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Can someone explain to me how the Heck GES posted such strong earnings in this recession?



March 27, 2009 – Comments (4) | RELATED TICKERS: GES

I feel like something is not right, economy crashes and they post a 9% revenue boost? Yeah right.

Guess shares rise on 4th-quarter results

Guess shares up as company reports 4th-quarter results above expectations, analyst upbeat Wednesday March 18, 2009, 1:59 pm EDT Buzz up! Print Related: Guess? Inc.

NEW YORK (AP) -- Shares of Guess Inc. rose on Wednesday, after the apparel maker and retailer reported a strong fourth quarter despite a difficult retail environment.

Related QuotesSymbolPriceChangeGES20.66+0.47{"s" : "ges","k" : "c10,l10,p20,t10","o" : "","j" : ""}

The Los Angeles company said profit for the fourth-quarter fell, but adjusted results beat analyst expectations, helped by a revenue boost. Revenue rose 9 percent to $561.1 million, ahead of the $528.6 million analysts predicted.

Shares rose $1.73, or 11 percent, to $17.38. The stock has traded between $10.26 and $45.15 during the past 52 weeks.

Needham & Co. analyst Christine Chen, who rates Guess "strong buy," said the company's mark downs and other promotions have been minimal, unlike many retailers.

"Unlike most of its competitors, inventory levels at Guess Inc. are lean and well-controlled, with clearance levels minimal and similar to last year," Chen wrote in a note to investors.

She lowered her price target on the stock to $31 from $36 but said the company's long-term growth should be fueled by international opportunities, licensing and U.S. retail square footage growth.

4 Comments – Post Your Own

#1) On March 27, 2009 at 11:38 AM, Netteligent09 (< 20) wrote:

It is very fishy. Speculative market..too risky and dangerous. Best Buy and others are posting good results. I am not convinced.

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#2) On March 27, 2009 at 11:53 AM, jbnow (< 20) wrote:

I'm equally puzzled about Guess.... and another company  NATI (somewhere around 19.34 as I write this and dropping) and it recently admitted it's tightening it's belt. NATI has NO DEBT, and is sitting on a PILE OF CASH according to googles financials. NATI has a steady, solid dividend, and great management for a number of years, and yet the stock is lack luster in terms of price.  Why? I don't know.  Because the way I see it as science, engineering and industry gear up to solve the really hard problems facing society today (both private and public companies are still investing in new product development and solutions), companies that support and supply both software and hardware to the sciences, engineering and industry are poised to do well. After all we have a reasoning president who looks to scientific method to solve problems. Go and look at NATI and explain to me where my thinking is on track and where it's gone wrong.   

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#3) On March 27, 2009 at 2:47 PM, Rehydrogenated (33.37) wrote:

Guess clothes are a pretty good value. Their turnover could be very high giving them more flexibility than their peers. They might send all their merchandise that doesn't sell quickly to a outlet store like Ross. I would compare turnover ratios and look at their inventory system to see if they are really at an advantage. If not, short them for being full of crap and let me know if you do.

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#4) On March 27, 2009 at 3:06 PM, Melaschasm (< 20) wrote:

Guess profits fell, just not as much as expected.  If the claim of good inventory management is true, that would help explain why profts did not take as big a hit as expected. 

 If Guess is able to continue to manage their inventory better than the competition, they will have a better chance at beating the retail market as a whole.  Also, it is possible that they are benefiting from some consumers trading down to Guess products, rather than making purchases of more expensive clothing. 

The danger of buying Guess is the danger that a longer/deeper than expected recession will cause shrinking profits going forward.  The other issue is determining if there is a better retailer to buy, since half will out perform the sector, while the other half will underperform. 

 From a shorting perspective, if they are playing games with the numbers this is a good opportunity, but timing will be everything since they could have a higher stock price even after falling short of expectations if the entire retail market improves before their funny numbers come into the light. 

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