Guess sales lift on Rag & Bone acquisition, Asia and North America sales remain soft (#1682452)

Guess Inc. announced on Tuesday revenue for the third quarter increased 13% to $738.5 million, driven by the company’s recent Rag & Bone acquisition and modest growth of its core Guess businesses. 

The Los Angeles-based company said Americas retail revenues increased 12%, while retail comparable sales (including e-commerce) dropped 14%. Meanwhile, wholesale revenues in the region surged 79% for the three months ending November 2.

Europe revenues increased 7%, and retail comparable sales grew 8% in the region. Elsewhere, Asia revenues inched forward 2%, while retail comparable sales plummeted 17%.

Despite the sales growth, the company recorded a net loss of $23.4 million, compared to net earnings of $55.7 million for the same prior-year quarter. Earning were hit by a net $39.8 million unrealized loss due to the change in fair value of the derivatives related to the company’s convertible senior notes due 2028 and the related convertible note hedge, according to the earnings release.

“In the third quarter we delivered revenue growth of 13%. This increase was primarily driven by the Rag & Bone acquisition coupled with modest growth of our core Guess businesses,” said Carlos Alberini, chief executive officer, Guess Inc.

“All of our operating segments posted revenue growth, except for our Licensing segment, which was impacted by the internalization of our outerwear business and delivered flat revenues. Our business in Europe was strong while North America and Asia experienced a more challenging environment impacted by slow customer traffic into our direct-to-consumer channels. During the period we managed margins and expenses well, delivering earnings from operations near the top of our expectations.”

Looking ahead, Guess warned that the current sluggish consumer sentiment and slow customer traffic in North America and Asia will persist during the fourth quarter, impacting its business negatively. As a result, for the full year, the company now expects revenues at or slightly below $3 billion, an increase between 7.1% and 8.1%.