Why Investors Are Excited About Guess? Inc. Today

What happened?

Shares of Guess? Inc. (NYSE: GES), an apparel retailer, were up 14% as of 11:05 a.m. EDT on Thursday after topping second-quarter earnings estimates and giving strong guidance.

So what

The company’s fiscal 2019 second-quarter net revenue jumped 13.7% to $645.9 million, but fell short of analysts’ estimates of $651 million. Guess’ bottom-line results shined, with adjusted net earnings per share increasing 89.5% to $0.36, higher than analysts’ estimates calling for $0.33. Regional bright spots were found overseas with Europe revenue up 22.2% in U.S. dollars, and Asia revenue up 32% in U.S. dollars, with both results slightly lower in constant currency. Retail revenue in the Americas declined 2%.

Image source: Getty Images.

In a press release, CEO Victor Herrero said: “The second quarter marked another quarter of operating margin expansion for the Company, with a 70 basis points increase in GAAP operating margin and 130 basis points increase in adjusted operating margin. In addition, I am very encouraged by the trends in our Americas Retail business where we posted another quarter of positive comps and expanded our operating margin.”

Now what

Despite missing revenue estimates, investors were pleased enough with the 13.7% year-over-year growth, which marks the eighth consecutive quarter of year-over-year growth. Investors bought in to the company’s positive outlook, which includes expectations for positive comparable sales in all regions going forward, finishing fiscal 2019 with every business segment being profitable. Management was also confident enough to boost fiscal 2019 consolidated net revenue guidance to grow between 8% and 8.5%, up from the prior guidance between 6.5% to 7.5% at constant currency. And it now projects full-year adjusted EPS to check in between $0.94 and $1.03, compared to the prior guidance between $0.88 and $0.99.

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Daniel Miller has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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