Guess? Inc. (GES) is expected to be benefited from the strength of its Europe and Asia businesses as third-quarter earnings results are scheduled for Wednesday. The lifestyle products designer’s international businesses growth will be aided by the constant store opening and e-commerce growth.
Analysts, on average, predict Guess to post earnings of $0.16 per share on revenue of $603.08 million for the third quarter. In comparison, during the previous year quarter, the company reported a profit of $0.12 per share on revenue of $554.14 million. Majority of the analysts recommended a “hold” rating on the stock with an average price target of $25.50.
The company’s top line is expected to be fueled by higher comps including e-commerce, store opening, and the rise in wholesale revenues. The comps are likely to improve in Europe as sales quality improvement and merchandising structure will aid in the desired result.
The operating margin will be benefited by the higher European wholesale shipments and a decline in markdowns in Americas Retail. However, the relocation of the European distribution center and an increase in retail promotions in Europe will likely to hurt the company’s results for the third quarter.
For the second quarter, Guess? posted a 62% jump in earnings as the revenue growth of 14% was driven by the continued momentum in Europe and Asia. Americas Retail revenue declined 2% while Americas Wholesale revenue increased 4.9%. Europe revenue jumped 22.2% and Asia revenue soared 32%.
For the third quarter, the company had expected revenue growth of 9% to 10% and adjusted EPS of $0.12 to $0.15. For the full year 2019, Guess? had predicted revenue growth of 9% to 9.5%, GAAP earnings of $0.85 to $0.94 per share and adjusted earnings of $0.94 to $1.03 per share.
The company has been strengthening its digital operations by investing in brand building through social media platforms. Also, the company has been focusing on linking brick-and-mortar stores, e-commerce and mobile sales to improve its online operations. The sales growth could be driven by the enhanced customer base as they could reserve the merchandise online and pick them up in stores.
Shares of Guess? ended Monday’s regular session up 3.93% at $21.42 on the NYSE. The stock has risen over 26% in the year so far and over 39% in the past year.
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