EX-99.1 2 gi8958ex991.txt EXHIBIT 99.1 Exhibit 99.1 GUESS?, INC. REPORTS RECORD RESULTS FOR THE FOURTH QUARTER AND FULL YEAR 2006 - RAISES FISCAL YEAR 2008 GUIDANCE Fourth Quarter EPS Increased by 74%, to $0.99 Versus $0.57 Last Year Full Year 2006 EPS Increased by 105%, to $2.68 Versus $1.31 Last Year Company Raises EPS Guidance for Current Fiscal Year to $3.30 to $3.40 Fourth Quarter Highlights - Revenues grew 25% to $346.4 million - Operating margin improved 480 basis points to 20.5% - Net earnings grew 77% to $45.7 million 2006 Highlights - Revenues grew 27% to $1.19 billion - Operating margin improved 540 basis points to 16.3% - Net earnings grew 109% to $123.2 million LOS ANGELES, Feb. 14 /PRNewswire-FirstCall/ -- Guess?, Inc. (NYSE: GES) today reported financial results for the fourth quarter and full year ended December 31, 2006. Fourth Quarter 2006 Results For the fourth quarter of 2006, the Company reported record revenues and record net earnings of $45.7 million, an increase of 77.1% compared to net earnings of $25.8 million for the quarter ended December 31, 2005. Diluted earnings per share increased 73.7% to $0.99 per share in the current quarter versus $0.57 per share in the fourth quarter of last year. Paul Marciano, Chief Executive Officer, commented, "The globalization of the Guess? brand is in full drive and delivering strong financial results. I am very pleased with our outstanding performance in the fourth quarter, which represented our 14th consecutive quarter of earnings growth. We drove double-digit top line growth in each of our businesses with Europe and licensing posting the largest increases. Our wholesale business showed outstanding growth this period and our retail stores generated double-digit same store sales increases. All businesses contributed significantly to the earnings growth across all regions of the world and generated strong operating margins in the period. "Our 2006 results mark our second straight year where net income doubled from the year-ago level. This performance places 2006 as Guess?'s best year ever, with record revenues and record earnings. All our business segments operated with double-digit operating margins and provided tremendous balance to our well-diversified business model. "We have a unique business format in our market. As we look ahead, we continue to see the globalization of our brand as our main focus in 2007 and beyond. In North America, we plan to continue our retail development of all our retail formats, including the launch of our newest concept, G by Guess. 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. We have strong management in each region of the world and we have a powerful brand supported by outstanding products to achieve our vision," concluded Mr. Marciano. Total net revenue for the fourth quarter of 2006 increased 25.2% to $346.4 million from $276.6 million in the fourth quarter of 2005. The Company's retail stores in the U.S. and Canada generated revenue of $240.2 million in the fourth quarter of 2006, a 16.0% increase from $207.1 million in the prior-year period. Comparable store sales increased 10.8% in the fourth quarter of 2006. Net revenue from the Company's wholesale segment increased 27.4% to $42.0 million in the fourth quarter of 2006, from $33.0 million in the prior-year period. Net revenue from the Company's European segment increased 87.4% to $42.8 million in the fourth quarter of 2006, compared to $22.9 million in the prior-year period. Licensing segment net revenue increased 56.0% to $21.3 million in the fourth quarter of 2006, from $13.7 million in the prior-year period. The Company operated 336 retail stores in the U.S. and Canada at the end of the fourth quarter 2006 versus 315 stores a year earlier. Operating earnings for the fourth quarter of 2006 increased 63.8% to $71.1 million from $43.4 million in the fourth quarter of 2005. Operating margin in the fourth quarter improved 480 basis points to 20.5%, compared to the prior year's quarter. This margin expansion was driven by a gross margin increase of 340 basis points to 46.0%, and an SG&A expense rate reduction of 140 basis points to 25.5% in the period. Full Year 2006 Results