By Dhirendra Tripathi
Investing.com – Guess (NYSE:GES) stock climbed 8% Thursday after the retailer posted better fourth quarter margins than anticipated, persuading traders to ignore the misses on both sales and profit fronts.
Adding to the gains is the company’s plan to do a $175 million accelerated share repurchase.
Adjusted operating margin in the fourth quarter rose 3.6% to 15.7% because of higher markups, fewer discounts, and lower occupancy costs. Retailers have been able to cut back on discounts as demand has stayed elevated while inventories are stabilizing.
The gains were partially offset by lower comparable sales in Europe and higher inbound freight costs.
Assuming no meaningful COVID-related shutdowns, the company expects 2023 revenue to grow in low-single digits. It forecast a deterioration in operating margin, but still sees it close to 10.5% for the year. Revenue in 2022 was $2.6 billion.
Fourth quarter adjusted profit per share was $1.14, while revenue was down 5% to $800 million.
CEO Carlos Alberini said the company’s 26% return on invested capital for the year is the highest it has been in ten years.
“Our balance sheet is strong, and we plan to use our capital opportunistically to return value to our shareholders through dividends and increased share repurchases.”
The company will pay a quarterly dividend of 22 cents.
For the current quarter, the company is expecting first quarter revenue to be up in low-teens.