EX-99.1 2 gi3218ex991.htm

Exhibit 99.1

Guess?, Inc. Reports an 80% Increase in Second Quarter 2005 Earnings to $0.09 Per Share Versus $0.05 Last Year

          LOS ANGELES, July 28 /PRNewswire-FirstCall/ -- Guess?, Inc. (NYSE: GES) today reported financial results for the second quarter ended July 2, 2005. 

          Second Quarter Results
          For the second quarter ended July 2, 2005, the Company reported that net earnings increased by 95.4% to $4.2 million compared to net earnings of $2.1 million for the quarter ended June 26, 2004.  Diluted earnings per share increased 80.0% to $0.09 per share in the current quarter versus $0.05 per share in the second quarter last year. 

          Maurice Marciano, Co-Chairman and Co-CEO, commented, “We are pleased with our second quarter financial performance.  Our wholesale, retail and licensing operations all posted solid performance during the period.  We controlled expenses effectively and operated with leaner inventories in North America, which contributed to higher margins in our wholesale segment and a better transition into the important back to school selling period in our stores.  Our retail business and the licensing segment had solid results based on strong customer response to our product and our new contemporary line, Marciano, is performing ahead of plan.  We are very pleased with the progress made with our European business and its integration.  We believe we are well positioned for strong international expansion and remain confident about our prospects for the balance of 2005.”

          Total net revenue for the second quarter of 2005 increased 15.7% to $178.2 million from $154.1 million in the second quarter of 2004.  The Company’s retail stores in the U.S. and Canada generated revenue of $132.9 million in the 2005 second quarter, a 15.3% increase from $115.2 million, as reported in the prior year period. Comparable store sales increased 4.2% during the second quarter of 2005 versus the prior year period.  Net revenue from the Company’s wholesale segment increased 3.5% to $26.1 million in the second quarter of 2005 from $25.3 million in the same year-ago period.  Net revenue from the Company’s European operations increased 146.3% to $9.9 million in the second quarter of 2005, compared to $4.0 million in the prior year period.  Licensing segment net revenue decreased 3.0% to $9.3 million in the second quarter of 2005 from $9.6 million in the prior year period.  The Company operated 301 retail stores at second quarter-end 2005 versus 264 stores a year earlier. 

          Six Month Results
          For the six months ended July 2, 2005, the Company reported that net earnings increased 327.0% to $12.3 million compared to net earnings of $2.9 million for the six months ended June 26, 2004.  Diluted earnings per share increased 366.7% to $0.28 per share in the current six-month period versus $0.06 per share in the comparable period last year.  The six months ended July 2, 2005 had 183 days compared to 178 days in the six months ended June 26, 2004.


          Total net revenue increased 28.1% to $393.8 million in the 2005 six-month period from $307.4 million in the prior year period.  The Company’s retail stores in the U.S. and Canada generated revenue of $249.4 million for the first six months of 2005, an increase of 16.1% from $214.8 million for the prior year period.  Comparable store sales increased 4.4% during the first half of 2005.  Net revenue from the Company’s wholesale segment in the first half of 2005 increased 7.2% to $57.1 million from $53.3 million in the first six months of 2004.  Net revenue from the Company’s European operations increased 253.7% to $66.6 million in the first six months of 2005, compared to $18.8 million in the prior year period, following the acquisition of the Company’s European jeanswear licensee on January 3, 2005.  Licensing segment net revenue was $20.7 million in the first six months of 2005, a 0.9% increase from $20.5 million for the same prior year period.

          July Comparable Store Sales
          The Company’s July fiscal month began on July 3, 2005 and will end on July 30, 2005.  Based on current sales trends, the Company expects July comparable store sales to increase in the low to mid single digits on a percentage basis.

          The Company will hold a conference call at 4:30 pm (ET) on July 28, 2005 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’s Info” link from the “Guess?, Inc.” section of the site.  The webcast will be archived on the website for 30 days.

          Guess?, Inc. designs, markets, distributes and licenses a lifestyle collection of contemporary apparel, accessories and related consumer products.  At July 2, 2005, the Company operated 301 retail stores in the United States and Canada.  The Company also distributes its products through better department and specialty stores around the world.  For more information about the Company, please visit www.guess.com.

          Except for historical information contained herein, certain matters discussed in this press release 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 are only expectations, and involve known and unknown risks and uncertainties, which may cause actual results in future periods and other future events to differ materially from what is currently anticipated.  Factors which may cause actual results in future periods to differ from current expectations include, among other things, the continued availability of sufficient working capital, the successful integration of acquisitions and new stores into existing operations, the continued desirability and customer acceptance of existing and future product lines (including licensed product lines), possible cancellations of wholesale orders, the success of competitive products, and the availability of adequate sources of capital.  In addition to these factors, the economic and other factors identified in the Company’s most recent annual report on Form 10-K for the fiscal year ended December 31, 2004, including but not limited to the risk factors discussed therein, could affect the forward-looking statements contained herein and in the Company’s other public documents.

