Top-Thema

Guess?, Inc. Reports Third Quarter Results

Mittwoch, 30.11.2016 22:20 von

PR Newswire

LOS ANGELES, Nov. 30, 2016 /PRNewswire/ -- Guess?, Inc. (NYSE: GES) today reported financial results for its third quarter ended October 29, 2016.

Victor Herrero, Chief Executive Officer, commented, "While I recognize the challenges we are facing in the Americas, I am thrilled that, due to our various revenue enhancement initiatives, our third quarter revenues increased by 3%. We enjoyed strong double digit growth in Europe and in Asia, and we remain focused on improving our profitability in North America. As we reach the end of our transition year, I look forward to fiscal year 2018 with tremendous anticipation and excitement."

Mr. Herrero continued, "Third quarter earnings finished at the low-end of our guidance. Overall we are pleased with the performance of our international businesses. In Europe, our revenues were up 16% driven by new store openings and another strong quarter of positive comp store sales. Our European wholesale order book for Spring Summer finished up 1%, marking the second consecutive season of growth in the European wholesale business. Turning to Asia, revenues finished up 10% driven by new store openings and positive comp store sales in China."

Mr. Herrero continued, "In the Americas, where the retail environment remains challenging, we are more than ever focused on improving the profitability of our retail business. In order to do so, we have identified a four point plan that we believe will drive value for our business: (1) continue to negotiate rent reductions whenever possible, (2) close unprofitable stores upon lease kick-out or expiration unless new rent terms make them profitable, (3) continue to implement supply chain initiatives including vendor consolidation, fabric platforming and source country diversification and (4) enhance our digital capabilities to help set ourselves apart from other retailers."

Mr. Herrero concluded, "As for the outlook for the current fiscal year, our previous full year guidance assumed better comps and gross margins in the Americas Retail segment for the fourth quarter than we are now expecting based on our third quarter results and trends so far in the fourth quarter. This is the main driver of the change in company guidance."

This press release contains certain non-GAAP, or adjusted, financial measures, which exclude the impact of (i) a gain from the sale of a minority interest investment recorded during the second quarter of fiscal 2017 and (ii) restructuring charges and a related exit tax charge recorded during the first quarter of fiscal 2017. A reconciliation of reported GAAP results to comparable non-GAAP results is provided in the accompanying tables and discussed under the heading "Presentation of Non-GAAP Information" below.

Third Quarter Fiscal 2017 Results

For the third quarter of fiscal 2017, the Company recorded net earnings of $9.1 million, a 26.8% decrease from $12.4 million for the third quarter of fiscal 2016. Diluted earnings per share decreased 26.7% to $0.11 for the third quarter of fiscal 2017, from $0.15 for the prior-year quarter. The Company estimates that currencies did not have a meaningful impact on diluted earnings per share in the third quarter of fiscal 2017.

Net Revenue. Total net revenue for the third quarter of fiscal 2017 increased 2.9% to $536.3 million, compared to $521.0 million in the prior-year quarter. In constant currency, net revenue also increased by 2.9%.

  • Americas Retail revenues decreased 4.7% in U.S. dollars and 4.6% in constant currency; retail comp sales including e-commerce decreased 4.9% in U.S. dollars and 4.8% in constant currency.
  • Europe revenues increased 16.4% in U.S. dollars and 16.8% in constant currency.
  • Asia revenues increased 9.8% in U.S. dollars and 6.4% in constant currency.
  • Americas Wholesale revenues decreased 4.3% in U.S. dollars and 2.2% in constant currency.
  • Licensing revenues decreased 14.3% in U.S. dollars and constant currency.

Operating Earnings. Operating earnings for the third quarter of fiscal 2017 decreased 27.4% to $15.1 million (including a $0.2 million unfavorable currency translation impact), from $20.8 million in the prior-year quarter. Operating margin in the third quarter decreased 120 basis points to 2.8%, from 4.0% in the prior-year quarter, driven primarily by the negative impact on the Company's fixed cost structure resulting from negative comparable store sales in Americas Retail and segment mix, partially offset by lower performance-based compensation costs. The negative impact of currency on operating margin for the quarter was roughly 40 basis points.

