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What Drove Guess’s Fiscal 4Q18 Top Line?

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Guess grows sales by more than 16% in fiscal 4Q18

Guess (GES) posted a 17.5% YoY (year-over-year) increase in its fiscal 4Q18 sales when it reported its results on March 21, 2018. Its total sales stood at $792 million, edging past analysts’ estimate by $36 million. Driving this growth were the company’s strong retail comps in Europe and Asia as well as the positive impact of foreign currency. On a constant currency basis, its total sales rose 10.2% YoY during the quarter.

The fashion retailer missed revenue expectations in two of the previous three quarters.

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In fiscal 2018, Guess’s total sales rose 7.9% YoY to $2.4 billion on a reported basis and 5.3% on a constant-currency basis. Its growth was anchored by more than a 20% rise in revenue in Europe and Asia and a ~3% rise in its US wholesale revenue. Its US retail revenue, however, fell 11% during the year, as comps were down 9%.

What drove fiscal 4Q18 sales growth?

Behind Guess’s solid fiscal 4Q18 top line were its impressive performances in Europe and Asia, where sales expanded by a stellar 39.7% YoY and 40.2% YoY, respectively. While healthy comps drove growth in these two regions, currency exchange also played a major role.

European same-store sales (including e-commerce) improved 6% YoY during the quarter. However, including currency gains, this increase was ~18%. Similarly, in Asia, comps improved 8% on a constant-currency basis and 14% on a reported basis. Together, Europe and Asia accounted for 59% of the company’s fiscal 4Q18 sales.

The company delivered a mixed performance in the Americas. While its wholesale sales were up 3.8%, its retail business was down 6.1%. A 4% fall in its sales comps was the key reason for the fall in its retail revenue. While wholesale accounted for 4.6% of Guess’s fiscal 4Q18 sales, retail’s share was close to 34%.

Read the next article to take a closer look at the company’s fiscal 4Q18 margins and profitability.

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