          Contact:  Carlos Alberini
                         President & Chief Operating Officer
                         (213) 765-3582

                         Frederick G. Silny
                         SVP & Chief Financial Officer
                         (213) 765-3289


Guess?, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(dollars in thousands, except per share data)
(Unaudited)

 

 

Three Months Ended

 

 

 

 

 

 

July 2,
2005

 

June 26,
2004

 

 

 

 

 

 

 

$

 

%

 

$

 

%

 

 

 

 

 

 

 

Net revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

Product sales

 

$

168,913

 

 

94.8

%

$

144,489

 

 

93.8

%

Net royalties

 

 

9,322

 

 

5.2

%

 

9,608

 

 

6.2

%

 

 

 

178,235

 

 

100.0

%

 

154,097

 

 

100.0

%

Cost of product sales

 

 

111,757

 

 

62.7

%

 

96,307

 

 

62.5

%

Gross profit

 

 

66,478

 

 

37.3

%

 

57,790

 

 

37.5

%

Selling, general and administrative expenses

 

 

58,717

 

 

32.9

%

 

52,577

 

 

34.1

%

Earnings from operations

 

 

7,761

 

 

4.4

%

 

5,213

 

 

3.4

%

Other (income) expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

2,093

 

 

1.2

%

 

1,576

 

 

1.0

%

Interest income

 

 

(1,043

)

 

(0.6

)%

 

(103

)

 

—  

 

Earnings before income taxes

 

 

6,711

 

 

3.8

%

 

3,740

 

 

2.4

%

Income taxes

 

 

2,547

 

 

1.5

%

 

1,609

 

 

1.0

%

Net earnings

 

$

4,164

 

 

2.3

%

$

2,131

 

 

1.4

%

Net earnings per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.09

 

 

 

 

$

0.05

 

 

 

 

Diluted

 

$

0.09

 

 

 

 

$

0.05

 

 

 

 

Weighted number of shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

44,238

 

 

 

 

 

43,997

 

 

 

 

Diluted

 

 

44,703

 

 

 

 

 

44,553

 

 

 

 

 

 

Six Months Ended

 

 

 

 

 

 

July 2,
2005

 

June 26,
2004

 

 

 

 

 

 

 

$

 

%

 

$

 

%

 

 

 

 

 

 

 

Net revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

Product sales

 

$

373,107

 

 

94.7

%

$

286,894

 

 

93.3

%

Net royalties

 

 

20,736

 

 

5.3

%

 

20,548

 

 

6.7

%

 

 

 

393,843

 

 

100.0

%

 

307,442

 

 

100.0

%

Cost of product sales

 

 

245,142

 

 

62.2

%

 

197,122

 

 

64.1

%

Gross profit

 

 

148,701

 

 

37.8

%

 

110,320

 

 

35.9

%

Selling, general and administrative expenses

 

 

125,786

 

 

32.0

%

 

102,498

 

 

33.3

%

Earnings from operations

 

 

22,915

 

 

5.8

%

 

7,822

 

 

2.6

%

Other (income) expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

3,847

 

 

1.0

%

 

2,961

 

 

1.0

%

Interest income

 

 

(1,478

)

 

(0.4

)%

 

(205

)

 

—  

 

Earnings before income taxes

 

 

20,546

 

 

5.2

%

 

5,066

 

 

1.6

%

Income taxes

 

 

8,219

 

 

2.1

%

 

2,179

 

 

0.7

%

Net earnings

 

$

12,327

 

 

3.1

%

$

2,887

 

 

0.9

%

Net earnings per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.28

 

 

 

 

$

0.07

 

 

 

 

Diluted

 

$

0.28

 

 

 

 

$

0.06

 

 

 

 

Weighted number of shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

44,219

 

 

 

 

 

43,881

 

 

 

 

Diluted

 

 

44,677

 

 

 

 

 

44,456

 

 

 

 


Guess?, Inc. and Subsidiaries
Consolidated Segment Data
(in thousands)
(Unaudited)

 

 

Three Months Ended

 

Six Months Ended

 

 

 

 

 

 

 

July 2,
2005

 

June 26,
2004

 

July 2,
2005

 

June 26,
2004

 

 

 

 

 

 

 

Net revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

Retail operations

 