  • Operating margin for the Company's Americas Retail segment decreased 400 basis points to negative 4.9% in the third quarter of fiscal 2017, from negative 0.9% in the prior-year period. The decrease in operating margin was driven primarily by the negative impact on the fixed cost structure resulting from negative comparable store sales and more markdowns.
  • Operating margin for the Company's Europe segment increased 220 basis points to 6.0% in the third quarter of fiscal 2017, compared to 3.8% in the prior-year period, driven primarily by the favorable impact on the fixed cost structure resulting from higher wholesale shipments and overall leveraging of expenses, partially offset by the unfavorable impact from currency exchange rate fluctuations.
  • Operating margin for the Company's Asia segment decreased 630 basis points to negative 1.6% in the third quarter of fiscal 2017, from 4.7% in the prior-year period. The decrease in operating margin was driven by a higher SG&A rate due primarily to the unfavorable impact from country mix and higher expenses resulting from expansion in China.
  • Operating margin for the Company's Americas Wholesale segment decreased 310 basis points to 17.4% in the third quarter of fiscal 2017, from 20.5% in the prior-year period, due to lower gross margins and a higher SG&A rate. The lower gross margins were driven primarily by lower initial mark-ups. The higher SG&A rate was due to overall deleveraging of expenses.
  • Operating margin for the Company's Licensing segment decreased 480 basis points to 84.7% in the third quarter of fiscal 2017, from 89.5% in the prior-year period.

Other net income, which primarily includes net unrealized and realized mark-to-market revaluation gains on foreign exchange currency contracts, partially offset by net unrealized mark-to-market revaluation losses on foreign currency balances, was $0.1 million for the third quarter of fiscal 2017, compared to $0.2 million in the prior-year quarter.

Nine-Month Period Results

For the nine months ended October 29, 2016, the Company recorded GAAP net earnings of $16.2 million, a 52.5% decrease from $34.1 million for the nine months ended October 31, 2015. GAAP diluted earnings per share decreased 52.5% to $0.19 for the nine months ended October 29, 2016, from $0.40 for the prior-year period.

During the nine months ended October 29, 2016, the Company recognized a gain from the sale of a minority interest investment of approximately $22.3 million which was partially offset by the negative impact from restructuring charges of $6.1 million and a related exit tax charge of $1.9 million (or a combined $14.5 million after considering the net $0.2 million tax benefit resulting from the restructuring charges and the sale of the minority interest investment), or a favorable $0.17 per share impact. Excluding the impact of these items, adjusted net earnings was $1.7 million and adjusted diluted earnings per share was $0.02 during the nine months ended October 29, 2016. The Company estimates the negative impact of currency on diluted earnings per share for the nine months ended October 29, 2016 was approximately $0.12.

Net Revenue. Total net revenue for the first nine months of fiscal 2017 decreased 1.0% to $1.53 billion, from $1.55 billion in the prior-year period. In constant currency, net revenue decreased by 0.4%.

  • Americas Retail revenues decreased 4.0% in U.S. dollars and 3.1% in constant currency; retail comp sales including e-commerce decreased 3.9% in U.S. dollars and 3.2% in constant currency.
  • Europe revenues increased 7.7% in U.S. dollars and 7.2% in constant currency.
  • Asia revenues decreased 4.2% in U.S. dollars and 2.9% in constant currency.
  • Americas Wholesale revenues decreased 7.8% in U.S. dollars and 4.1% in constant currency.
  • Licensing revenues decreased 13.8% in U.S. dollars and constant currency.

Operating Earnings. GAAP operating earnings for the first nine months of fiscal 2017 decreased 96.6% to $1.7 million (including a $1.3 million unfavorable currency translation impact), from $51.4 million in the prior-year period. GAAP operating margin in the first nine months of fiscal 2017 decreased 320 basis points to 0.1%, from 3.3% in the prior-year period, driven primarily by the negative impact of currency exchange rate fluctuations, the negative impact on the Company's fixed cost structure resulting from negative comparable store sales in Americas Retail and segment mix, partially offset by the favorable impact from positive comparable store sales in Europe. The negative impact of currency on operating margin for the first nine months of fiscal 2017 was roughly 80 basis points.

Excluding the impact of the restructuring charges, adjusted operating earnings was $7.8 million and adjusted operating margin was 0.5%, a decrease of 280 basis points compared to the same prior-year period.

