Guess? Inc.
Guess? not only increased revenues, it also maintained tight cost control in light of the tough economic marketplace. Gross margin actually dropped from 55.3% to 54.6%, while selling, general, and administrative expenses held steady at 26.7%. In addition to actually delivering shareholder value, Guess? has announced a $200 million stock repurchase program and a $0.08 quarterly cash dividend, again prompting me to ask: What gives?
Guess? does have some advantages over the typical retailer. Its international focus has certainly boosted results, with Europe and Asia delivering 66% of the revenue growth and 50% of the earnings growth. But when you look at the results of other upscale, international retailers like Coach
All isn't perfect for Guess?. Balance sheet inventories were up more than 33% year over year, so buyers aren't grabbing everything that the company is selling. And while European fourth-quarter revenues were up by 75%, operating margins actually dropped from 19.5% to 18.3%.
Still, it's hard to argue with results like these in today's tough retail environment, and it explains why the company is selling at a premium multiple of nearly 15 times forward earnings even when rival retailers have been beaten down.
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