$

132,908

 

$

115,248

 

$

249,403

 

$

214,772

 

Wholesale operations

 

 

26,087

 

 

25,214

 

 

57,146

 

 

53,303

 

European operations

 

 

9,918

 

 

4,027

 

 

66,558

 

 

18,819

 

Licensing operations

 

 

9,322

 

 

9,608

 

 

20,736

 

 

20,548

 

 

 

$

178,235

 

$

154,097

 

$

393,843

 

$

307,442

 

Earnings (loss) from operations:

 

 

 

 

 

 

 

 

 

 

 

 

 

Retail operations

 

$

13,457

 

$

12,546

 

$

10,049

 

$

10,868

 

Wholesale operations

 

 

279

 

 

(4,752

)

 

2,406

 

 

(5,946

)

European operations

 

 

(4,853

)

 

(508

)

 

11,000

 

 

4,783

 

Licensing operations

 

 

7,906

 

 

7,065

 

 

17,050

 

 

16,048

 

Corporate overhead

 

 

(9,028

)

 

(9,138

)

 

(17,590

)

 

(17,931

)

 

 

$

7,761

 

$

5,213

 

$

22,915

 

$

7,822

 

Guess?, Inc. and Subsidiaries
Selected Condensed Consolidated Balance Sheet Data
(in thousands)
(Unaudited)

 

 

July 2,
2005

 

December 31,
2004

 

June 26,
2004

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

88,273

 

$

106,003

 

$

50,377

 

Restricted cash

 

 

3,231

 

 

3,660

 

 

4,097

 

Receivables, net

 

 

74,399

 

 

53,915

 

 

38,084

 

Inventories, net

 

 

113,206

 

 

82,329

 

 

96,810

 

Other current assets

 

 

26,307

 

 

25,116

 

 

26,684

 

Property and equipment, net

 

 

121,430

 

 

113,944

 

 

106,524

 

Other assets

 

 

58,479

 

 

39,337

 

 

35,588

 

Total Assets

 

$

485,325

 

$

424,304

 

$

358,164

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

Current installments of notes payable and long-term debt

 

$

37,015

 

$

13,430

 

$

12,948

 

Other current liabilities

 

 

122,659

 

 

119,369

 

 

92,510

 

Notes payable and long-term debt, excluding current installments

 

 

50,848

 

 

41,396

 

 

47,773

 

Other liabilities

 

 

43,938

 

 

29,532

 

 

16,353

 

Stockholders’ equity

 

 

230,865

 

 

220,577

 

 

188,580

 

Total Liabilities and Stockholders’ Equity

 

$

485,325

 

$

424,304

 

$

358,164

 


Guess?, Inc. and Subsidiaries
Condensed Consolidated Cash Flow Data
(in thousands)
(Unaudited)

 

 

Six Months Ended

 

 

 

 

 

 

July 2,
2005

 

June 26,
2004

 

 

 

 

 

Net cash provided by (used in) operating activities

 

$

23,937

 

$

(1,468

)

Net cash used in investing activities

 

 

(41,389

)

 

(9,950

)

Net cash provided by (used in) financing activities

 

 

148

 

 

(5,282

)

Effect of exchange rates on cash

 

 

(426

)

 

(86

)

Net decrease in cash and cash  equivalents

 

 

(17,730

)

 

(16,786

)

Cash and cash equivalents at the beginning of the year

 

 

106,003

 

 

67,163

 

Cash and cash equivalents at the end  of the period

 

$

88,273

 

$

50,377

 

Supplemental information:

 

 

 

 

 

 

 

Depreciation and amortization

 

$

16,985

 

$

17,498

 

Rent

 

 

34,433

 

 

30,462

 

Guess?, Inc. and Subsidiaries
Retail Store Data
U.S. and Canada
(Unaudited)

 

 

Six Months Ended

 

 

 

 

 

 

July 2,
2005

 

June 26,
2004

 

 

 

 

 

Number of stores at the beginning of  the year

 

 

287

 

 

265

 

Store openings

 

 

21

 

 

7

 

Store closures

 

 

(7

)

 

(8

)

Number of stores at the end of the period

 

 

301

 

 

264

 

Total store square footage at the end of the period

 

 

1,508,000

 

 

1,370,000

 

SOURCE  Guess?, Inc.
          -0-                                        07/28/2005
          /CONTACT:  Carlos Alberini, President & Chief Operating Officer,  +1-213-765-3582, or Frederick G. Silny, SVP & Chief Financial Officer, +1-213-765-3289, both of Guess?, Inc./
          /FCMN Contact: Fredsi@guess.com /
          /Web site:  http://www.guess.com /