  • Operating margin for the Company's Americas Retail segment decreased 320 basis points to negative 3.8% in the first nine months of fiscal 2017, from negative 0.6% in the prior-year period. The decrease in operating margin was driven primarily by the negative impact on the fixed cost structure resulting from negative comparable store sales and more markdowns.
  • Operating margin for the Company's Europe segment decreased 120 basis points to 3.0% in the first nine months of fiscal 2017, from 4.2% in the prior-year period, due to lower gross margins, partially offset by a lower SG&A rate. The lower gross margins were driven primarily by the unfavorable impact from currency exchange rate fluctuations and business mix, partially offset by the favorable impact from positive comparable store sales. The lower SG&A rate was driven by the favorable impact on the fixed cost structure resulting from positive comparable store sales.
  • Operating margin for the Company's Asia segment decreased 770 basis points to negative 3.1% in the first nine months of fiscal 2017, from 4.6% in the prior-year period. The decrease in operating margin was due to a higher SG&A rate and lower gross margins. The higher SG&A rate was driven primarily by higher expenses resulting from expansion in China, the unfavorable impact from country mix and overall deleveraging. The lower gross margins were driven by higher occupancy costs due to retail expansion in China and overall deleveraging.
  • Operating margin for the Company's Americas Wholesale segment decreased 260 basis points to 15.6% in the first nine months of fiscal 2017, from 18.2% in the prior-year period. The decrease in operating margin was due to lower gross margins and a higher SG&A rate. The lower gross margins were driven primarily by the unfavorable impact from currency exchange rate fluctuations on product costs and lower initial markups. The higher SG&A rate was due primarily to overall deleveraging.
  • Operating margin for the Company's Licensing segment decreased 40 basis points to 88.6% in the first nine months of fiscal 2017, from 89.0% in the prior-year period.

Other net income, which primarily includes a realized gain of $22.3 million from the sale of a minority interest investment, was $26.4 million for the first nine months of fiscal 2017, compared to $6.6 million in the prior-year period. The gain from the sale of the minority interest investment has been excluded for purposes of calculating adjusted financial measures for the first nine months of fiscal 2017. A reconciliation of reported GAAP results to comparable non-GAAP results is provided in the accompanying tables and discussed under the heading "Presentation of Non-GAAP Information" below.

Dividends

The Company's Board of Directors has approved a quarterly cash dividend of $0.225 per share on the Company's common stock. The dividend will be payable on December 30, 2016 to shareholders of record at the close of business on December 14, 2016.

Outlook

The following guidance assumes that foreign currency exchange rates remain at prevailing rates:

The Company's expectations for the fourth quarter of fiscal 2017 ending January 28, 2017, are as follows:

  • Consolidated net revenues are expected to increase between 3.5% and 7.5% in U.S. dollars. Currency headwinds are expected to negatively impact consolidated revenue growth by approximately 0.5%. Excluding the impact of currency, consolidated net revenues are expected to increase between 4.0% and 8.0% in constant currency.
  • Operating margin is expected to be between 7.5% and 9.5% and includes roughly 30 basis points of currency headwind.
  • Diluted earnings per share are expected to be in the range of $0.40 to $0.50. Currencies are expected to have a minimal impact on earnings per share for the fourth quarter.

The Company updated its outlook for the fiscal year ending January 28, 2017, which is now as follows:

  • Consolidated net revenues are expected to increase between 0.5% and 1.5% in U.S. dollars. Currency headwinds are expected to negatively impact consolidated revenue growth by approximately 0.5%. Excluding the impact of currency, consolidated net revenues are expected to increase between 1.0% and 2.0% in constant currency.
  • GAAP operating margin is expected to be between 2.5% and 3.0% and includes roughly 60 basis points of currency headwind. Adjusted operating margin is expected to be between 3.0% and 3.5%.
  • GAAP diluted earnings per share are expected to be in the range of $0.59 to $0.69. The estimated impact on earnings per share of the currency headwinds is approximately $0.14. Adjusted diluted earnings per share are expected to be in the range of $0.42 to $0.52.

During the first nine months of fiscal 2017, the Company recognized a gain related to the sale of its minority interest equity holding in a privately-held boutique apparel company. The Company also implemented a global cost reduction and restructuring plan to better align its global cost and organizational structure with its current strategic initiatives which resulted in restructuring charges and a related exit tax charge incurred during the first nine months of fiscal 2017. The Company's adjusted outlook for the full year excludes the impact of these items recorded in the first nine months of fiscal 2017, where applicable. The Company's expectations for the fourth quarter ending January 28, 2017, and the Company's adjusted and GAAP outlook for the fiscal year ending January 28, 2017, also exclude the impact of any restructuring charges that may be recorded in the fourth quarter of fiscal 2017.

