NEW YORK — Propelled by rising sales in the North American and European markets, Guess reported Wednesday that earnings soared in the second quarter and first half of the year,
For the three months ended July 1, the Los Angeles company said earnings increased 229.8 percent, to $13.7 million, or 30 cents a diluted share, beating Wall Street’s consensus estimate of 22 cents a share. The company reported earnings of $4.2 million, or 9 cents a share, in the same period a year ago.
Revenues spiked 29.6 percent, to $231 million from $178.2 million. Sales increased 28.8 percent, to $217.6 million from $168.9 million.
“I’m pleased to report that all of our business formats delivered improved results in the quarter,” Paul Marciano, co-chairman and co-chief executive officer, said during a conference call.
Revenue gains are largely being driven by the company’s wholesale and North American retail business in North America. Sales from company-owned stores in the U.S. and Canada increased 23.4 percent, to $163.9 million, during the quarter, and comparable-store sales rose 17.4 percent.
“In the quarter, we opened 10 new stores,” Marciano said. “We opened five Guess stores, two Marciano and three accessory stores.”
Guess ended the quarter with 320 North American stores, compared with 301 at this time last year. Marciano said the company is on target to boost the store count to 339 by the end of the year.
The wholesale business also posted significant gains, rising 18.2 percent, to $30.8 million from $26.1 million.
“We were pleased with the performance of our wholesale business, particularly in light of the impact of the Federated-May consolidation,” said Dennis Secor, who joined Guess as chief financial officer last month. Maurice Marciano, co-chairman and co-ceo, said wholesale gains are being driven by jeanswear.
The company made its biggest strides during the quarter in the European market, reporting a 130.1 percent revenue gain, to $22.9 million from $9.9 million. One of the major opportunities in the European market was footwear, Paul Marciano said. Secor pointed out that the European market traditionally operates on a two-season buying cycle, resulting in stronger results during the first and third quarters.
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“Sales for the second and fourth quarters are typically lower as the business becomes more a function of reordering activity and immediate replacement,” Secor said. The significant gains during the second quarter were cause for optimism for the balance of the year, he added.
Management is setting its sights on expanding into the Asian market, opening a showroom in Hong Kong during the quarter that “will give our dimensional partners faster and easier access to the full collection from both Europe and the U.S.,” Paul Marciano said.
For the first half of the year earnings climbed 136.3 percent, to $29.1 million, or 64 cents a share, from $12.3 million, or 28 cents, in the year-ago period.
Revenues gained 24.4 percent, to $490 million from $393.8 million. Revenue generated from sales rose 24 percent, to $462.5 million from $373.1 million, with the U.S. and Canada contributing $302.9 million. Wholesale revenues increased 7.8 percent, to $61.6 million from $57.1 million, and in the European segment revenues climbed 47.3 percent, to $98 million from $66.6 million.
The strong results prompted management to up its guidance for the third quarter. Revenues are now expected to increase more than 20 percent, driven by the European and wholesale segments. Earnings for the third quarter are expected to get an earnings-per-share bump of between $1.5 million and $2 million from third-quarter results last year, or an increase of between 3 cents and 4 cents a share.
The company reported earnings results after the close of the stock market. However, an upgrade from analyst Holly Guthrie at Morgan Keegan Wednesday morning helped send share prices upward. The stock rose 5.2 percent to close at $44.06 in New York Stock Exchange trading and crested at $45 in after-hours trading.