The company posted third-quarter profit of $34 million, or 40 cents a share, which included a 2-cent tax charge due to restructuring, compared to $36.6 million, or 43 cents in the year-earlier period. Adjusted income of $35.4 million, or 42 cents a share, fell 3.4% compared to the last year's third quarter. The adjusted net earnings exclude restructuring charges of $1.9 million, Guess said.
Still the company managed to beat analysts' expectations of 37 cents a share.
That said, sales suffered in the quarter. Revenue, which includes net sales as well as royalties from licensed products, slipped 2.4% to $613.5 million, below analysts' expectations of $614 million.Revenue from its retail stores in North America, Europe and Asia divisions all declined in the quarter, Guess said, as retail comparable sales dropped 5% in the quarter. On the other hand, revenue from its licensing segment net revenue increased 3.1% to $32.4 million in the quarter. Guess shares closed down 1.6% to $33.34 on Wednesday. The stock was falling 1.4% to $32.87 in post-markets trading. "We delivered revenues within the range of our expectations and through our continued focus on cost control have been able to deliver profitability at the high end of our expectations," CEO Paul Marciano said in a statement. "We are also encouraged by our efforts to efficiently manage our working capital, especially inventory where the trend keeps on improving quarter-over-quarter as we worked through more of our excess inventory and tightly managed our buys." Marciano noted that the company is optimistic about sales trends in North America for the fourth quarter, reflecting better product assortment. "However, the economic climate in Southern Europe remains challenging. Therefore, although we are encouraged by our overall results in the first nine months of fiscal 2014, we will continue to plan our business cautiously given the uncertain environment," he said. For the fourth quarter, net revenue is expected to be in the range of $750 million to $770 million, lower than consensus expectations of $778 million. Earnings per share are expected to be in the range of 74 cents to 84 cents a share, compare to Wall Street expectations of 83 cents a share. Guess now expects full-year revenue in the range of $2.55 billion to $2.57 billion, with adjusted diluted earnings per share in the range of $1.82 to $1.92. on a GAAP basis, diluted earnings per share are expected to be in the range of $1.73 to $1.83. Guess implemented cost-cutting measures and operational streamlining in the first half of the year. The guidance excludes the impact of the restructuring charges recorded in the first nine months of fiscal 2014, which reduced GAAP earnings by $10.4 million, or approximately 9 cents per share. Written by Laurie Kulikowski in New York. Follow @LKulikowski