On a segment basis, the Company expects the following ranges for percentage changes for comparable store sales ("comps") and net revenue in U.S. dollars and constant currency compared to the same prior-year period:













Outlook by Segment1














Fourth Quarter of Fiscal 2017


Fiscal Year 2017














U.S. Dollars


Constant Currency2


U.S. Dollars


Constant Currency2











Americas Retail:










Comps


down MSD to HSD


down MSD to HSD


down LSD to MSD


down LSD to MSD


Net Revenue


down LSD to MSD


down LSD to MSD


down LSD to MSD


down LSD











Europe:










Comps


__ 


up HSD to LDD


__ 


up HSD to LDD


Net Revenue


up LDD to high teens


up mid-teens to high-teens


up HSD to LDD


up HSD to LDD











Asia:










Net Revenue


up low-twenties to high-twenties


up low-twenties to mid-twenties


up LSD


up LSD











Americas Wholesale:










Net Revenue


up HSD


up LDD


down LSD


down LSD











Licensing:










Net Revenue


down LDD


__ 


down LDD


__ 











Notes:









1

As used in the table above, "LSD" is used to refer to the range of Low-Single-Digits, "MSD" is used to refer to the range of Mid-Single-Digits, "HSD" is used to refer to the range of High-Single-Digits, and "LDD" is used to refer to the range of Low-Double-Digits.

2

Eliminates the impact of expected foreign currency translation to give investors a better understanding of the underlying trends within the business.

 

Presentation of Non-GAAP Information

The financial information presented in this release includes non-GAAP financial measures such as "adjusted" results (to exclude the impact of a gain from the sale of a minority interest investment, restructuring charges, related exit tax charge and tax impacts incurred during the nine months of fiscal 2017), constant currency financial information and free cash flow measures. The non-GAAP measures are provided in addition to, and not as alternatives for, the Company's reported GAAP results.

The Company has excluded these items from its adjusted financial measures primarily because it does not believe such items reflect the Company's ongoing operating results or future outlook. The Company believes that these adjusted financial measures are useful as an additional means for investors to evaluate the comparability of the Company's operating results when reviewed in conjunction with the Company's GAAP financial statements. A reconciliation of reported GAAP results to comparable non-GAAP results is provided in the accompanying tables.

This release also includes certain constant currency financial information. Foreign currency exchange rate fluctuations affect the amount reported from translating the Company's foreign revenue, expenses and balance sheet amounts into U.S. dollars. These rate fluctuations can have a significant effect on reported operating results under GAAP. The Company provides constant currency information to enhance the visibility of underlying business trends, excluding the effects of changes in foreign currency translation rates. To calculate net revenue, comparable store sales and earnings (loss) from operations on a constant currency basis, actual or forecasted results for the current-year period are translated into U.S. dollars at the average exchange rates in effect during the comparable period of the prior year. The constant currency calculations do not adjust for the impact of revaluing specific transactions denominated in a currency that is different to the functional currency of that entity when exchange rates fluctuate. However, in calculating the estimated impact of currency on our earnings per share for our actual and forecasted results, the Company estimates gross margin (including the impact of merchandise-related hedges) and expenses using the appropriate prior-year rates, translates the estimated foreign earnings at the comparable prior-year rates, and excludes the year-over-year earnings impact of gains or losses arising from balance sheet remeasurement and foreign currency contracts not designated as merchandise hedges. The constant currency information presented may not be comparable to similarly titled measures reported by other companies.

The Company also includes information regarding its free cash flows in this release. The Company calculates free cash flows as cash flows from operating activities less purchases of property and equipment. Free cash flows is not intended to be an alternative to cash flows from operating activities as a measure of liquidity, but rather provides additional visibility to investors regarding how much cash is generated for discretionary and non-discretionary items after deducting purchases of property and equipment. Free cash flow information presented may not be comparable to similarly titled measures reported by other companies. A reconciliation of reported GAAP cash flows from operating activities to the comparable non-GAAP free cash flow measure is provided in the accompanying tables.

