We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Guess (GES) Down 4.6% Since Last Earnings Report: Can It Rebound?
Read MoreHide Full Article
A month has gone by since the last earnings report for Guess (GES - Free Report) . Shares have lost about 4.6% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Guess due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Guess? Q3 Earnings & Revenues Top Estimates, Up Y/Y
Guess? reported splendid third-quarter fiscal 2022 results, with the top and the bottom line increasing year over year. Revenues and earnings surpassed their respective Zacks Consensus Estimates. Management raised its fiscal 2022 revenues and operating margin outlook.
Quarter in Detail
Guess? posted adjusted earnings of 62 cents per share, up 6.9% from the year-ago quarter’s reported figure. Earnings in the quarter reflect favorable currency translations and minimal impact from share repurchases as well as convertible notes transactions. Earnings surpassed the Zacks Consensus Estimate of 46 cents. Adjusted earnings surged 181.8% from 22 cents reported in third-quarter fiscal 2020.
Net revenues amounted to $643.1 million, which surpassed the consensus mark of $615.1 million. The metric went up 13% from $569.3 million reported in the year-ago quarter. On a constant-currency (cc) basis, net revenues increased 12.8% year over year. The upside can be attributed to solid performance across European Wholesale, Americas Retail and Licensing businesses. The company’s net revenues rose 4.4% from $615.9 million reported in third-quarter fiscal 2020 (pre-pandemic period), reflecting solid growth in European business driven by the wholesale and e-commerce categories. Permanently-closed stores and negative same-store sales in Europe and Asia affected the metric.
The company’s gross margin expanded to 45.7% from 42.1% reported in the year-ago quarter. As a percentage of sales, SG&A expenses increased to 34.8% from 32.5% in the prior-year quarter’s level. During the quarter, adjusted earnings from operations came in at $70.4 million, up from $55.3 million posted in the year-ago quarter. Adjusted operating margin came in at 10.9%, up 1.2% year on year on the back of reduced markdowns, increased initial markups and leveraging expenses. These upsides were somewhat offset by increased performance-based compensation.
Segment Performance
Revenues in the Americas Retail segment rallied 30% year over year on a reported basis, while increasing 29% at cc. Revenues fell 5% from third-quarter fiscal 2020 levels. Segmental operating margin came in at 14.2% compared with 0.4% in the year-ago quarter.
Revenues in the Americas Wholesale unit rallied 64% (up 61% at cc) year over year. Revenues were up 5% from third-quarter fiscal 2020 levels. Segmental operating margin came in at 29.3% compared with 22.9% in the year-ago quarter.
The Europe segment’s revenues rose 3% (up 4% at cc) year on year. Revenues increased 19% from third-quarter fiscal 2020 levels. Segmental operating margin came in at 13.5% compared with 16% in the year-ago quarter.
Asia revenues declined 8% (same at cc) year on year. The metric fell 31% from third-quarter fiscal 2020 levels.
Licensing revenues advanced 37% year over year. The unit’s revenues were up 20% compared with third-quarter fiscal 2020 levels. The operating margin came in at 91.8% compared with 93.8% in the year-ago quarter.
Other Updates
The company exited the quarter with cash and cash equivalents of $391.1 million as well as long-term debt and finance lease obligations of $67.5 million. Stockholders’ equity was $625.3 million. Net cash provided by operating activities for the nine months ended Oct 30, 2021 amounted to $4.6 million. The company increased its quarterly dividend from 11.25 cents per share to 22.5 cents. The revised dividend is payable on Dec 24, 2021 to shareholders on record as of Dec 8.
COVID-19 Update
The pandemic-related disruptions continue to impact the company’s operations. Although quarterly revenues increased year over year, management continued to face challenges related to lower store traffic and capacity restrictions. The company started the third quarter with all directly-operated stores open for business. However, some government-mandated temporary store closures came into effect toward the end of the quarter. The company witnessed less than 5% directly-operated store closures as of Oct 30, 2021, mainly in Europe. In the wake of the ongoing uncertainties related to the pandemic, Guess? continues to monitor global and regional developments, especially in Europe. Also, the company is managing expenses to preserve profitability.
Outlook
For fourth-quarter fiscal 2022, the company expects revenues to be down mid-single digits from fourth-quarter fiscal 2020. The guidance indicates impact from permanent store closures and unfavorable shift of European wholesale shipments from fourth-quarter fiscal 2022 to first-quarter 2023. These are likely to be partially offset by the ongoing momentum in the company’s global e-commerce business. For fiscal 2022, management now expects revenues to decline in low-single digits from fiscal 2020 levels, considering there will not be any more pandemic-related closures. The company now expects operating margin to come in at nearly 11% in fiscal 2022. Earlier, the company guided fiscal 2022 revenues to decline in mid-single digits from fiscal 2020 levels. The company had earlier anticipated operating margin to come in at nearly 10% in fiscal 2022.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates. The consensus estimate has shifted 6.1% due to these changes.
