Guess 4th-Quarter Profit Down 24% on Higher Costs, Charges

       By Debbie Cai 

    Guess Inc.'s (GES) fiscal fourth-quarter earnings fell 24% as higher input costs and special charges offset the apparel company's improved revenue.

    Shares slid 5.4% to $25.50 after hours Wednesday as the company's view for the first quarter and full year were below Wall Street's expectations. The stock is down 17% over the past 12 months through the close.

    For the current quarter, Guess forecast per-share earnings of five cents to 10 cents on revenue of $545 million to $560 million. Analysts surveyed by Thomson Reuters were looking for 29 cents and $591 million, respectively.

    Guess expects earnings for fiscal year 2014 to be between $1.70 to $190 a share and revenue to range from $2.6 billion to $2.64 billion. Analysts predicted $2.31 a share on revenue of $2.74 billion.

    The company has been struggling in recent quarters amid declining revenue from its North American and European operations. The company has recently implemented plans to streamline its operational structure and cut expenses.

    Chief Executive Paul Marciano said the company enters the current fiscal year expecting continued challenges in the macroeconomic environment.

    "In our more developed markets, we will continue to invest in marketing and visual merchandising initiatives to improve the performance of our stores while tightly managing expenses and inventories to protect our strong financial position," he said. "Already we have made progress in streamlining our operations in these markets that we expect to yield cost savings in the future. At the same time we will continue to invest in under-developed markets where the brand awareness is high but less penetrated."

    In the latest period, North American retail revenue grew 1.9%. Same-store sales were down 6.3%. In its European business, revenue improved 3.2%. Asian revenue was up 19%.

    For the quarter ended Feb. 2, Guess reported a profit of $72.6 million, or 85 cents a share, down from $95.9 million, or $1.05 a share, a year earlier. Excluding a charge of $12.8 million related to the resolution of a tax audit dispute in Italy and unrelated tax benefits of $4 million, adjusted earnings were down at 95 cents a share, from $1.05 a year earlier.

    Revenue improved 5.1% to $815.1 million. Excluding currency fluctuations, revenue was up 4.2%.

    Guess in November had estimated per-share earnings of 85 cents to 95 cents on revenue of $780 million to $800 million.

    Gross margin narrowed to 40.8% from 43.2%. Overhead costs were up 9.4%. The company's effective tax rate in the period increased to 31.1% from 30.9%.

    Write to Debbie Cai at