Investor Conference Call

The Company will hold a conference call at 4:45 pm (ET) on November 30, 2016 to discuss the news announced in this press release. A live webcast of the conference call will be accessible at www.guess.com via the "Investor Relations" link. The webcast will be archived on the website for 30 days.

About Guess?

Guess?, Inc. designs, markets, distributes and licenses a lifestyle collection of contemporary apparel, denim, handbags, watches, footwear and other related consumer products. Guess? products are distributed through branded Guess? stores as well as better department and specialty stores around the world. As of October 29, 2016, the Company directly operated 916 retail stores in the Americas, Europe and Asia. The Company's licensees and distributors operated 735 additional retail stores worldwide. As of October 29, 2016, the Company and its licensees and distributors operated in more than 95 countries worldwide. For more information about the Company, please visit www.guess.com.

Forward-Looking Statements

Except for historical information contained herein, certain matters discussed in this press release or the related conference call and webcast, including statements concerning the Company's expectations, future prospects and strategic initiatives; statements expressing optimism or pessimism about future operating results or events and projected sales, earnings, capital expenditures and business strategy; and guidance for the fourth quarter and full year of fiscal 2017, are forward-looking statements that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements, which are frequently indicated by terms such as "expect," "will," "goal," "strategy," "believe," "continue," "outlook," "plan" and similar terms, are only expectations, and involve known and unknown risks and uncertainties, which may cause actual results in future periods to differ materially from what is currently anticipated. Factors which may cause actual results in future periods to differ materially from current expectations include, among others: our ability to maintain our brand image and reputation; domestic and international economic conditions, including economic and other events that could negatively impact consumer confidence and discretionary consumer spending; changes in the competitive marketplace and in our commercial relationships; our ability to anticipate and respond to consumer preferences and trends; our ability to manage our inventory commensurate with customer demand; risks related to the timing and costs of delivering merchandise to our stores and our wholesale customers; unexpected or unseasonable weather conditions; our ability to effectively operate our various retail concepts, including securing, renewing, modifying or terminating leases for store locations; our ability to successfully and/or timely implement our growth strategies and other strategic initiatives; our ability to expand internationally and operate in regions where we have less experience, including through joint ventures; our ability to successfully or timely implement plans for cost and workforce reductions; our ability to attract and retain key personnel; changes to our short or long-term strategic initiatives; unexpected obligations arising from new or existing litigation, tax and other regulatory proceedings; accounting adjustments identified from subsequent events arising after issuance of this release; risk of future asset impairments or restructuring charges; our ability to adapt to new regulatory compliance and disclosure obligations; risks associated with our foreign operations, such as violations of laws prohibiting improper payments and the burdens of complying with a variety of foreign laws and regulations; risks associated with the acts or omissions of our third party vendors, including a failure to comply with our vendor code of conduct or other policies; risks associated with cyber attacks and other cyber security risks; and changes in economic, political, social and other conditions affecting our foreign operations and sourcing, including the impact of currency fluctuations, global tax rates and economic and market conditions in Eastern Europe, Southern Europe and Asia (particularly China and Korea). In addition to these factors, the economic, technological, managerial, and other risks identified in the Company's most recent annual report on Form 10-K and other filings with the Securities and Exchange Commission, including but not limited to the risk factors discussed therein, could cause actual results to differ materially from current expectations. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Contact:

Guess?, Inc.


Fabrice Benarouche


VP, Finance and Investor Relations


(213) 765-5578

 































Guess?, Inc. and Subsidiaries

Condensed Consolidated Statements of Income

(amounts in thousands, except per share data)






































Three Months Ended


Nine Months Ended






October 29, 2016


October 31, 2015


October 29, 2016


October 31, 2015






$

%



$

%



$

%



$

%


































Product sales


$

512,553


95.6%



$

493,214


94.7%



$

1,462,029


95.6%



$

1,467,110


94.9%


Net royalties


23,768


4.4%



27,750


5.3%



68,066


4.4%



78,942


5.1%


Net revenue


536,321


100.0%



520,964


100.0%



1,530,095


100.0%



1,546,052


100.0%


















Cost of product sales


356,079


66.4%



337,300


64.7%



1,021,462


66.8%



998,786


64.6%


















Gross profit


180,242


33.6%



183,664


35.3%



508,633


33.2%



547,266


35.4%


















Selling, general and administrative expenses


165,119


30.8%



162,826


31.3%



500,828


32.7%



495,874


32.1%


Restructuring charges



0.0%




0.0%



6,083


0.4%




0.0%


















Earnings from operations


15,123


2.8%



20,838


4.0%



1,722


0.1%



51,392


3.3%


















Other income (expense):















