Thai VI

Long-Term Growth Strategy

Despite the economic conditions described above, our key long-term strategies remain consistent. Global expansion continues to be the cornerstone of our growth strategy. Our combined revenues outside of the U.S. and Canada represented approximately half of the total Company’s revenues for the six months ended July 30, 2011, compared to one-fifth in fiscal 2005. We expect to continue to expand in both Europe and Asia. Expanding our retail business across the globe is another important part of our growth strategy. We see opportunities to increase the number of GUESS? branded retail stores in Europe and Asia. In North America, we also see opportunities, particularly with our newer store concepts. We will continue to regularly evaluate and implement initiatives that we believe will build brand equity, grow our business and enhance profitability.


Our North American Retail growth strategy is to increase retail sales and profitability by expanding our network of retail stores and improving the productivity and performance of existing stores. We will continue to emphasize our newer G by GUESS store concept and our accessories business. This includes greater focus on our accessories line in our existing stores and the expansion of our GUESS? Accessories store concept. We currently plan to open between 35 and 40 retail stores across all concepts in the U.S. and Canada during fiscal 2012, of which, 15 stores have been opened during the first half of fiscal 2012. In addition, we plan to remodel key existing locations as part of the roll-out of our new store designs. In February 2011, we opened our largest flagship store in the world in New York City with over 13,000 square feet.


In Europe, we will continue to focus on developing new markets in Northern Europe where our brand is well known but under-penetrated and expand on our recent success in Western and Southern Europe. We have flagship stores in key cities such as Barcelona, Dusseldorf, London and Milan. Together with our licensee partners, we opened 73 stores in the first half of fiscal 2012 and plan to continue our international expansion in Europe and the Middle East by opening between 125 and 130 retail stores in total during fiscal 2012, about one third of which will be owned and operated directly by us.


We see significant market opportunities in Asia and we are dedicating capital and human resources to support the region’s growth and development. We and our partners have opened flagship stores in key cities such as Seoul, Shanghai, Hong Kong, Macau, Taipei and Beijing and we have partnered with licensees to develop our business in the second tier cities in this region. We and our partners have opened 30 stores during the first half of fiscal 2012 and plan to open between 70 and 75 retail stores in total across all concepts in Asia during fiscal 2012.


The Company’s capital expenditures for the full fiscal year 2012 are planned at approximately $135 million (after deducting estimated lease incentives of approximately $10 million). The planned capital expenditures are primarily for expansion of our retail businesses

in Europe and North America, store remodeling programs in North America, expansion of our Asia business, investments in information systems and other infrastructure investments.

http://secfilings.nasdaq.com/filingFram ... F2011&pdf=

Recent Global Economic Developments


Economic and market conditions have become increasingly volatile and uncertain in many markets around the world and consumer behavior remains cautious. In North America, the relatively weaker levels of consumer confidence and the highly promotional conditions among retailers may persist for some time. In Europe, sovereign debt issues continue to affect the capital markets of various European countries which could lead to reduced consumer confidence and spending in those countries. These conditions could affect both our growth and our profitability.


The Company anticipates that inflationary pressures on raw materials, labor, freight or other commodities including oil, will negatively impact the cost of product purchases in the second half of fiscal 2012. The Company has plans to mitigate more than half of these effects through price increases on select items, supply chain initiatives and reduced markdowns. However, there can be no assurances that these actions will be successful. In addition, increased prices could lead to reduced customer demand.


We also continue to experience significant volatility in the global currency markets. Since the majority of our international operations are conducted in currencies other than the U.S. dollar (primarily the euro, Canadian dollar and Korean won), currency fluctuations can have a significant impact on the translation of our international revenues and earnings into U.S. dollar amounts. During the first six months of fiscal 2012, the average U.S. dollar rate was weaker against these currencies versus the average rate in the comparable prior-year period. This had an overall positive impact on the translation of our international revenues and earnings for the six months ended July 30, 2011.



