Guess 1Q profit shrinks as sales drop in Europe

Associated Press

LOS ANGELES (AP) -- Guess Inc.'s fiscal first-quarter profit fell 63 percent as the weak economy in Europe weighed on business there and sales slid in U.S. stores.

Still, the clothing retailer's earnings per share came in above Wall Street expectations, and shares rose in after-hours trading Thursday.

Guess reported after the market closed that it earned $9.9 million, or 12 cents per share, for the period that ended May 4. That is down from $26.6 million, or 30 cents per share, in the first quarter last year. Excluding one-time expenses from efforts to cut costs, Guess earned 14 cents per share in the most recent period, topping analyst expectations of 8 cents per share.

Revenue slid 5 percent, to $548.9 million from $579.3 million, with declines in North America and Europe, while Asia sales increased. Sales matched the prediction of analysts polled by FactSet.

Revenue in stores open at least a year, a key retail metric, fell 9.8 percent in North American stores.

The company has been trying to improve its productivity and cut costs to cope with the impact of still weak economic conditions in Europe and fewer shoppers in the U.S.

Guess CEO Paul Marciano said the outlook for consumer spending "remains soft," and the retailer is particularly concerned about conditions in Southern Europe. Still, he said the company is "encouraged" by how the beginning of its fiscal year turned out.

The company maintained its earnings forecast for the year, saying it will earn between $1.70 and $1.90 per share. It lowered its revenue forecast by $30 million, to a range of $2.57 billion and $2.61 billion.

Analysts were forecasting earnings of $1.78 per share on revenue of $2.59 billion.

Guess also said that it expects to earn between 34 and 38 cents per share in its current quarter on revenue between $620 million to $635 million. Analysts had forecast 36 cents per share on revenue of $618.4 million.

Shares soared more than 8 percent to $31.75 in after-hours trading. Its stock added 19 cents to close regular trading at $29.35, in line with broader market trends.