Interest expense


(500)


(0.1%)



(292)


(0.0%)



(1,478)


(0.0%)



(1,456)


(0.1%)




Interest income


861


0.2%



273


0.0%



1,763


0.1%



784


0.1%




Other income, net


125


0.0%



247


0.0%



26,417


1.7%



6,581


0.4%


















Earnings before income tax expense


15,609


2.9%



21,066


4.0%



28,424


1.9%



57,301


3.7%


















Income tax expense


5,880


1.1%



8,005


1.5%



11,682


0.8%



21,774


1.4%


















Net earnings


9,729


1.8%



13,061


2.5%



16,742


1.1%



35,527


2.3%


















Net earnings attributable to noncontrolling interests


626


0.1%



617


0.1%



548


0.0%



1,453


0.1%


















Net earnings attributable to Guess?, Inc.


$

9,103


1.7%



$

12,444


2.4%



$

16,194


1.1%



$

34,074


2.2%


















Net earnings per common share attributable to common stockholders:



















Basic


$

0.11




$

0.15




$

0.19




$

0.40





Diluted


$

0.11




$

0.15




$

0.19




$

0.40



















Weighted average common shares outstanding attributable to common stockholders:



















Basic


83,758




83,985




83,631




84,651





Diluted


83,917




84,373




83,813




84,847



















Effective tax rate


37.7%




38.0%




41.1%




38.0%




Adjusted earnings from operations1:









$

7,805


0.5%







Adjusted net earnings attributable to Guess?, Inc.1:









$

1,687


0.1%







Adjusted diluted earnings per common share attributable to common stockholders1:










$

0.02























Adjusted effective tax rate1








81.7%






















Notes:













1

The adjusted results reflect the exclusion of a gain on sale of a minority interest investment, restructuring charges, related exit tax charge and tax impacts recorded during the nine months ended October 29, 2016. No adjustments have been made to the same prior-year period. A complete reconciliation of actual results to adjusted results is presented in the table entitled "Reconciliation of GAAP Results to Adjusted Results."

 


Guess?, Inc. and Subsidiaries

Reconciliation of GAAP Results to Adjusted Results

(dollars in thousands)


The following table provides reconciliations of reported GAAP earnings from operations to adjusted earnings from
operations, reported GAAP net earnings attributable to Guess?, Inc. to adjusted net earnings attributable to Guess?, Inc.
and reported GAAP income tax expense to adjusted income tax expense for the nine months ended October 29, 2016.




Nine Months Ended



October 29, 2016





% of



$


Revenues







Reported GAAP earnings from operations


$

1,722


0.1%

  Restructuring charges1


6,083








Adjusted earnings from operations


$

7,805


0.5%







Reported GAAP net earnings attributable to Guess?, Inc.


$

16,194


1.1%

  Restructuring charges1


6,083








  Gain on sale of a minority interest investment2


(22,279)








  Income tax adjustments3


(222)



  Exit tax charge4


1,911








Total adjustments affecting net earnings attributable to Guess?, Inc.


(14,507)








Adjusted net earnings attributable to Guess?, Inc.


$

1,687


0.1%







Reported GAAP income tax expense


$

11,682








  Total income tax adjustments3


222



  Exit tax charge4


(1,911)








     Total income tax effect


(1,689)








Adjusted income tax expense


$

9,993



Adjusted effective tax rate


81.7%








Notes:

1

During the first quarter of fiscal 2017, the Company implemented a global cost reduction and restructuring plan to better align its global cost and organizational structure with its current strategic initiatives which resulted in restructuring charges, mainly related to cash-based severance costs, incurred during the nine months ended October 29, 2016. The restructuring charges were recorded during the three months ended April 30, 2016.



2

The Company recognized a gain related to the sale of its minority interest equity holding in a privately-held boutique apparel company during the nine months ended October 29, 2016. The gain related to the sale was recorded during the three months ended July 30, 2016.