For the year ended December 31, 2006, the Company reported record revenues and record net earnings of $123.2 million, an increase of 109.4% compared to net earnings of $58.8 million for the year ended December 31, 2005. Diluted earnings per share increased 104.6% to $2.68 in 2006 versus $1.31 in 2005. Total net revenue for 2006 increased 26.6% to $1.19 billion from $936.1 million in 2005. The Company's retail stores in the U.S. and Canada generated revenue of $721.3 million for 2006, an increase of 17.7% from $612.9 million in 2005. Comparable store sales increased 12.2% for the 2006 year. Net revenue from the Company's wholesale segment increased 20.8% in 2006 to $146.3 million from $121.1 million in 2005. Net revenue from the Company's European segment increased 64.1% to $252.4 million in 2006, compared to $153.8 million in 2005. Licensing segment net revenue increased 35.0% to $65.2 million in 2006, compared to $48.3 million in 2005. Operating earnings for 2006 increased 89.6% to $193.0 million from $101.8 million in 2005. Operating margin for 2006 improved by 540 basis points to 16.3%. This margin expansion was driven by a gross margin increase of 310 basis points to 43.8% and a decrease in the SG&A expense rate of 230 basis points to 27.5%. Fiscal Year End Change As announced recently, the Company decided to change its fiscal year end from December 31 to the Saturday closest to January 31, effective with the current 2008 fiscal year that began on February 4, 2007 and will end on February 2, 2008. Recast historical financial information for the first three fiscal quarters of 2006 is included in today's press release as well as posted on the Company's website under the "Investor's Info" link. Results for the five-week January 2007 transition period will be reported when the Company releases its results for the first fiscal quarter ending May 5, 2007. Outlook For the recast fourth quarter ended February 3, 2007, the Company expects consolidated net revenues of approximately $385 million and diluted earnings per share between $0.95 and $0.97. These expectations include the January 2007 transition period, where same store sales growth of 12.7% and strong shipments in Europe are expected to generate a diluted earnings per share improvement of $0.12 to $0.14 versus the year-ago January. Given these expectations, for the twelve-month period ended February 3, 2007, the Company now anticipates consolidated net revenues of slightly above $1.2 billion, operating margin of 16.5% and diluted earnings per share in the range of $2.80 to $2.82. The Company noted that this twelve-month period encompasses 53 weeks, including a five-week January period. For the fiscal year ending February 2, 2008, the Company's expectations are as follows: - Consolidated net revenues are expected to range from $1.45 billion to $1.5 billion. - Operating margin is expected to be about 17%. - Diluted earnings per share are expected to be in the range of $3.30 to $3.40. The fiscal year ending February 2, 2008, will include 52 weeks and a four-week January. For the first quarter ending May 5, 2007, the Company's expectations are as follows: - Consolidated net revenues are expected to range from $325 million to $335 million. - Operating margin is expected to be in the low teens. - Diluted earnings per share are expected to be in the range of $0.52 to $0.55. The Company will hold a conference call at 4:30 pm (ET) on February 14, 2007 to discuss the news announced in this press release. A live webcast of the conference call will be accessible at www.guessinc.com via the "Investor's Info" link. 