LOS ANGELES: Guess Inc. GES, +2.14% on Tuesday reported a sharp drop in third-quarter profit as the retailer continues to struggle with lower sales worsened by the stronger U.S. dollar.
For the year that ends Jan. 30, the retailer raised the lower end of its profit projection but said it expects lower revenue, raising the projected impact from currency fluctuations.
Los Angeles-based Guess now projects profit of 93 cents to $1.02 a share with sales declining 8.5% to 9.5%, compared with its earlier view of profit of 89 cents to $1.02 a share with sales declining 8% to 9%. Adjusted for currency fluctuations, sales are still expected to contract 0.5% to 1.5%.
Shares, down 7% this year, rose 2.9% to $20.10 in late trading.
Overall, Guess reported a quarterly profit of $12.4 million, or 15 cents a share, down from $20.8 million, or 24 cents a share, a year earlier.
Revenue fell to $521 million, a 12% decline from the year earlier or a 3.9% decline when adjusted for currency fluctuations.
Guess had projected profit of 8 cents to 12 cents a share with revenue declining 11% to 12.5%, or 3% to 4.5% when adjusted for currency fluctuations.
Gross profit margin narrowed one percentage point to 35.3%.
Guess is the latest retailer to record disappointing sales in the most recent period leading to what is shaping up to be a rocky holiday season.
Retail sales in the Americas, which account for the largest share of the company’s revenue, fell 7%. Meanwhile, comparable sales–a key metric that Guess defines as sales at stores open for at least 13 months, along with online sales but excluding shipping fees–fell 6%.
Europe, which accounts for about a third of sales, reported a 15% drop in sales and Asia a 17% decline.
Guess had projected a decline in the low single digits in the Americas, in the low 20% range in Europe and in the low teens in Asia.
Established in 1981 by the Marciano brothers, Paul and Maurice, Guess had more than 820 directly operated stores as of Oct. 31.