In addition, some of our transactions that occur in Europe, Canada and South Korea are denominated in U.S. dollars, Swiss francs and British pounds, exposing them to exchange rate fluctuations when converted to their functional currencies. These transactions include U.S. dollar denominated purchases of merchandise, U.S. dollar and British pound intercompany liabilities and certain sales, operating expenses and tax liabilities denominated in Swiss francs. Fluctuations in exchange rates can impact the profitability of our foreign operations and reported earnings and are largely dependent on the transaction timing and magnitude during the period that the currency fluctuates. The Company enters into derivative financial instruments to manage exchange risk on certain foreign currency transactions. However, the Company does not hedge all transactions denominated in foreign currency.

At the end of the first quarter of fiscal 2012, the euro strengthened significantly compared to the U.S. dollar, which unfavorably impacted the net revaluation of our foreign currency contracts and balances, resulting in an unrealized net revaluation loss recorded in other expense in the first quarter of fiscal 2012. However, during the second quarter of fiscal 2012, the U.S. dollar moderately strengthened against the euro, which favorably impacted the net revaluation of our foreign currency contracts and balances, resulting in an unrealized net revaluation gain recorded in other income in the second quarter of fiscal 2012. Continued volatility in the global currency markets could result in further revaluation gains or losses in future periods

http://secfilings.nasdaq.com/filingFram ... F2011&pdf=

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Guess outlook disappoints; shares slide

NEW YORK | Wed Aug 24, 2011 6:32pm EDT

NEW YORK (Reuters) - U.S. clothing maker Guess Inc (GES.N) gave a disappointing outlook for the rest of the year, citing a difficult economy and competitive environment.

The company, best known for its jeans, reported better-than-expected earnings for the second quarter, but said a recent slowdown in the global economy made it more cautious moving forward.

"Recently ... we've seen increased volatility and uncertainty in financial markets around the world and the global economy," said Chief Executive Paul Marciano. "As we know from the past, volatility can significantly impact consumer confidence."

The company's shares fell 4.8 percent in after-hours trading.

Guess generates more than 40 percent of its revenue in Europe, where sovereign debt crises are hurting many economies. It has been taking steps to diversify its European revenue away from Italy, but that country still accounts for some 40 percent of the region's total.

"Everyday you open the TV, you have no clue if things are going to be up or going to be down," Marciano said about the global stock market and economic factors. "We can only manage what is manageable."

Guess said cotton prices have eased but that the easing should not benefit results in the current fiscal year, which ends in January 2012.

The company forecast earnings of 71 to 74 cents per share in the current third quarter on revenue of $650 million to $665 million. That compares with analysts' average estimate for earnings of 84 cents per share and revenue of $687.9 million, according to Thomson Reuters I/B/E/S.

It said same-store sales in the quarter so far were down at a low single-digit rate, and expects that trend to continue for the rest of the quarter.

For the full year, Guess forecast adjusted earnings per share of $3.25 to $3.35 on revenue of $2.74 billion to $2.78 billion.Analysts were expecting $3.43 per share on revenue of $2.78 billion. It also expects full-year same-store sales to fall at a low single-digit rate as it tightens inventory to prevent markdown selling.

In the just-ended second quarter, net income fell to $60.7 million, or 65 cents per share, from $66.8 million or 72 cents per share a year earlier.

Excluding one-time items, earnings were 84 cents per share, topping analysts' average estimate of 81 cents per share.

Quarterly revenue jumped 17.3 percent to $677.2 million, helped by foreign exchange rates. Same-store sales, or sales at retail stores open at least a year, fell 3.4 percent in North America in local currency in the quarter.

North American wholesale revenue fell 0.9 percent.

Revenue rose 31.1 percent in Asia and 29.9 percent in Europe, helped by the weak U.S. dollar.

Shares fell $1.60, or 4.8 percent, to $31.69 in after-hours trade following the earnings report. They closed at $33.29 on the New York Stock Exchange.

http://www.reuters.com/article/2011/08/ ... ompanyNews

Guess?, Inc. Reports Third Quarter Results

Third Quarter Revenues Increased 5% to $643 Million
Third Quarter EPS Decreased 5% to $0.71
Updates Full Year Guidance: Adjusted EPS in the Range of $3.04 to $3.10; GAAP EPS in the Range of $2.85 to $2.91
Provides Fourth Quarter EPS Guidance in the Range of $1.03 to $1.09

LOS ANGELES, Nov. 30, 2011 /PRNewswire via COMTEX/ --

Guess?, Inc. (NYSE: GES) today reported financial results for the third quarter of its 2012 fiscal year, which ended October 29, 2011.


