Guess Inc.'s fiscal fourth-quarter dropped 24 percent as the company discounted more clothing due to economic pressures on European shoppers and fewer customers in North America. It issued a disappointing forecast and shares fell in after-hours trading.
The clothing company said Wednesday that it earned $72.6 million, or 85 cents per share, for the quarter that ended Feb. 2. That compared with net income of $95.9 million, or $1.05 per share, in the same period the year before, which had one week less of sales.
After adjusting for one-times items including a $12.8 million charge for an Italian tax dispute, it earned 95 cents per share. Revenue grew 5 percent, to $815.1 million from $775.8 million, with a big sales boost coming from Asia and the company's sales to department stores and other retailers in North America.
Analysts polled by FactSet were expecting the company to earn 88 cents per share on revenue of $786.3 million.
Guess CEO Paul Marciano said that the fourth-quarter financial results were at the high end of the company's expectations, despite the difficult economic environment. Europe's debt crisis has led to recession in several countries. Traffic was also lower in Guess' North American stores. The company had more markdowns in both regions.
Sales in Guess' North American stores open at least a year dropped 6.3 percent, with overall revenue up nearly 2 percent. But revenue rose 26 percent in the North American wholesale division, which sells Guess clothing to other retailers.
Marciano said the weak economy will keep challenging Guess. It will try to cut costs, improve its marketing and expand in faster-growing markets. In the fourth quarter, revenue grew by a double-digit percentage in Korea, China, Mexico and Russia, as well as in Germany, the strongest economy in Europe.
For this fiscal year, Guess forecast earnings between $1.70 and $1.90 per share on revenue between $2.60 billion and $2.64 billion. Analysts had predicted profit of $2.38 per share on revenue of $2.77 billion.
The company's outlook for the current quarter was also short of Wall Street predictions. Guess expects to earn between 5 and 10 cents per share on revenue between $545 million and $560 million. Analyst had forecast earnings of 29 cents per share on revenue $590.6 million.
Guess has taken steps to cut expenses during the current quarter and the forecasts do not include restructuring costs associated with this.
Guess shares fell $1.45, or 5.4 percent, to $25.50 in after-hours trading. They had added 20 cents to close regular trading Wednesday at $26.95.