Guess?, Inc. (NYSE: GES) stock fell over 8.5% (As of 1:00 pm GMT-4; Source: Google finance) as the company posted better than expected results for the first quarter of FY 20. Adjusted operating loss has widened to $22.4 million compared to $20.5 million last year driven by deleveraging expenses in Asia offset by strong sales and price increases in Europe and Americas Retail divisions.
GES in the first quarter of FY 20 has reported the adjusted loss per share of 25 cents, beating the analysts’ estimates for the adjusted loss per share of 26 cents. The company had reported the adjusted revenue growth of 3 percent to $536.7 million in the first quarter of FY 20, beating the analysts’ estimates for revenue of $536.58 million. Total company gross margin expanded by 50 basis points to 33.9% driven by higher IMUs and occupancy leverage. This was on top of a 160 basis points improvement in gross margins in last year’s first quarter. Americas Retail revenues for the quarter finished up 3% in US dollars and up 4% in constant currency. Comp sales for the quarter including e-commerce were up 4% in US dollars and 5% in constant currency marking our fifth consecutive quarter of positive comps. The positive comps in the quarter were driven by better conversion and UPT. E-commerce increased the comps for the quarter by two percentage points
The company reduced dividends to $0.1125 per share, which is a decrease of 50% from the prior dividend of $0.225 per share. The reduction is part of the capital allocation changes undertook by the management as part of the turnaround strategy. The company had also announced a $150 million share repurchase program in April to restore investor confidence.
Guess is forecasting revenue to increase in the range of 4-5% and adjusted earnings per share of $0.27-0.30. The analysts are expecting sales of $674.8 million and adjusted earnings per share of 38 cents. The retailer’s top line is in line with estimates, but the earnings per share fell short of street expectations.
Guess has issued an updated outlook for the fiscal year 2020, that includes an increase of 3.5 percent to 4.5 percent in net revenue and an operating margin of 6 percent to 7 percent. Earnings per share are expected to be in the range of $1.09 to $1.20. For the same period, the street is expecting sales growth of 4.3% and non-GAAP earnings per share of $1.21, which is in line with the company’s outlook.