Third Quarter Fiscal 2012 Highlights


North American Retail revenues increased 5%
European revenues increased 2% in US dollars and decreased 4% in local currency
Asian revenues increased 18% in US dollars and 15% in constant dollars
Operating profit grew 5%; operating margin was flat at 15.1%

This press release includes certain non-GAAP, or adjusted, financial measures, which exclude a settlement charge incurred during the second quarter of fiscal 2012. Reconciliations of reported GAAP results to comparable non-GAAP amounts are provided in the accompanying tables and discussed under the heading "Presentation of Non-GAAP Information" below.

Third Quarter Fiscal 2012 Results

For the third quarter of fiscal 2012, the Company generated net earnings of $66.3 million, a 4.0% decrease compared to net earnings of $69.1 million for the third quarter of fiscal 2011. Diluted earnings per share decreased 5.3%, reaching $0.71, compared to $0.75 for the prior-year quarter.

Paul Marciano, Chief Executive Officer, commented, "We are pleased to deliver third quarter earnings consistent with our expectations, even as economic pressures have intensified and are affecting consumer confidence in many of our markets, particularly in Europe. During the quarter, we made good progress on many key strategic initiatives. Our efforts to elevate our brand in North America are yielding significant improvements in profitability. We enjoy momentum in Asia and the newer markets in Europe where our brand is well known but where our business is still under-penetrated. And we are focusing on sound execution, managing our inventories, expenses and capital prudently."

Mr. Marciano continued, "It is difficult to predict how long the current economic conditions may persist. As always, we plan to manage carefully and prudently, focusing on those things that we can directly control. Our goal is to improve productivity, expand our long term profitability and deliver outstanding returns to our shareholders, while always protecting our brand. Backed by our strong balance sheet, we are committed to pursuing the long term potential of our iconic lifestyle brand in a very strategic and disciplined way that is consistent with prevailing market conditions."

Total net revenue for the third quarter of fiscal 2012 increased 4.7% to $642.8 million, from $613.9 million in the prior-year quarter. In constant dollars, total net revenue increased 1.9%.


The Company's retail stores in North America generated revenue of $265.6 million in the third quarter of fiscal 2012, a 4.7% increase from $253.7 million in the same period a year ago. Comparable store sales decreased 4.1% in local currency and 3.5% in US dollars for the third quarter of fiscal 2012, compared to the same period a year ago. The Company directly operated 495 retail stores in the United States and Canada at the end of the third quarter of fiscal 2012 versus 473 stores a year earlier.

Net revenue from the Company's Europe segment increased 2.3% to $221.0 million in the third quarter of fiscal 2012, compared to $216.2 million in the prior-year period. In local currency, net revenue decreased 3.7%.
Net revenue from the Company's Asia segment increased 18.3% to $64.8 million in the third quarter of fiscal 2012, from $54.8 million in the prior-year period. In constant dollars, net revenue increased 14.8%.
Net revenue from the Company's North American Wholesale segment increased 1.9% to $57.3 million in the third quarter of fiscal 2012, from $56.3 million in the prior-year period.

Licensing segment net revenue increased 3.2% to $34.0 million in the third quarter of fiscal 2012, from $33.0 million in the prior-year period.

Operating earnings for the third quarter of fiscal 2012 increased 4.6% to $97.0 million (including a $3.3 million favorable currency translation impact) from $92.7 million in the prior-year period. Operating margin in the third quarter was flat at 15.1% compared to the prior-year quarter as higher product margins and an improved SG&A rate offset the impact of a higher occupancy rate. Product margins improved primarily due to lower markdowns in North American Retail while the occupancy deleverage was driven by retail expansion and negative comparable store sales. The SG&A rate decreased as lower performance-based compensation expenses and North American retail store selling expenses more than offset the negative impact of lower international jewelry shipments and higher advertising expenses.

Other net income, which primarily includes net unrealized mark-to-market gains on foreign currency contracts and balances, partially offset by net unrealized losses on non-operating assets, was $1.9 million for the third quarter of fiscal 2012, compared to other net income of $5.9 million in the third quarter of the prior year.

