $0.04 worse than the analyst estimate of ($0.19). Revenue for the quarter came in at $426.5 million versus the consensus estimate of $464.37 million.

Victor Herrero, Chief Executive Officer, commented, "Our first quarter adjusted operating loss finished at the low-end of our guidance as sales finished below our expectations. In the Americas, our retail business in the US and Canada was very challenging, especially in the month of April. In Europe, our retail business performed extremely well and delivered positive comp store sales in the mid-teens, a trend of strong comps that started in the second half of last year. In Asia, we delivered positive comps in Korea, although Greater China was below our expectations as we continue to build out our infrastructure there and transition the business to a direct model."

Mr. Herrero continued, "I had highlighted on our last earnings call that the first six months of the year would be a transition period. The start to the year has been a bit more challenging than we anticipated especially in the Americas and to a lesser extent in Greater China. These developments are reflected in our guidance for the second quarter as well as our updated guidance for the full year. We are still confident that we will be able to achieve the three year plan goals we provided in March this year, but with a different cadence than initially planned."

GUIDANCE:

Guess? sees FY2017 EPS of $0.55-$0.75, versus the consensus of $0.77.

• Consolidated net revenues are expected to increase between 5.5% and 7.5% in U.S. dollars. Currency tailwinds are expected to positively impact consolidated revenue growth by approximately 0.5%. Excluding the impact of currency, consolidated net revenues are expected to increase between 5.0% and 7.0% in constant currency.
• GAAP operating margin is expected to be between 3.0% and 4.0% and includes 40 basis points of currency headwind; Adjusted operating margin is expected to be between 3.5% and 4.5%.
• GAAP diluted earnings per share are expected to be in the range of $0.48 to $0.68. The estimated impact on earnings per share of the currency headwinds is approximately $0.12. Adjusted diluted earnings per share are expected to be in the range of $0.55 to $0.75.

Guess? sees Q2 2017 EPS of $0.04-$0.08, versus the consensus of $0.11.

• Consolidated net revenues are expected to increase between 0.5% and 2.5% in U.S. dollars and constant currency.
• Operating margin is expected to be between 1.5% and 2.5% and includes 60 basis points of currency headwind.
• Diluted earnings per share are expected to be in the range of $0.04 to $0.08. The estimated impact on earnings per share of the currency headwinds is approximately $0.06.

For earnings history and earnings-related data on Guess? (GES) click here.

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