Guess?, Inc. (
GES)
Q3 2011 Earnings Call Transcript
November 23, 2010 4:30 p.m. ET
Executives
Maili Bergman – Vice President, Investor Relations
Paul Marciano – Vice Chairman and Chief Executive Officer
Dennis Secor – Chief Financial Officer
Maurice Marciano – Chairman of the Board
Russell Bowers – Chief Financial Officer of North America Retail Business
Executives
Jeffrey Klinefelter – Piper Jaffray
Omar Saad – Credit Suisse
Christine Chen – Needham & Company
Dana Telsey – Telsey Advisory Group
Betty Chen – Wedbush Securities
Eric Beder – Brean Murray, Carret & Co.
David Glick – Buckingham Research Group
Todd Slater – Lazard Capital Markets
Chi Lee – Morgan Stanley
Janet Kloppenburg – JJK Research
John Kernan – Cowen and Company
Operator
Good day, everyone and welcome to the Guess? Third Quarter Fiscal 2011 Earnings Conference Call. For opening remarks and introductions, I would like to turn the call over to Maili Bergman, Vice President of Investor Relations. Please go ahead, Maili.
Maili Bergman
Good afternoon, everyone and thank you for joining us today. On the call are Paul Marciano, Vice Chairman and Chief Executive Officer; Maurice Marciano, Chairman of the Board; Dennis Secor, Chief Financial Officer and Russell Bowers, Chief Financial Officer of our North America Retail Business.
During today''s call, we will be making forward-looking statements, including comments regarding future plans and our financial outlook. The company''s actual results may differ materially from those current expectations based on risk factors included in the company''s quarterly and annual filed -- annual reports filed with the SEC.
Now I would like to turn the call over to Paul Marciano. Paul?
Paul Marciano
Thank you, Maili. Good afternoon and thank you for joining us. Today, we reported solid first quarter results in both terms of revenues and earnings. All other business segments contributed to our performance, delivering diluted earnings per share of $0.75, a new third quarter record for the company.
We delivered operating margin of 15.1%, 160 basis points stronger than our expectation just a quarter ago. In the quarter, we made significant progress against our strategic growth initiatives, especially in international markets where our brand continued to be underpenetrated. In the third quarter, Europe and Asia businesses combined represent over two-thirds of our revenue increase.
Our brand enjoyed tremendous momentum worldwide. In the last two years, we have opened 386 new stores and our plan this year is to open another 241 stores. At the same time, we''re growing, we continue to manage our business well resulting in a solid increase in earnings per share, significantly ahead of expectations.
Let''s start with Europe and Asia. In Europe, we had a very strong quarter increasing revenue in local currency by 40%. Our growth in Europe was driven by new store opening and strong comp in our retail stores which we expect to continue throughout the end of the year.
Our retail presence in the region has grown with the addition of key flagship stores. Most recently, nice reads in London across Harrods, then Passeig de Gracia in Barcelona and in the center of Milan where we expanded our existing flagship store. Additionally, our new international jewelry business performed well above expectation in Europe, Middle East and Asia.
In Europe, our brand recognition is getting stronger year after year. Because of the fast expansion of our retail stores, we are filling the position of Guess? as a global lifestyle and affordable luxury brand. This quarter, we added 22 retail property and 17 licensing stores in Europe, ending the period with a total of 379 Guess? branded stores.
We expect to open a total of 126 stores in Europe this fiscal year. We are announcing 2008 that we''ll be focusing on France, Spain, U.K. and Germany and since then we have opened 75 retail property and licensing stores in these four countries.
We will now expand on that development to North of Europe, where we basically have no presence. We believe there''s a potential for another 75 stores on the North over the next three to five years.