The Company's reported effective tax rate increased to 32.3% in the third quarter of fiscal 2012, from 29.1% for the third quarter of the prior year.

Nine-Month Period Results

Adjusted net earnings for the nine months ended October 29, 2011 were $187.2 million, an increase of 0.6% compared to net earnings of $186.2 million for the nine months ended October 30, 2010. Adjusted diluted earnings per share increased 0.5% to $2.01 per share in the first nine months of the 2012 fiscal year compared to $2.00 per share in the comparable nine-month period last year. The adjusted net earnings excludes a settlement charge of $19.5 million recorded in the second quarter of fiscal 2012, along with the related tax impact, associated with the settlement of the Company's relationship with one of its European service providers. On a GAAP basis, net earnings for the nine months ended October 29, 2011 were $169.6 million and diluted earnings per share, including an unfavorable $0.19 impact from the settlement charge, totaled $1.82.

Total net revenue for the first nine months of fiscal 2012 increased 10.5% to $1.91 billion from $1.73 billion in the prior-year period. In constant dollars, total net revenue increased 6.3%.


The Company's retail stores in North America generated revenue of $774.1 million in the first nine months of fiscal 2012, a 5.9% increase from $731.3 million in the same period a year ago. Comparable store sales decreased 3.9% in local currency and 2.8% in US dollars for the nine months ended October 29, 2011, compared to the nine months ended October 30, 2010.

Net revenue from the Company's Europe segment increased 15.1% to $720.1 million in the first nine months of fiscal 2012, compared to $625.5 million in the prior-year period. In local currency, revenues increased 6.7%.

Net revenue from the Company's Asia segment increased 23.8% to $180.2 million in the first nine months of fiscal 2012, compared to $145.5 million in the prior-year period. In constant dollars the increase was 18.8%.

Net revenue from the Company's North American Wholesale segment increased 2.5% to $146.8 million in the first nine months of fiscal 2012, from $143.3 million in the prior-year period.

Licensing segment net revenue increased 7.3% to $91.0 million in the first nine months of fiscal 2012, from $84.8 million in the prior-year period.

Excluding the settlement charge, adjusted operating earnings for the first nine months of fiscal 2012 increased 7.9% to $280.9 million (including a $13.4 million favorable currency translation impact) from $260.3 million in the prior-year period. Adjusted operating margin for the first nine months of fiscal 2012 declined 30 basis points to 14.7% compared to the prior-year period as improvements in product margins were more than offset by a higher occupancy rate. The higher product margins were driven by lower markdowns in North American Retail and the greater mix of retail in Europe. The SG&A rate remained flat compared to the prior year period as lower performance-based compensation expenses offset the negative impact of the lower international jewelry shipments. GAAP operating earnings, which includes the settlement charge, increased 0.4% to $261.4 million (including an $11.4 million favorable currency translation impact) and GAAP operating margin declined 130 basis points to 13.7%.

Other net expense, which relates to net unrealized mark-to-market losses on foreign currency contracts and balances and net unrealized losses on non-operating assets was $5.4 million for the first nine months of fiscal 2012, compared to other net income of $9.0 million in the prior-year period.

Outlook

The Company's expectations for the fourth quarter of fiscal 2012 ending January 28, 2012, are as follows:


Consolidated net revenues are expected to range from $780 million to $795 million.
Operating margin is expected to be between 17.5% and 18.5%.
Diluted earnings per share are expected to be in the range of $1.03 to $1.09.

The Company updated its outlook for the fiscal year ending January 28, 2012, which is now as follows:


Consolidated net revenues are expected to range from $2.70 billion to $2.71 billion.
Adjusted operating margin is expected to be in the mid to high 15 percent range; GAAP operating margin around 15%.
Adjusted diluted earnings per share are expected to be in the range of $3.04 to $3.10; GAAP diluted earnings per share between $2.85 and $2.91.

Dividend

The Company also announced today that its Board of Directors has approved a quarterly cash dividend of $0.20 per share on the Company's common stock. The dividend will be payable on January 3, 2012 to shareholders of record at the close of business on December 14, 2011.

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