Guess? reported financial results for its first quarter ended May 2, 2015. Net earnings were $3.3 million, compared to a net loss of $2.1 million for the first quarter of fiscal 2015.
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Diluted earnings per share was $0.04, compared to diluted loss per share of $0.03 for the prior-year quarter, an increase of $0.07 per share.
The company's retail stores and e-commerce sites in North America generated revenue of $214.2 million in the first quarter of fiscal 2016, a 6.2% decrease from $228.3 million in the same period a year ago.
Comparable store sales including the results of our e-commerce sites for the first quarter of fiscal 2016 decreased 5.9% in U.S. dollars and 3.8% in constant currency compared to the same period a year ago.
Net revenue from the company's Europe segment decreased 13.7% to $137.4 million in the first quarter of fiscal 2016, from $159.2 million in the prior-year period. In constant currency, net revenue increased 7.5%.
Net revenue from the company's Asia segment decreased 8.7% to $64.0 million in the first quarter of fiscal 2016, from $70.1 million in the prior-year period. In constant currency, net revenue decreased 6.0%.
Net revenue from the company's North American Wholesale segment decreased 5.2% to $37.3 million in the first quarter of fiscal 2016, from $39.3 million in the prior-year period. In constant currency, net revenue increased 1.4%.
Licensing segment net revenue increased 1.0% to $25.9 million in the first quarter of fiscal 2016, from $25.6 million in the prior-year period.
Operating earnings for the first quarter of fiscal 2016 was $4.4 million (including a $1.2 million favorable currency translation impact), compared to an operating loss of $2 million in the prior-year period, an increase of $6.3 million.
Operating margin in the first quarter increased 130 basis points to 0.9%, compared to negative 0.4% in the prior-year quarter. The increase in operating margin was driven by the favorable impact from business and segment mix and overall product margin improvements relating to less markdowns and higher initial mark-ups in North American Retail
These increases were partially offset by negative impact on the company's fixed cost structure from negative same store sales in North America and the unfavorable impact from currency exchange rate fluctuations.
Other net income, which primarily includes net unrealized and realized gains on non-operating assets, was $2.6 million for the first quarter of fiscal 2016, compared to other net expense of $1.1 million in the prior-year quarter.
The company's effective tax rate increased to 41.5% for the first quarter of fiscal 2016, compared to 32.0% in the prior-year quarter.
The company's expectations for the second quarter of fiscal 2016 ending August 1, 2015, are: consolidated net revenues are expected to decline between 3.5% and 1.5% in constant currency; currency headwinds are expected to negatively impact consolidated revenue growth by approximately 9.5%, for a net decline between 13% and 11%, and operating margin is expected to be between 3.0% and 4.0% and includes 170 basis points of currency headwind.
Diluted earnings per share are expected to be in the range of $0.12 to $0.16. The estimated impact on earnings per share of the currency headwinds is roughly $0.12.
The company updated its outlook for the fiscal year ending January 30, 2016, which is now as follows: consolidated net revenues are expected to range between a decline of 1.5% and an increase of 0.5% in constant currency; currency headwinds are expected to negatively impact consolidated revenue growth by approximately 7%, for a net decline between 8.5% and 6.5%, and operating margin is expected to be between 5.0% and 6.0% and includes 130 basis points of currency headwind.
Diluted earnings per share are expected to be in the range of $0.86 to $1.02. The estimated impact on earnings per share of the currency headwinds is roughly $0.45. The company's guidance assumes that foreign currency exchange rates remain at prevailing rates. ■