The apparel retailer Guess?, Inc. saw its stock plunge after Tuesday's market close, following a third-quarter earnings report that fell short of Wall Street expectations. The company reported earnings per share (EPS) of $0.49, missing the estimated $0.62, and revenue of $651 million, which also did not meet the forecasted $656 million. Despite these figures representing year-over-year improvements, the company's shares dropped sharply by 14.3% in after-hours trading.
For the fourth quarter, Guess? has set a conservative guidance with EPS predicted to be between $1.53 and $1.60, which is below analysts' expectations of $1.68 as per Benzinga Pro data. The revised full-year 2024 targets now aim for up to 2.4% revenue growth with adjusted EPS within the range of $2.67 to $2.74 while maintaining around a 9% operating margin.
CEO Carlos Alberini pointed out that solid contributions from the licensing business and cost efficiencies have helped mitigate softer performance in the direct-to-consumer segment amid broader economic challenges. He emphasized the firm's resilience in the face of market volatility, noting a 5% increase in Europe's revenue in constant currency terms and a 7% rise in retail comparable sales when adjusted for currency fluctuations.
Despite the challenging quarter, fiscal year 2024 projections indicate a positive outlook with expected growth between 4-6% in revenues for Q4FY24 and EPS estimates set at $1.53-$1.60. Furthermore, the board has approved a stable quarterly dividend yielding at 4.39%, demonstrating confidence in the company's financial health.
Analysts have maintained a Moderate Buy consensus rating on Guess?, citing an average price target that suggests over a 13% upside potential from current levels. This optimism comes even as year-to-date shares had previously risen by 16% before the recent downturn triggered by faltering consumer confidence and the latest financial results.
InvestingPro Insights
As Guess?, Inc. navigates through post-earnings turbulence, real-time data from InvestingPro offers a deeper perspective on the company's financial standing. With a market capitalization of $1.27 billion and a P/E ratio of 8.94, Guess? is trading at a valuation that could be appealing to investors looking for potentially undervalued opportunities. The adjusted P/E ratio for the last twelve months as of Q2 2024 stands at an even lower 8.21, reinforcing the notion of an attractive valuation against near-term earnings growth.
InvestingPro Tips highlight that Guess? yields a high return on invested capital and stockholders receive robust returns on book equity. These metrics are particularly relevant as they suggest that the company is effectively utilizing its capital and providing value to its shareholders. Moreover, the firm has upheld its dividend payments for 17 consecutive years, which is a testament to its commitment to returning value to investors, especially in light of the current dividend yield of 5.06% as of the end of 2023.
For those considering a deeper dive into Guess?'s financials, InvestingPro provides a wealth of additional tips—9 in total—on the company's performance and prospects. Currently, there's a special Black Friday sale offering up to a 55% discount on an InvestingPro subscription, allowing investors to access these valuable insights at a reduced cost.
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