Guess?, Inc., the Los Angeles-based fashion retailer, has announced impressive first-quarter profits due to improved margins. The company reported net earnings of $12.0 million, or $0.18 per diluted share, for the quarter ended May 1, 2021. This is a significant improvement compared to the losses reported in the first quarters of the past two years.

In the same period last year, Guess experienced a net loss of $157.7 million, or $2.40 per diluted share, as a result of store closures caused by the pandemic. The first quarter of 2019 also saw a net loss of $21.4 million, or $0.27 per diluted share.

The remarkable growth in profits can be attributed to a year-over-year increase of 99.8% in Guess’ net revenues for the first quarter of this year. The company’s Q1 net revenues reached $520.0 million, compared to $260.3 million in the same period last year. When adjusted for constant currencies, the rise was 90.3%.

Guess saw the strongest revenue growth in Europe, with a remarkable increase of 127.1% year-over-year. The Americas also experienced significant growth, with retail revenues rising by 108.5% and wholesale revenues increasing by 75.6%. Revenues in Asia increased by 37.8%, while licensing revenues climbed 66.4%.

Despite the overall strong performance, Guess’ first-quarter revenues experienced a decline of 3%, or 5% when adjusted for constant currencies, compared to the same period two years ago. Nevertheless, the company managed to achieve bottom-line growth through its 5.1% operating margin in the quarter, marking an expansion of more than 900 basis points compared to two years ago. Guess also saw an improvement in its gross margin and SG&A rate.

Guess co-founder and chief creative officer Paul Marciano attributes the company’s strong performance to various transformational initiatives. These include efforts to elevate the brand and product, accelerate e-commerce, optimize the global footprint and brand portfolio, reorganize the global team, and implement cost reductions.

Due to the ongoing uncertainty caused by the Covid-19 pandemic, Guess has refrained from providing detailed financial guidance. However, the company anticipates that second-quarter and full-year revenues will experience a slight decline in the mid-single digits compared to two years ago.

Guess CEO Carlos Alberini is confident in the company’s strategic business plan and expects to reach an operating margin of about 8.6% in the current year. He also believes that the company is at an inflection point for its growth and anticipates achieving their long-term target of a 10% operating margin a year earlier than expected.


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