Updated from May 30



) --


(GES) - Get Report

shares surged more than 9% Friday following better-than-expected profit despite a significant decline from the year before.

Guess shares were up 8.7% to $31.91 on Friday morning after 2.2 million shares had already changed hands, more than doubling the stock's average three-month daily trading volume.

Investors cheered the fashion apparel and accessories company's ability to manage their profitability despite significantly slower sales in the May 4-ending quarter.

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Guess reported adjusted net earnings of $11.7 million for the 2014 fiscal first quarter, a 56% decrease from the first quarter of 2013. Adjusted earnings per share were 14 cents compared to 30 cents a share the year prior.

During the first quarter, Guess implemented plans to streamline its operational structure and reduce expenses. Earnings per share based on GAAP accounting, which excludes a restructuring charge of $2.3 million, or 2 cents a share, were 12 cents a share.

The Los Angeles-based company was expected to post a first-quarter profit of 8 cents a share, on average, on revenue of $550 million, according to

Yahoo! Finance


Net revenue slipped 5.2% to $548.9 million. Revenue from operations in North America and Europe were 5% and 13% lower in the period, respectively, while sales in Asia jumped 10%. Guess said that North American retail comp sales declined 9.8% in the quarter.

"Despite the continued global economic challenges, we are pleased to deliver better than expected first quarter earnings," CEO and co-founder Paul Marciano said in the earnings release. "These earnings reflect the ongoing success within the company to globally streamline and improve productivity. While we are encouraged by our start to fiscal 2014, the near term outlook for consumer spending remains soft and we are planning our business accordingly. Southern Europe continues to be our main concern going forward."

Guess said that adjusted operating margin in the first quarter declined 430 basis points to 2.5%, compared to operating margin of 6.8% in the prior-year quarter.

The lower operating margin "primarily reflects the impact of negative same store sales on the company's fixed cost structure, lower sales in our European wholesale business and more markdowns in our North American retail business, partially offset by lower corporate expenses," according to the earnings release.

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During the quarter, Guess hired a new head of design -- Hillary Super, who has held senior merchant roles at

American Eagle Outfitters

(AEO) - Get Report



(GPS) - Get Report

. It also hired a former

Limited Brands


Victoria's Secret executive as its head of retail merchandising for North America during the quarter. The company is now focused on filling its COO and CFO positions, Marciano said.

"I strongly believe that product and design are the right direction today," Marciano said during the earnings call. "I also believe that the executive management team will be complete in the next 60 days. I see some clear and positive economic signs in U.S. that should continue going forward. And because of that, we have clear and compelling long-term growth opportunities, and I remain very confident in the strength of our brand."

The company expects second-quarter earnings in the range of 34 cents to 38 cents a share on consolidated net revenue of $620 million to $635 million. Analysts have the retailer reporting earnings of 36 cents a share on revenue of $618 million.

Guess maintains its full-year earnings guidance of $1.70 to $1.90 a share.

Guess operated 511 retail stores in the U.S. and Canada at the end of the first quarter.

-- Written by Laurie Kulikowski in New York.

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