United States Of America : Q2FY15 net income crashes 50% at apparel retailer Guess?

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Q2FY15 net income crashes 50% at apparel retailer Guess?

29
Aug '14

Despite a 50% growth in the North American online business, net earnings crashed 50.5% year-on-year at lifestyle apparel retailer Guess? Inc in the second fiscal quarter ending August 2, 2014.

For the second quarter of 2014, Guess recorded net earnings of $22.0 million, down 50.5% from adjusted net earnings of $44.3 million, the retailer posted for the second fiscal quarter of 2014.

Correspondingly, second quarter of 2014 diluted earnings per share too fell 50.0% to $0.26, compared to adjusted diluted earnings per share of $0.52 for the prior-year quarter.

Guess said the prior-year adjusted net earnings excluded restructuring charges of $6.1 million or $4.4 million net of taxes.

Total net revenue for the second quarter of 2014 fell 4.8% to $608.6 million from $639.0 million in the comparable second quarter of 2013. In constant currency, total net revenue decreased 6.3%, the retailer revealed.

Operating earnings for the second quarter of 2014 too went down 55.4% to $29.9 million, which includes a $0.9 million favorable currency translation impact, from adjusted operating earnings of $66.9 million in the prior-year period.

Operating margin in the second quarter fell by a massive 560 basis points to 4.9%, compared to adjusted operating margin of 10.5% in the prior-year quarter.

Guess attributed the lower operating margin to the negative impact on its fixed cost structure from negative same store sales in North America and lower wholesale shipments in Europe and more markdowns in North America and Europe.

Second quarter 2014 effective tax rate increased to 34.8%, compared to 33.0% for the second quarter of 2013.

CEO Paul Marciano said, “We are consolidating in North America, making it more efficient and more focused on our long-term goals and also continue to rationalize the region’s store portfolio and also have the flexibility to further optimize our retail footprint in the coming years.”

Guess directly operated 488 retail stores in the United States and Canada at end of second quarter of 2014 fiscal 2015 against 507 retail stores a year earlier and 349 retail stores in Europe, Asia and Latin America.

Fibre2fashion News Desk - India

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