Guess? stock plunges 15% on Q3 miss and weak guidance; UBS sees more challenges ahead

(Updated – November 22, 2023 6:36 AM EST)

Guess? (GES) shares dropped 15% in early Wednesday trade following the release of Q3 results.

EPS of $0.49 came in worse than the consensus estimate of $0.62. Revenue grew 3% year-over-year (up 1% in constant currency) to $651.2 million, missing the consensus estimate of $655.98M.

“We are navigating through an uncertain shopping environment in many parts of the world impacted by geopolitical issues and lower consumer confidence. Based on these factors and our recent sales trends, we are taking a more cautious view for our fourth quarter outlook and now expect to deliver net revenue growth of 2% and an operating margin of roughly 9% for the fiscal year,” commented CEO Carlos Alberini.

Q4/24 EPS is expected to be in the range of $1.53-$1.60, compared to the consensus of $1.68. For the full year, the company sees EPS at $2.67-$2.74, compared to the consensus of $2.96.

UBS analysts reiterated a Neutral rating and a $22 per share price target.

“We believe sales headwinds should persist into FY25, pressuring GES’ earnings growth. We also see limited upside to Street estimates in a decelerating sales environment,” the analysts said in a note.

“Our view is these factors should prevent near-term P/E expansion. Looking out over the long-term, we forecast a 5% 5-yr. EPS CAGR and believe this outlook is fairly priced. These are the key reasons we continue to rate GES Neutral.”

Additional reporting by Senad Karaahmetovic