Q4 EPS Reached $0.52, Including Non-Cash Impairment Charge of $0.15, Compared to $0.59 Last Year
Fiscal Year 2009 EPS Reached a Record of $2.28, Including Non-Cash Impairment Charges of $0.17, Compared to $1.99 Last Year
Fourth Quarter Fiscal 2009 Highlights
- Global revenues increased 9% to a record of $561 million
- European revenues increased 18%
- North American retail revenues increased 7%; comp sales decreased 6.5%
- Operating margin decreased to 12.2%, or to 16.2% excluding impairment charge
- Adjusted EPS, excluding impairment charge, increased 14% to $0.67
Fiscal Year 2009 Highlights
- Global revenues increased 20% to a record of $2.1 billion
- European revenues increased 34%
- North American retail revenues increased 13%; comp sales increased 1.0%
- Operating margin decreased to 15.7%, or to 16.9% excluding impairment charges
- Adjusted EPS, excluding impairment charges, increased 23% to $2.45
LOS ANGELES, March 17 /PRNewswire-FirstCall/ -- Guess?, Inc. (NYSE: GES) today reported financial results for the fourth quarter and fiscal year ended January 31, 2009.
Fourth Quarter Fiscal 2009 Results
For the fourth quarter of fiscal 2009, the Company reported net earnings of $47.9 million, a decrease of 13.2% compared to net earnings of $55.2 million for the quarter ended February 2, 2008. Diluted earnings per share decreased 11.9% to $0.52 in the current quarter, including a $0.13 favorable impact from a lower effective tax rate, a $0.04 favorable impact of a European revenue shift, and a $0.06 unfavorable impact from currency translation, versus $0.59 in the prior-year quarter. In the quarter, the Company recorded a $22.3 million non-cash asset impairment charge (compared to $0.2 million in the prior year fourth quarter) related to long-lived assets associated with retail stores in North America and Asia. Excluding the impairment charge, the Company's adjusted net earnings were $62.0 million in the current fourth quarter, an increase of 12.1% compared to adjusted net earnings of $55.3 million for the quarter ended February 2, 2008. Adjusted diluted earnings per share increased 13.6% to $0.67 from $0.59 in the comparable period last year.
Paul Marciano, Chief Executive Officer, commented, 'Our performance was solid during the fourth fiscal quarter of 2009, especially considering the unprecedented global economic crisis and significant currency headwinds we encountered during the period. We took quick and decisive actions to streamline our operations, reduce our inventory position and decelerate new store development. As we had anticipated, our retail business was affected by the current environment, which impacted sales and margins negatively, resulting in a decrease in profitability for the segment.'
Mr. Marciano continued, 'Europe delivered very good results in the period, with an operating earnings growth of 40%. Once again, our results demonstrate the power of our balanced business model. Excluding the non-cash charge, net earnings increased by 12.1% in the quarter.'
Mr. Marciano concluded, 'Our long term strategy remains unchanged. We will continue to invest in international expansion. We will continue to prudently manage our business, with focused execution on cost control and inventory management. We will also deploy our capital carefully, making targeted and compelling investments that enhance shareholder value. We believe that our brand's vitality, our diversified business model, our seasoned management team and our solid balance sheet, position us well to remain strong and take advantage of the opportunities that few in this market will have.'
Total net revenue for the fourth quarter of fiscal 2009 increased 9.0% to $561.1 million from $514.6 million in the prior fourth quarter period. During the quarter, the Company's retail stores in North America generated revenue of $288.6 million, a 6.5% increase from $270.9 million in the prior-year quarter. Comparable store sales for the current fourth quarter decreased 6.5% compared to the same period a year ago. The Company's wholesale segment, which includes its Asian operations, generated revenue of $69.9 million during the quarter, a 7.5% increase from $65.1 million in the prior-year quarter. The Company's European segment generated revenue of $179.9 million during the quarter, an increase of 18.2% when compared to $152.2 million in the prior-year quarter. During the period, the Company benefited from a $14.0 million shift in revenues in Europe due to early product shipments. The Company's licensing segment generated revenue of $22.6 million, a 14.5% decrease from $26.5 million in the prior-year period. At the end of fiscal year 2009, the Company operated 425 retail stores in the U.S. and Canada, versus 373 stores a year earlier.
