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.
Fool contributor Colleen Paulson doesn't own shares of any of the companies in this article, but remembers fondly when Guess? jeans were the newest trend. The Fool's disclosure policy is always a trendsetter.