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Why Guess? Stock Is Falling Today

By Rich Duprey – Aug 26, 2021 at 11:57AM

Key Points

  • Guess? beat analyst Q2 earnings estimates, but missed on revenue.
  • Q2 sales were also up over last year, but not over pre-pandemic amounts.
  • Its e-commerce platform could not make up the deficit of fewer store visits.

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The apparel retailer is having difficulty getting customers back into its stores, though they're buying more online.

What happened

Shares of Guess? (GES 2.12%) were falling more than 7% in morning trading Thursday after the clothing retailer reported second-quarter earnings after market close on Wednesday.

Guess? reported sales of $628 million versus expectations of $648 million, but profits of $0.91 per share handily outstripped Wall Street's consensus view of $0.70. Although sales were above the year-ago period, they were down 8% compared to pre-pandemic levels.

Guess storefront

Image source: Guess?.

So what

Most retailers are reporting better year-over-year results, as that's a low bar to step over compared to a time when most retail stores were closed for a good part of the quarter. But they're also reporting sales greater than they generated in 2019, indicating their businesses are still growing. 

That's not what's happening with Guess? The retailer also said it wouldn't provide detailed guidance for the third quarter or the full year, but it expects next quarter's revenue to be flat to slightly negative, while it will be down by mid single digits for the full year compared to its pre-pandemic results, assuming no more COVID-related closures.

Now what

Guess? looks to be struggling to regain its momentum, and while it says its global e-commerce platform has shown gains, they have been completely offset by the declines in the apparel retailer's store traffic.

Rich Duprey has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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