NEW YORK (AP) — Shares of Guess climbed more than 2 percent on Thursday as the clothing company's third-quarter revenue beat analysts' estimates and it announced plans for a special dividend.
THE SPARK: On Wednesday Guess reported quarterly revenue of $628.8 million. Analysts polled by FactSet forecast $624.8 million. Earnings of 43 cents per share missed Wall Street's forecast of 44 cents per share, however.
The Los Angeles-based retailer also said that it will pay a special cash dividend of $1.20 per share. The dividend is payable on Dec. 28 to shareholders of record as of Dec. 12.
THE ANALYSIS: Wedbush's Betty Chen said in a client note that the special dividend would likely overshadow the slight quarterly earnings miss. The analyst said that Guess is seeing some improvement in its handbag and accessories categories and modest signs of stabilization in certain European segments such as Russia and Germany.
Chen reaffirmed a "Neutral" rating.
Dorothy Lakner of Caris & Co. downgraded Guess to "Average" from "Above Average" and reduced its price target to $28 from $33.
The analyst said that Europe was a bright spot in the quarter, but that the retailer has a lot on its plate with merchandising issues in its women's business, competitive pressure in North America and ongoing economic uncertainty in Europe.
Lakner said that Guess could see a rebound in its earnings in 2013 and beyond and has ample room for growth in all regions worldwide. But the analyst said she'd prefer to stay on the sidelines for now while waiting for more signs of a turnaround in the business.
SHARE ACTION: Guess Inc.'s stock rose 53 cents, or 2.1 percent, to $25.78 in afternoon trading. The shares have traded in a 52-week range of $22.48 to $37.15. For the year to date, the stock is down 16 percent.