3

The income tax effect of the restructuring charges was based on the Company's assessment of deductibility using the statutory tax rate of the tax jurisdiction in which the charges were incurred. The income tax effect on the gain on sale of the minority interest investment was based on the impact of the transaction on the effective tax rate.



4

As a result of the global cost reduction and restructuring plan, the Company incurred an estimated exit tax charge related to its reorganization in Europe during the nine months ended October 29, 2016. The estimated exit tax charge was recorded during the three months ended April 30, 2016.



 

Guess?, Inc. and Subsidiaries

Consolidated Segment Data

(dollars in thousands)









































Three Months Ended


Nine Months Ended







October 29,


October 31,


%


October 29,


October 31,


%







2016


2015


change


2016


2015


change


















Net revenue:













Americas Retail

$

215,862



$

226,599



(5%)


$

646,573



$

673,304



(4%)


Europe

187,008



160,696



16%


535,855



497,468



8%


Asia

64,865



59,100



10%


172,241



179,880



(4%)


Americas Wholesale

44,818



46,819



(4%)


107,360



116,458



(8%)


Licensing

23,768



27,750



(14%)


68,066



78,942



(14%)







$

536,321



$

520,964



3%


$

1,530,095



$

1,546,052



(1%)



































Earnings (loss) from operations:













Americas Retail

$

(10,614)



$

(2,053)



(417%)


$

(24,829)



$

(4,018)



(518%)


Europe

11,157



6,150



81%


16,105



20,668



(22%)


Asia

(1,049)



2,794



(138%)


(5,264)



8,294



(163%)


Americas Wholesale

7,814



9,583



(18%)


16,764



21,202



(21%)


Licensing

20,141



24,842



(19%)


60,289



70,282



(14%)


Corporate Overhead

(12,326)



(20,478)



(40%)


(55,260)



(65,036)



(15%)


Restructuring Charges







(6,083)












$

15,123



$

20,838



(27%)


$

1,722



$

51,392



(97%)



































Operating margins:













Americas Retail

(4.9%)



(0.9%)





(3.8%)



(0.6%)





Europe

6.0%



3.8%





3.0%



4.2%





Asia

(1.6%)



4.7%





(3.1%)



4.6%





Americas Wholesale

17.4%



20.5%





15.6%



18.2%





Licensing

84.7%



89.5%





88.6%



89.0%






















Total Company including restructuring charges

2.8%



4.0%





0.1%



3.3%





Total Company before restructuring charges

2.8%



4.0%





0.5%



3.3%




 

Guess?, Inc. and Subsidiaries

Constant Currency Financial Measures

(dollars in thousands)
























Three Months Ended











October 29, 2016


October 31, 2015


% change


As Reported


Foreign Currency Impact


Constant
Currency


As Reported


As
Reported


Constant Currency

Net revenue:













Americas Retail

$

215,862



$

269



$

216,131



$

226,599



(5%)


(5%)


Europe

187,008



709



187,717



160,696



16%


17%


Asia

64,865



(1,961)



62,904



59,100



10%


6%


Americas Wholesale

44,818



971



45,789



46,819



(4%)


(2%)


Licensing

23,768





23,768



27,750



(14%)


(14%)







$

536,321



$

(12)



$

536,309



$

520,964



3%


3%









































Nine Months Ended











October 29, 2016


October 31, 2015


% change


As Reported


Foreign Currency Impact


Constant
Currency


As Reported


As
Reported


Constant Currency

Net revenue:













Americas Retail

$

646,573



$

6,001



$

652,574



$

673,304



(4%)


(3%)


Europe

535,855



(2,519)



533,336



497,468



8%


7%


Asia

172,241



2,344



174,585



179,880



(4%)


(3%)


Americas Wholesale

107,360



4,296



111,656



116,458



(8%)


(4%)


Licensing

68,066





68,066



78,942



(14%)


(14%)







$

1,530,095



$

10,122



$

1,540,217



$

1,546,052



(1%)


(0%)









































 

Guess?, Inc. and Subsidiaries


Selected Condensed Consolidated Balance Sheet Data


(in thousands)






































