NEW YORK (TheStreet) -- Times haven't been easy for companies in the apparel industry lately, and Guess? (GES) in particular has struggled to hold its own in an increasingly competitive environment. But the retailer posted a surprise profit for the quarter and, more importantly, it boosted its outlook for the remainder of the fiscal year.
A look at Guess? and its quarterly results show the trouble the apparel industry faces right now. Overall revenue fell by more than 8% to $478.8 million, which was about a percentage point worse than the contraction that investors had expected to see.
On the earnings front, though, Guess? managed to earn $3.3 million, which works out to 4 cents per share. That reversed a year-ago loss for the company and defied expectations for another negative earnings quarter this year.
A closer look at the numbers reveals some concerns, though. Of the retailer's gains for the quarter, $2.6 million came from what Guess? calls "other net income," which it says primarily included unrealized and realized gains on non-operating assets. Still, even if you take away that item, Guess? still earned a small profit for the quarter.
CEO Paul Marciano attributed the positive results to the company's efforts to control margins. He said, "Overall first-quarter results were better than our expectations, mainly driven by tight expense management."
Marciano pointed to the success of the e-commerce business and the improving conditions for its women's category.
TheStreet Ratings team rates GUESS INC as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
"We rate GUESS INC (GES) a HOLD. The primary factors that have impacted our rating are mixed ? some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, attractive valuation levels and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including feeble growth in the company's earnings per share, deteriorating net income and disappointing return on equity."
You can view the full analysis from the report here: GES Ratings Report