Piper Jaffray Reiterates Underweight on Guess? (GES) Following 2Q
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Piper Jaffray maintained an Underweight rating and $12.00 price target on Guess? (NYSE: GES) following the company's 2Q earnings report. Guess reported EPS of $0.14 vs. the Street at $0.06. Revenue was flat Y/Y and was driven by Europe, which grew 7% Y/Y in the quarter. Management reduced its FY17 Sales guidance calling for revenue between 3.0% and 5.0% vs. previously at 5.5% to 7.5%.
Analyst Erinn Murphy commented, "We are reiterating our UW rating on shares of GES despite better-than-expected Q2 results. While Q2 EPS of $0.14 bested our $0.08 estimate and the Street's $0.06 estimate, we note $0.06 of the beat came from "other income". Sales were in line with our estimate and gross margins declined 220 bps. Inventory was +13% Y/Y. By region, sales were worse in licensing (down 13%) as watches in particular remained weak. Sales in NA wholesale and Asia declined 8% and 6%, respectively. Europe remained a brightspot with sales +7% aided by positive DD comps & new stores. On the call, mgmt. indicated they would no longer be giving QTD comps. Store openings have been adjusted and mgmt. is pushing out 10 NA stores into FY18 while accelerating an additional 10 new stores in Europe. While the low end of FY17 EPS moves up, sales guidance is now for 3-5% growth vs. 5.5-7.5%, prior."
Shares of Guess closed at $14.90 yesterday.
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Create E-mail Alert Related CategoriesAnalyst Comments, Analyst EPS Change, Analyst EPS View
Related EntitiesPiper Jaffray, Earnings, Erinn Murphy
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