October 29,


January 30,


October 31,










2016


2016


20151
















ASSETS
















Cash and cash equivalents

$

349,104



$

445,480



$

402,386

















Receivables, net

218,205



222,359



195,825

















Inventories

428,139



311,704



373,103

















Other current assets

59,479



56,709



59,497

















Property and equipment, net

272,918



255,344



240,058

















Other assets

251,918



247,152



251,603


















Total Assets

$

1,579,763



$

1,538,748



$

1,522,472































LIABILITIES AND STOCKHOLDERS' EQUITY
















Current portion of borrowings and capital lease obligations

$

560



$

4,024



$

4,450

















Other current liabilities

363,416



323,035



322,600

















Long-term debt

23,540



2,318



2,189

















Other long-term liabilities

179,372



172,826



174,288

















Redeemable and nonredeemable noncontrolling interests

14,659



18,070



17,004

















Guess?, Inc. stockholders' equity

998,216



1,018,475



1,001,941


















Total Liabilities and Stockholders' Equity

$

1,579,763



$

1,538,748



$

1,522,472















Notes:












1

As a result of the adoption of new authoritative guidance during fiscal 2016 which requires that all deferred tax liabilities and assets be classified as long-term on the balance sheet, other current assets and other assets at October 31, 2015 were adjusted to reflect the reclassification of deferred tax assets for $19.3 million from current to long-term.


 

Guess?, Inc. and Subsidiaries

Condensed Consolidated Cash Flow Data

(in thousands)































Nine Months Ended









October 29,


October 31,









2016


2015












Net cash provided by (used in) operating activities



$

(30,775)



$

64,727













Net cash used in investing activities



(25,383)



(30,529)













Net cash used in financing activities



(44,977)



(107,994)













Effect of exchange rates on cash and cash equivalents



4,759



(7,301)













Net change in cash and cash equivalents



(96,376)



(81,097)













Cash and cash equivalents at the beginning of the year



445,480



483,483













Cash and cash equivalents at the end of the period



$

349,104



$

402,386
























Supplemental information:

















Depreciation and amortization



$

51,194



$

54,013













Rent



$

193,671



$

193,292


 

Guess?, Inc. and Subsidiaries

Reconciliation of Net Cash Provided by (Used in) Operating Activities to Free Cash Flow

(in thousands)































Nine Months Ended









October 29,


October 31,









2016


2015












Net cash provided by (used in) operating activities



$

(30,775)



$

64,727













Less: Purchases of property and equipment



(66,849)



(40,293)













Free cash flow



$

(97,624)



$

24,434













 













Guess?, Inc. and Subsidiaries

Retail Store Data

International Store Count



























As of October 29, 2016


As of October 31, 2015





Total


Directly Operated


Total


Directly Operated

Region




Stores


Stores


Stores


Stores













United States

342


341


347


346













Canada

111


111


114


114













Central and South America

91


48


96


43














Total Americas

544


500


557


503













Europe and the Middle East

614


321


593


274













Asia

493


95


475


49
















1,651


916


1,625


826
























 


 

Guess?, Inc. and Subsidiaries

Directly Operated Retail Store Data

U.S. and Canada































Nine Months Ended









October 29,


October 31,









2016


2015












Number of stores at the beginning of the year



455


481













Store openings



11


10













Store closures



(14)


(31)












Number of stores at the end of the period



452


460























Total store square footage at the end of the period



2,216,000


2,225,000






















 

Guess?, Inc. and Subsidiaries

Americas Retail Net Revenue

(dollars in thousands)


























Three Months Ended


Nine Months Ended


October 29,


October 31,


%


October 29,


October 31,


%


2016


2015


change


2016


2015


change

Net revenue:
























Retail stores

$

195,383



$

206,466



(5.4%)


$

586,792



$

616,727



(4.9%)













E-commerce sites

20,479



20,133



1.7%


59,781



56,577



5.7%













Total

$

215,862



$

226,599



(4.7%)


$

646,573



$

673,304



(4.0%)













 

Guess?, Inc. and Subsidiaries

Retail Store Change in Comparable Store Sales

U.S. and Canada










Three Months Ended


Nine Months Ended


October 29, 2016


October 29, 2016


U.S. Dollars


Constant
Currency


U.S. Dollars


Constant
Currency









Excluding e-commerce sales

(5.6%)


(5.4%)


(4.8%)


(4.1%)









Impact of e-commerce sales

0.7%


0.6%


0.9%


0.9%









Including e-commerce sales

(4.9%)


(4.8%)


(3.9%)


(3.2%)

 

 

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/guess-inc-reports-third-quarter-results-300370703.html

SOURCE Guess?, Inc.