Guess Earnings Fall Short of Expectations
Guess Inc.’s new chief executive officer has spoken publicly for the first time, detailing his growth plans for the retailer following a fourth-quarter earnings miss that sent its stock down in after-hours trading.
In a statement accompanying its latest results, Carlos Alberini declared he was “thrilled” to be part of the Guess family once again, but acknowledged that there are several areas that can be improved, which should result in operating margin growth over time.
“I intend to apply some key principles for shareholder value creation, including a disciplined approach to capital allocation and working capital management, careful product development and distribution, pursuing global initiatives to leverage and support our global business more effectively,” he said, adding that he wants its denim business to reign once again.
The work needed to be done was highlighted by its earnings miss. Net earnings were $23.2 million, or 28 cents per share, for the fourth quarter, up from 1 cents a year earlier. Adjusted earnings per share came in at 70 cents a share, below analysts’ estimates of 75 cents and leading to a 13.5 percent drop in its stock to $19.10 during after-hours trading. At $837.1 million, net revenue beat the consensus for $831 million.
Alberini was formerly Guess’ president and chief operating officer between 2000 and 2010, but left to join Restoration Hardware as co-ceo until 2014 and later went on to be appointed chairman and ceo of Lucky Brand. In January, Guess surprised the market when it poached him to replace Victor Herrero and it was revealed today that the latter was paid more than $5 million in severance.
At the time of the ceo switch, the company also announced that cofounder Paul Marciano would remain as its creative chief despite being at the center of the sexual harassment storm that rocked the company last year.
This marked an about-turn from the summer when Marciano said he had voluntarily recused himself as executive chairman and had started to pass his duties as chief creative officer over to Herrero in preparation for a Jan. 30 departure, although he would stay on the board.
His remaining on as chief creative officer will no doubt raise eyebrows as he was accused last year of sexual harassment by model and actress Kate Upton and others.
Guess subsequently set up a special committee to investigate these allegations and in June concluded that it would pay out $500,000 in settlements to five individuals and that he would step down from his role of executive chairman. He remained on the board, but his brother, Maurice Marciano, was appointed chairman.
The firm stressed at the time that the settlements did not admit liability or fault and were done to avoid the cost of taking the matters to court.
During a call with analysts Wednesday evening, Alberini lavished Marciano with praise: “I think the world of Paul and have tremendous respect for him. He has incredible talents and a commitment to this company and to this brand that is unmatched,” he said. “I believe we both have different skill sets that complement one another, and we plan to take full advantage of our combined strengths.”
The retailer’s latest set of results were unveiled by
Carlos Alberini, who recently replaced Victor Herrero as ceo.