Clothing Maker Falls Out Of Fashion With Investors

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The holiday shopping season is well under way, but store traffic has been slow for downtown L.A. fashion retailer Guess Inc., continuing a long skid for the company.

Guess, which designs, sells and licenses clothing and accessories, last week reported a 4 percent drop in revenue and a bigger decline in profit for the three months ended Nov. 1. That helped push the company’s stock down 8 percent to $20.48 for the week ended Dec. 10 and made it one of the biggest losers on the LABJ Stock Index. (See page 28.)

The quarter was the latest disappointment for Guess, which hasn’t seen same-store sales growth in more than four years. But analysts who follow the company said there’s still reason for optimism: While sales were down, the company’s e-commerce revenue for the quarter hit $17 million – a 38 percent increase over the same quarter last year.

Jeff Van Sinderen, an analyst who follows Guess for West L.A. investment bank B. Riley & Co., said the uptick in online sales is a good sign, despite lower sales overall. He believes the company is doing the right thing by continuing to focus on building up its online strategy.

“There’s more business shifting to e-commerce,” he said. “Now, if their e-commerce business weren’t up, I would say they really have a serious problem with not picking up market share.”

Guess reported net income of $20.8 million (24 cents a share) for the quarter ended Nov. 1, a decrease of 41 percent from the same quarter last year. Still, analysts had estimated even lower earnings of 18 cents a share on average. Revenue for the quarter was $590 million, down 4 percent.

Though sales fell, the company still managed to beat analysts’ expectations, which were relatively low thanks in part to an overall tough time for the women’s apparel market. Many consumers have lately been choosing to spend their dollars on activewear and electronics, not on more mainstream fashion, Van Sinderen said.

Paul Marciano, chief executive of Guess, said on the company’s Dec. 3 conference call that weak results were in line with the company’s expectations, but credits e-commerce as a highlight.

“The effort we have taken in the past year to build a true omni-channel experience across brick-and-mortar, online and mobile platforms continues, creating a true and consistent shopping experience for our brand,” he said.

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