VGM Scores
Currently, Guess has a poor Growth Score of F, a grade with the same score on the momentum front. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Guess has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Guess (GES) Down 4.6% Since Last Earnings Report: Can It Rebound?
A month has gone by since the last earnings report for Guess (GES - Free Report) . Shares have lost about 4.6% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Guess due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Guess? Q3 Earnings & Revenues Top Estimates, Up Y/Y
Guess? reported splendid third-quarter fiscal 2022 results, with the top and the bottom line increasing year over year. Revenues and earnings surpassed their respective Zacks Consensus Estimates. Management raised its fiscal 2022 revenues and operating margin outlook.
Quarter in Detail
Guess? posted adjusted earnings of 62 cents per share, up 6.9% from the year-ago quarter’s reported figure. Earnings in the quarter reflect favorable currency translations and minimal impact from share repurchases as well as convertible notes transactions. Earnings surpassed the Zacks Consensus Estimate of 46 cents. Adjusted earnings surged 181.8% from 22 cents reported in third-quarter fiscal 2020.
Net revenues amounted to $643.1 million, which surpassed the consensus mark of $615.1 million. The metric went up 13% from $569.3 million reported in the year-ago quarter. On a constant-currency (cc) basis, net revenues increased 12.8% year over year. The upside can be attributed to solid performance across European Wholesale, Americas Retail and Licensing businesses. The company’s net revenues rose 4.4% from $615.9 million reported in third-quarter fiscal 2020 (pre-pandemic period), reflecting solid growth in European business driven by the wholesale and e-commerce categories. Permanently-closed stores and negative same-store sales in Europe and Asia affected the metric.
The company’s gross margin expanded to 45.7% from 42.1% reported in the year-ago quarter. As a percentage of sales, SG&A expenses increased to 34.8% from 32.5% in the prior-year quarter’s level. During the quarter, adjusted earnings from operations came in at $70.4 million, up from $55.3 million posted in the year-ago quarter. Adjusted operating margin came in at 10.9%, up 1.2% year on year on the back of reduced markdowns, increased initial markups and leveraging expenses. These upsides were somewhat offset by increased performance-based compensation.
Segment Performance
Revenues in the Americas Retail segment rallied 30% year over year on a reported basis, while increasing 29% at cc. Revenues fell 5% from third-quarter fiscal 2020 levels. Segmental operating margin came in at 14.2% compared with 0.4% in the year-ago quarter.
Revenues in the Americas Wholesale unit rallied 64% (up 61% at cc) year over year. Revenues were up 5% from third-quarter fiscal 2020 levels. Segmental operating margin came in at 29.3% compared with 22.9% in the year-ago quarter.
The Europe segment’s revenues rose 3% (up 4% at cc) year on year. Revenues increased 19% from third-quarter fiscal 2020 levels. Segmental operating margin came in at 13.5% compared with 16% in the year-ago quarter.
Asia revenues declined 8% (same at cc) year on year. The metric fell 31% from third-quarter fiscal 2020 levels.
Licensing revenues advanced 37% year over year. The unit’s revenues were up 20% compared with third-quarter fiscal 2020 levels. The operating margin came in at 91.8% compared with 93.8% in the year-ago quarter.
Other Updates
The company exited the quarter with cash and cash equivalents of $391.1 million as well as long-term debt and finance lease obligations of $67.5 million. Stockholders’ equity was $625.3 million. Net cash provided by operating activities for the nine months ended Oct 30, 2021 amounted to $4.6 million. The company increased its quarterly dividend from 11.25 cents per share to 22.5 cents. The revised dividend is payable on Dec 24, 2021 to shareholders on record as of Dec 8.
COVID-19 Update
The pandemic-related disruptions continue to impact the company’s operations. Although quarterly revenues increased year over year, management continued to face challenges related to lower store traffic and capacity restrictions. The company started the third quarter with all directly-operated stores open for business. However, some government-mandated temporary store closures came into effect toward the end of the quarter. The company witnessed less than 5% directly-operated store closures as of Oct 30, 2021, mainly in Europe. In the wake of the ongoing uncertainties related to the pandemic, Guess? continues to monitor global and regional developments, especially in Europe. Also, the company is managing expenses to preserve profitability.
Outlook
For fourth-quarter fiscal 2022, the company expects revenues to be down mid-single digits from fourth-quarter fiscal 2020. The guidance indicates impact from permanent store closures and unfavorable shift of European wholesale shipments from fourth-quarter fiscal 2022 to first-quarter 2023. These are likely to be partially offset by the ongoing momentum in the company’s global e-commerce business. For fiscal 2022, management now expects revenues to decline in low-single digits from fiscal 2020 levels, considering there will not be any more pandemic-related closures. The company now expects operating margin to come in at nearly 11% in fiscal 2022. Earlier, the company guided fiscal 2022 revenues to decline in mid-single digits from fiscal 2020 levels. The company had earlier anticipated operating margin to come in at nearly 10% in fiscal 2022.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates. The consensus estimate has shifted 6.1% due to these changes.
VGM Scores
Currently, Guess has a poor Growth Score of F, a grade with the same score on the momentum front. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Guess has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.