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 February 3, 2007 the Company operated 334 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.guessinc.com. Except for historical information contained herein, certain matters discussed in this press release, including statements concerning the Company's future prospects and guidance for fiscal years 2007 and 2008, 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 to differ materially from what is currently anticipated. Factors which may cause actual results in future periods to differ materially from current expectations include our ability to, among other things, anticipate consumer preferences, effectively operate our retail stores, effectively manage inventories, successfully execute our strategies, including our supply chain and international growth strategies, and domestic and international general economic conditions and consumer confidence. In addition to these factors, the economic and other factors 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. Contacts: Carlos Alberini President & Chief Operating Officer (213) 765-3582 Dennis R. Secor SVP & Chief Financial Officer (213) 765-3289 Joseph Teklits Integrated Corporate Relations (203) 682-8258 Guess?, Inc. and Subsidiaries Condensed Consolidated Statements of Operations (dollars in thousands, except per share data)
Three Months Ended --------------------------------------------------------------- December 31, December 31, 2006 2005 ----------------------------- ----------------------------- $ % $ % ------------ ------------ ------------ ------------ Net revenue: Product sales $ 325,097 93.8% $ 262,980 95.1% Net royalties 21,324 6.2% 13,669 4.9% 346,421 100.0% 276,649 100.0% Cost of product sales 186,958 54.0% 158,919 57.4% Gross profit 159,463 46.0% 117,730 42.6% Selling, general and administrative expenses 88,353 25.5% 74,307 26.9% Earnings from operations 71,110 20.5% 43,423 15.7% Other (income) expense: Interest expense 2,681 0.8% 1,870 0.7% Interest income (1,640) (0.5)% (1,124) (0.4)% Other, net (1,890) (0.5)% --- --- Earnings before income taxes and minority interest 71,959 20.7% 42,677 15.4% Income taxes 26,144 7.5% 16,875 6.1% Minority interest 132 0.0% --- --- Net earnings $ 45,683 13.2% $ 25,802 9.3% Earnings per share: Basic $ 1.00 $ 0.58 Diluted $ 0.99 $ 0.57 Weighted number of shares outstanding: Basic 45,630 44,698 Diluted 46,334 45,589
Year Ended --------------------------------------------------------------- December 31, December 31, 2006 2005 ----------------------------- ----------------------------- $ % $ % ------------ ------------ ------------ ------------ Net revenue: Product sales $ 1,119,945 94.5% $ 887,782 94.8% Net royalties 65,239 5.5% 48,310 5.2% 1,185,184 100.0% 936,092 100.0% Cost of product sales 665,805 56.2% 555,223 59.3% Gross profit 519,379 43.8% 380,869 40.7% Selling, general and administrative expenses 326,356 27.5% 279,059 29.8% Earnings from operations 193,023 16.3% 101,810 10.9% Other (income) expense: Interest expense 7,450 0.6% 6,741 0.8% Interest income (5,947) (0.4)% (2,626) (0.3)% Other, net (4,477) (0.4)% --- --- Earnings before income taxes and minority interest 195,997 16.5% 97,695 10.4% Income taxes 72,715 6.1% 38,882 4.2% Minority interest 114 0.0% --- --- Net earnings $ 123,168 10.4% $ 58,813 6.3% Earnings per share: Basic $ 2.72 $ 1.33 Diluted $ 2.68 $ 1.31 Weighted number of shares outstanding: Basic 45,309 44,387 Diluted 46,037 45,059
Guess?, Inc. and Subsidiaries Consolidated Segment Data (in thousands)
Three Months Ended ---------------------------------------------- December 31, December 31, % 2006 2005 chg ------------ ------------ ------------ Net revenue: Retail operations $ 240,237 $ 207,127 16% Wholesale operations 42,030 33,002 27% European operations 42,830 22,851 87% Licensing operations 21,324 13,669 56% $ 346,421 $ 276,649 25% Earnings (loss) from operations: Retail operations $ 51,324 $ 36,449 41% Wholesale operations 9,504 3,143 202% European operations 4,977 192 2492% Licensing operations 19,748 12,892 53% Corporate overhead (14,443) (9,253) 56% $ 71,110 $ 43,423 64% Operating margins: Retail operations 21.4% 17.6% Wholesale operations 22.6% 9.5% European operations 11.6% 0.8% Licensing operations 92.6% 94.3% Total Company 20.5% 15.7%
Year Ended ---------------------------------------------- December 31, December 31, % 2006 2005 chg ------------ ------------ ------------ Net revenue: Retail operations $ 721,262 $ 612,862 18% Wholesale operations 146,320 121,103 21% European operations 252,363 153,817 64% Licensing operations 65,239 48,310 35% $ 1,185,184 $ 936,092 27% Earnings (loss) from operations: Retail operations $ 100,436 $ 65,274 54% Wholesale operations 23,963 7,325 227% European operations 64,211 28,103 128% Licensing operations 57,189 37,804 51% Corporate overhead (52,776) (36,696) 44% $ 193,023 $ 101,810 90% Operating margins: Retail operations 13.9% 10.7% Wholesale operations 16.4% 6.0% European operations 25.4% 18.3% Licensing operations 87.7% 78.3% Total Company 16.3% 10.9%