Operating earnings for the fourth quarter of fiscal year 2009 decreased 28.8% to $68.5 million from $96.2 million in the fourth quarter of the prior year. Operating earnings in the current period included the $22.3 million non-cash asset impairment charge and a $7.6 million unfavorable currency translation impact. Operating margin in the fourth quarter decreased 650 basis points to 12.2%, compared to the prior year's quarter. This operating margin contraction was driven by the asset impairment charge, higher product markdowns due to the promotional retail environment and occupancy deleverage due to negative same store sales, which more than offset leverage in SG&A expenses.
The Company's net earnings benefited from a lower effective tax rate in the current quarter. For the fourth quarter, the tax rate was 22.9%, compared to 42.2% in the prior year's quarter. The lower tax rate for the period resulted from updating the annual effective tax rate analysis for fiscal year 2009, which was 32.6%, compared to 39.8% last year. The lower annual tax rate resulted from an increase in profits in lower tax jurisdictions.
Excluding the non-cash impairment charge, adjusted operating earnings declined 5.8% to $90.7 million from $96.4 million in the fourth quarter of the prior year period. Adjusted operating margin declined 250 basis points to 16.2% from 18.7% in the prior year period. The adjusted effective tax rate was 26.6% compared to 42.1% in the prior year quarter.
Fiscal Year 2009 Results
For the fiscal year ended January 31, 2009, the Company reported net earnings of $213.6 million, an increase of 14.5% compared to net earnings of $186.5 million for the year ended February 2, 2008. Diluted earnings per share increased 14.6% to $2.28 in fiscal year 2009 versus $1.99 in the prior year. Excluding impairment charges of $24.4 million in the current fiscal year and $0.6 million in the prior year, the Company's adjusted net earnings were $229.0 million, an increase of 22.6% compared to adjusted net earnings of $186.8 million for the year ended February 2, 2008. Adjusted diluted earnings per share increased 23.1% to $2.45 from $1.99 in the prior year.
Total net revenue for fiscal year 2009 increased 19.6% to $2.09 billion from $1.75 billion in the prior year. The Company's retail stores in North America generated revenue of $978.0 million for fiscal year 2009, an increase of 13.4% from $862.4 million in the prior year. Comparable store sales for fiscal 2009 increased 1.0% compared to the same period a year ago. Net revenue from the Company's wholesale segment, which includes its Asian operations, increased 14.6% in fiscal year 2009 to $296.2 million from $258.4 million in the prior year. Net revenue from the Company's European segment increased 33.5% to $719.0 million in fiscal year 2009, compared to $538.4 million in the prior year. Licensing segment net revenue increased 10.5% to $100.3 million in fiscal year 2009, compared to $90.7 million in the prior year.
Operating earnings for fiscal year 2009 increased 6.4% to $328.8 million, from $309.1 million in the prior year. Operating earnings in the current year included $24.4 million in non-cash asset impairment charges, partially offset by a $5.2 million favorable currency translation benefit. Operating margin for fiscal year 2009 decreased by 200 basis points to 15.7%. This margin decline was driven by the asset impairment charges and by lower product margins, which more than offset leverage in SG&A expenses.
The Company's net earnings benefited from a lower effective tax rate in fiscal 2009. For the year, the tax rate was 32.6%, compared to 39.8% in the prior year. The lower tax rate was due primarily to an increase of profits in lower tax jurisdictions.
Excluding the non-cash impairment charges, fiscal 2009 adjusted operating earnings increased 14.1% to $353.2 million from $309.7 million in fiscal 2008. Fiscal 2009 adjusted operating margin declined 80 basis points to 16.9% from 17.7% in fiscal 2008. The fiscal 2009 adjusted effective tax rate was 32.9% compared to 39.8% in fiscal 2008.
Share Repurchase
During the fourth quarter of fiscal 2009, the Company repurchased 1.9 million shares of its common stock at an average purchase price of $14.43, totaling $27.5 million.
