The struggles of the apparel companies have been well documented. Accordingly, the bigger surprise these days comes form companies reporting good news or, in some instances, reporting less bad news than expected.
Enter Guess? (GES 11.51, +1.53, +15.3%), which reported its fiscal first quarter results after Wednesday's close and managed to impress shareholders with a report that was not as bad as had been feared.
The operating fact of the matter is that Guess? is still struggling with its retail business in the Americas, yet its operations in Europe and Asia are providing some needed support and an encouraging reminder that the Guess? brand is not irrelevant.
To wit, revenues for the Americas segment decreased 14.9% in the first quarter while retail comp sales including e-commerce decreased 15%. In Europe, however, revenues increased 23.3% and retail comps including e-commerce rose 5%. For its Asian business, revenues were up 16.9% and retail comps including e-commerce increased 4%.
Separately, Guess? reported a 5.7% increase in its Wholesale revenues and a 9.3% decline in Licensing revenues.
On an adjusted basis, the company posted a loss of $0.24 per diluted share versus a loss of $0.23 per diluted share in the same period a year ago. A 920 basis points contraction in the operating margin of -15.4% for the Americas Retail segment weighed heavily on the bottom-line. Nevertheless, the loss per share was still better than analysts' average expectation.
The same can be said for total net revenues, which were up 2.2% to $458.6 million.
Shares of GES have jumped sharply in the wake of the report, helped by the company's fiscal 2018 outlook and most likely some short-covering activity. It has been estimated that roughly 36% of the stock's float has been sold short.
To this point, a short position has been quite profitable when taking into account that GES was down roughly 80% at Wednesday's close from its all-time high in 2007, including a 39% drop over the last 52 weeks alone.
Some short sellers have perhaps been compelled to cover their positions knowing that Guess? increased its fiscal 2018 guidance for net revenues and adjusted earnings per share.
Specifically, it now expects consolidated net revenues to increase between 3.5% and 5.0% and adjusted earnings per share to be between $0.34 and $0.44. Previously, Guess? thought consolidated net revenues would be up 2.0% to 4.0% and adjusted earnings per share would be between $0.28 and $0.40.