Guess?, Inc. and Subsidiaries Selected Condensed Consolidated Balance Sheet Data (in thousands) December 31, December 31, 2006 2005 ------------ ------------ ASSETS Cash and cash equivalents $ 220,333 $ 171,549 Receivables, net 133,406 81,762 Inventories, net 166,122 122,037 Other current assets 42,557 32,670 Property and equipment, net 164,260 144,007 Other assets 110,406 81,349 Total Assets $ 837,084 $ 633,374 LIABILITIES AND STOCKHOLDERS' EQUITY Current installments of notes payable, long-term debt and capital lease $ 34,357 $ 35,051 Other current liabilities 249,273 182,175 Notes payable, long-term debt and capital lease, excluding current installments 18,018 53,199 Other long-term liabilities 99,199 74,656 Minority interest 5,178 --- Stockholders' equity 431,059 288,293 Total Liabilities and Stockholders' Equity $ 837,084 $ 633,374 Guess?, Inc. and Subsidiaries Condensed Consolidated Cash Flow Data (in thousands) Year Ended --------------------------- December 31, December 31, 2006 2005 ------------ ------------ Net cash provided by operating activities $ 138,253 $ 149,316 Net cash used in investing activities (71,547) (70,314) Net cash used in financing activities (19,190) (13,324) Effect of exchange rates on cash 1,268 (132) Net increase in cash and cash equivalents 48,784 65,546 Cash and cash equivalents at the beginning of the year 171,549 106,003 Cash and cash equivalents at the end of the period $ 220,333 $ 171,549 Supplemental information: Depreciation and amortization $ 38,054 $ 34,639 Rent 84,598 73,126 Guess?, Inc. and Subsidiaries Retail Store Data U.S. and Canada Year Ended --------------------------- December 31, December 31, 2006 2005 ------------ ------------ Number of stores at the beginning of the year 315 287 Store openings 32 37 Store closures (11) (9) Number of stores at the end of the period 336 315 Total store square footage at the end of the period 1,621,000 1,563,000 Guess?, Inc. and Subsidiaries Recast Condensed Consolidated Statements of Operations (dollars in thousands, except per share data)
Three Months Ended Three Months Ended April 29, July 29, 2006 2006 ----------------------------- ----------------------------- $ % $ % ------------ ------------ ------------ ------------ Net revenue Product sales $ 251,337 94.6% $ 247,685 94.6% Net royalties 14,346 5.4% 14,264 5.4% 265,683 100.0% 261,949 100.0% Cost of product sales 155,073 58.4% 151,618 57.9% Gross profit 110,610 41.6% 110,331 42.1% Selling, general and administrative expenses 76,333 28.7% 76,683 29.3% Earnings from operations 34,277 12.9% 33,648 12.8% Other (income) expense: Interest expense 1,465 0.6% 1,794 0.7% Interest income (1,227) (0.5)% (1,494) (0.6)% Other, net (297) (0.1)% (827) (0.3)% Earnings before income taxes and minority interest 34,336 12.9% 34,175 13.0% Income taxes 13,665 5.1% 13,652 5.1% Minority interest --- --- (123) (0.0)% Net earnings $ 20,671 7.8% $ 20,646 7.9% Net earnings per share: Basic $ 0.46 $ 0.46 Diluted $ 0.45 $ 0.45 Weighted number of shares outstanding: Basic 45,073 45,297 Diluted 45,811 45,968
Three Months Ended Nine Months Ended October 28, October 28, 2006 2006 ----------------------------- ----------------------------- $ % $ % ------------ ------------ ------------ ------------ Net revenue Product sales $ 311,914 94.9% $ 810,936 94.7% Net royalties 16,902 5.1% 45,512 5.3% 328,816 100.0% 856,448 100.0% Cost of product sales 174,285 53.0% 480,976 56.2% Gross profit 154,531 47.0% 375,472 43.8% Selling, general and administrative expenses 88,366 26.9% 241,382 28.1% Earnings from operations 66,165 20.1% 134,090 15.7% Other (income) expense: Interest expense 1,517 0.5% 4,776 0.6% Interest income (1,770) (0.6)% (4,491) (0.5)% Other, net (1,646) (0.5)% (2,770) (0.3)% Earnings before income taxes and minority interest 68,064 20.7% 136,575 15.9% Income taxes 23,963 7.3% 51,280 5.9% Minority interest 111 0.0% (12) (0.0)% Net earnings $ 43,990 13.4% $ 85,307 10.0% Net earnings per share: Basic $ 0.97 $ 1.89 Diluted $ 0.95 $ 1.86 Weighted number of shares outstanding: Basic 45,423 45,243 Diluted 46,125 45,950
