Booming sales in Europe and significant gains in both wholesale and retail businesses lifted Guess Inc. to its 14th consecutive quarter of earnings growth in the fourth quarter and triple-digit earnings gains for the year.
For the three months ended Dec. 31, the Los Angeles-based company reported a 77.1 percent rise in earnings to $45.7 million, or 99 cents a diluted share, outpacing Wall Street analysts’ estimates of 93 cents. The company reported earnings of $25.8 million, or 57 cents, in the same period a year ago.
Revenues for the quarter expanded 25.2 percent to $346.4 million from $276.6 million, driven by double-digit gains in Guess’ retail, wholesale, European and licensing businesses. Product sales rose 23.6 percent to $325.1 million from $263 million. Retail sales from the U.S. and Canada accounted for the majority of the increase, with sales rising 16 percent to $240.2 million from $207.1 million. Comparable-store sales jumped 10.8 percent during the quarter.
“The globalization of the Guess brand is in full drive and delivering strong financial results,” Paul Marciano, chief executive officer, said in a statement. “This performance places 2006 as Guess’ best year ever, with record revenues and record earnings.”
The European business recorded an 87.4 percent improvement for the quarter to reach $42.8 million in revenues, compared with $22.9 million in the year-ago period. The wholesale business overall was up 27.4 percent to $42 million from $33 million.
Earnings for the year soared 109.4 percent to $123.2 million, or $2.68 a share, from $58.8 million, or $1.31 a share, in 2005.
Revenues increased 26.6 percent to $1.19 billion from $936.1 million, again driven by strong results across all its business segments. Product sales rose 26.2 percent to $1.12 billion from $887.8 million. U.S. and Canadian stores generated a 17.7 percent increase in revenues to $721.3 million from $612.9 million. The company finished the quarter with a total of 336 retail stores in the U.S. and Canada. The wholesale segment posted a 20.8 percent improvement to $146.3 million from $121 million, and the European division saw a 64.1 percent gain to $252.4 million from $153.8 million.
“Internationally, we plan to execute on our strategies to develop the European and Asian markets, both of which present outstanding growth opportunities for Guess in our denim line, our Guess by Marciano contemporary line, Marciano, and accessories,” Marciano said.
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Guess followed up the release of its earnings results by announcing the company’s board had approved a two-for-one stock split to shareholders of record as of the close of business on Feb. 26. The shares will be distributed starting on March 12, according to the company. The board also approved the initiation of a 12 cent a share quarterly dividend of the company’s common stock.
“These actions reflect our confidence in our company and recognize our solid financial performance and strong balance sheet,” Carlos Alberini, president and chief operating officer, said in a statement.