ANF Abercrombie and Fitch Co

Guess? Inc. (GES), one of the world’s leading designers and distributor of lifestyle apparels, is scheduled to report its fourth quarter 2012 financial results after the closing bell on March 14, 2012.

The current Zacks Consensus Estimate for the quarter’s earnings is pegged at $1.05 a share and $3.06 for fiscal year 2012. The Zacks Consensus Estimate projects revenues to come in at $778 million for the fourth quarter and $2690 million for fiscal year 2012.

Third Quarter 2012 Recap

Guess? Inc., which faces stiff competition from Abercrombie & Fitch Co. (ANF) and Gap Inc. (GAP), posted third quarter 2012 adjusted earnings per share (EPS) of 71 cents, which missed the Zacks estimate by 2 cents. It also lagged the year-ago earnings of 75 cents by 5.3%.

Revenues in the quarter climbed 4.7% year over year to $642.8 million. In constant dollar terms, net revenue went up 1.9% from the previous year.

Operating income grew 4.6% to $97.0 million, reflecting favorable currency, volume/mix gains and lower overheads.

Operating Income margin remained flat with the prior-year quarter at 15.1%. Product margin climbed up owing to higher relative occupancy, distribution and selling expenses.

Read The Whole Story at Guess? Falls Shy, Revs Modestly Up

Management Guidance

Based on the results posted in the third quarter, the company estimated the fourth quarter diluted earnings to be in the range of $1.03 to $1.09. For the fiscal 2012, the company projects earnings in the range of $3.04 to $3.10 a share and GAAP diluted earnings per share between $2.85 and $2.91.

Third-Quarter 2012 Zacks Consensus

Earnings estimates for the fourth quarter of 2012, as provided by the analysts, range from a low of $1.00 to a high of $1.09. Thus, the current Zacks Consensus Estimate for the quarter is pegged at $1.05 per share, reflecting a year-over-year decline of 5.4%.

Over the past 30 days, none of the analysts have revised their earnings estimates. Hence, the Zacks Consensus Estimate did not change. However, the estimate increased by 1 penny over the last 60 days.

Earnings History: Ahead of Zacks

With respect to earnings surprises, Guess? topped the Zacks Consensus Estimate in three of the preceding four quarters. Over the last four quarters, the earnings surprise ranged from a negative of 2.74% to 25.00%, with the average earnings surprise being 7.67%, suggesting that Guess? has outperformed the Zacks Consensus Estimate by that magnitude over that period.

Recommendation

Stiff competition from numerous manufacturers, importers and distributors; who boast a better financial, distribution, advertising and marketing resources concerns us.

Currently, we prefer to rate the stock as Underperform. Guess? holds the Zacks #4 Rank, which translates into a short-term 'Sell' rating.

 
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