Guess?, Inc. and Subsidiaries Recast Consolidated Segment Data (in thousands)
Three Three Three Nine Months Months Months Months Ended Ended Ended Ended Apr 29, Jul 29, Oct 28, Oct 28, 2006 2006 2006 2006 --------- --------- --------- --------- Net revenue: Retail operations $ 150,861 $ 166,095 $ 178,834 $ 495,790 Wholesale operations 33,360 32,824 43,939 110,123 European operations 67,116 48,766 89,141 205,023 Licensing operations 14,346 14,264 16,902 45,512 $ 265,683 $ 261,949 328,816 $ 856,448 Earnings (loss) from operations: Retail operations $ 13,689 $ 20,939 $ 26,787 $ 61,415 Wholesale operations 3,072 5,394 9,040 17,506 European operations 16,944 8,219 31,103 56,266 Licensing operations 11,888 13,232 13,115 38,235 Corporate overhead (11,316) (14,136) (13,880) (39,332) $ 34,277 $ 33,648 $ 66,165 $ 134,090 Operating margins: Retail operations 9.1% 12.6% 15.0% 12.4% Wholesale operations 9.2% 16.4% 20.6% 15.9% European operations 25.2% 16.9% 34.9% 27.4% Licensing operations 82.9% 92.8% 77.6% 84.0% 12.9% 12.8% 20.1% 15.7%
Guess?, Inc. and Subsidiaries Recast Selected Condensed Consolidated Balance Sheet Data (in thousands)
April 29, July 29, October 28, 2006 2006 2006 ------------ ------------ ------------ ASSETS Cash and cash equivalents $ 155,533 $ 196,027 $ 163,806 Restricted cash --- --- 16,361 Receivables, net 125,976 109,068 173,750 Inventories, net 108,241 132,453 144,514 Other current assets 34,166 36,911 39,097 Property and equipment, net 150,730 157,755 160,677 Other assets 97,026 104,630 109,337 Total Assets $ 671,672 $ 736,844 $ 807,542 LIABILITIES AND STOCKHOLDERS' EQUITY Current installments of notes payable, long-term debt and capital lease $ 44,768 $ 26,262 $ 52,585 Other current liabilities 164,536 226,805 229,159 Notes payable, long-term debt and capital lease, excluding current installments 52,152 46,946 41,122 Other long-term liabilities 88,420 88,606 87,930 Minority interest --- 367 478 Stockholders' equity 321,796 347,858 396,268 Total Liabilities and Stockholders' Equity $ 671,672 $ 736,844 $ 807,542
Guess?, Inc. and Subsidiaries Recast Condensed Consolidated Cash Flow Data (in thousands)
Three Six Nine Months Months Months Ended Ended Ended April 29, July 29, October 28, 2006 2006 2006 ------------ ------------ ------------ Net cash (used in) provided by operating activities $ (17,726) $ 63,102 $ 39,514 Net cash used in investing activities (13,039) (32,813) (47,785) Net cash provided (used in) financing activities 18,559 (2,087) 4,243 Effect of exchange rates on cash 545 631 640 Net (decrease) increase in cash and cash equivalents (11,661) 28,833 (3,388) Cash and cash equivalents at the beginning of the year 167,194 167,194 167,194 Cash and cash equivalents at the end of the period $ 155,533 $ 196,027 $ 163,806 Supplemental information: Depreciation and amortization $ 8,372 $ 17,888 $ 27,991 Rent 20,160 41,195 63,003
Guess?, Inc. and Subsidiaries Recast Retail Store Data and Comparable Store Sales U.S. and Canada
Three Six Nine Months Months Months Ended Ended Ended April 29, July 29, October 28, 2006 2006 2006 ------------ ------------ ------------ Number of stores at the beginning of the year 311 311 311 Store openings 9 17 27 Store closures (4) (6) (6) Number of stores at the end of the period 316 322 332 Total store square footage at the end of the period 1,553,000 1,574,000 1,607,000
Three Three Three Three Twelve Months Months Months Months Months Ended Ended Ended Ended Ended April 29, July 29, October 28, February 3, February 3, 2006 2006 2006 2007 2007 ----------- ----------- ----------- ----------- ----------- Comparable store sales percentage increase 12.6% 13.7% 8.9% 11.0% 11.4%
SOURCE Guess?, Inc. -0- 02/14/2007 /CONTACT: Carlos Alberini, President & Chief Operating Officer, +1-213-765-3582, or Dennis R. Secor, SVP & Chief Financial Officer, +1-213-765-3289, both of Guess?, Inc.; or Joseph Teklits of Integrated Corporate Relations, +1-203-682-8258, for Guess?, Inc./ /Web site: http://www.guessinc.com / (GES)