Tmall Traffic Downturn Guess Shares Fell Sharply

Cowboy Brand Company Guess Inc. (NYSE:GES) dropped its stock price by more than 8% on Friday after its first quarter earnings were slated on Thursday and its annual EPS was cut.

In the first quarter of May 4th, Guess revenue increased by 3% to $536 million 700 thousand, less than the $539 million expected by the market, and the fixed exchange rate increased by 8.3% compared with the 521 million 300 thousand US $2019 in fiscal year 2019.

During the reporting period, a net loss of $21 million 374 thousand or a loss of $0.27 per share was similar to a net loss of 21 million 221 thousand US dollars in the same period last year. Adjusted net loss of 19 million 616 thousand US dollars increased by 10.5% compared with the 17 million 831 thousand US dollars in the 2019 fiscal year. The share loss increased from 0.23 US dollars to 0.25 US dollars, which is better than the expected US $0.26.

Carlos Alberini, the new chief executive of the group, said it was satisfied with the company's recent progress and strong revenue growth. The business in the Americas and Europe offset the weak performance in Asia, increased gross margin and managed cost well.

In the first quarter, the growth rate of Guess retail sales in North American market entities was 3%, and the fixed exchange rate increased by 3.9%. If covering electricity providers, the retail business revenue increased by 4%, the fixed exchange rate increased by 5%, the wholesale business dollar increased by 13.6%, the fixed exchange rate increased by 15.5%, the European market period increased by 2.2%, the fixed exchange rate rose by 12.3%, the retail business in Europe, including the electricity business, the first quarter growth 1%, the fixed exchange rate growth 8%; the Asia Pacific market grew in the first quarter 1.4%, the fixed exchange rate increased, and the retail business, including the electricity supplier, fell in the first quarter, and the fixed exchange rate declined.

Carlos Alberini revealed at the performance conference that the volume of online business passenger traffic in Asia, China, Korea and Japan in the first quarter was generally weak and led to a sharp drop of 860 basis points in the operating profit margin of the market.

The group's new CEO has not blamed the weakness in Asia, especially the Chinese market, on the macro environment. He admits that the company can do better in products and inventory, and believes that cooperation with Tmall Tmall.com is a great opportunity. But it is still negotiating with China's e-commerce giant in order to benefit from it.

At present, Guess's business in China is mainly sold through Tmall, and its online performance is sluggish in the first quarter. There is no doubt that it is pointing to Tmall's passenger flow performance.

In response to trade disputes between the United States and its main sourcing countries, the group chief financial officer, Sandeep Reddy, said that the company intends to hire a team to reduce costs, even though it considers adjusting prices, but does not want to sacrifice demand.

Previously disclosed data showed that 47% of the products were purchased from China. Sandeep Reddy refused to update the latest data at its performance meeting, saying that it was negotiating with close cooperation suppliers to try to pfer procurement.

While announces its performance, Guess will reduce EPS from $1.09-1.21 to US $1.09-1.20 for the whole year. After adjustment, EPS expects us $1.19-1.30. We expect annual revenue growth of 3.5-4.5% and fixed exchange rate growth 6.0-7.0%.

In the current two quarter, group EPS and adj EPS are expected to be 0.24-0.27 US dollars and 0.27-0.30 US dollars respectively.

Guess Inc. (NYSE:GES) closed at $14.42 on Friday and plunged 8% in the day, which has plunged 30.57% so far this year, while the S & P 500 index rose 14.62% during the same period.

Author: Flower broken