Los Angeles Business Journal

Lower Guess Profit Still Better Than Expected

By Deborah Crowe Tuesday, May 22, 2012

Guess Inc. shares rose in after-hours trading Tuesday after the apparel company reported better-than-expected first quarter profit and learned that it would have to pay rival Gucci much less than sought in a patent lawsuit.

After the markets closed on Tuesday, the Los Angeles apparel designer and retailer reported first quarter net income of $26.6 million (30 cents a share), compared with $42.7 million (46 cents) in the same period a year earlier. Sales fell about 2 percent to $579 million.

Analysts surveyed by Thomson Reuters on average had expected net income of 26 cents a share on revenue of less than $570 million.

The company’s European business fell 9.7 percent to less than $190 million, but results were boosted by higher sales in Asia and fewer discounts at its North American retail business. Store revenue in North America rose 1.8 percent to nearly $252 million and was up 8 percent to $64.8 million in Asia.

“We continued to focus our efforts on growing in newer international markets, and we succeeded, expanding in key markets such as China, Germany and Russia,” Chief Executive Paul Marciano in a statement, “While we did face economic headwinds in southern Europe, our brand remains strong there and our business is stable.”

A U.S. court late Monday ordered Guess to pay $4.66 million in damages to Gucci America Inc. in a patent infringement lawsuit. Gucci, a unit of Paris holding company PPR, sued in 2009 claiming that some Guess clothing and accessories featured logos that were “studied imitations of the Gucci trademarks.”

Gucci had sought $120 million in the case. Guess did not comment on the court ruling in its earnings release.

In guidance for the current quarter, Guess expects to earn between 48 cents and 52 cents a share on revenue of $625 million to $635 million. That’s lower than the Wall Street consensus of 62 cents profit on revenue of $667 million.

Shares earlier closed down 3 cents, or less than 1 percent, to $24.44 on the New York Stock Exchange. They rose 6.4 percent in after-hours trading