Source: Wikimedia Commons

On March 19, Guess? (NYSE:GES) reported fiscal fourth-quarter earnings. Despite seeing stronger-than-anticipated quarterly performance, a dour forecast by the company's management caused shares to plunge 5% at the open of trading on the following day. Given the strong performance the company enjoyed, combined with the significant discount its shares are now trading for, is now an attractive time to buy? Should the Foolish investor instead steer clear of the business?

Guess? smashed forecasts!
For the quarter, Guess? reported revenue of $768.4 million. Although this represents a 6% decline compared to the $815.1 million the retailer reported in the year-ago quarter, it's 1% higher than the $758.5 million forecast by analysts. In its release, management attributed the decline to falling sales across the board.

In its North American segment, for instance, Guess? saw its revenue fall 6%. This was due, in large part, to a 4.4% drop in comparable-store sales. But it was also chalked up to the company closing 3.5% of its stores compared to the number it operated a year earlier. The business' European segment also saw substantial declines, while its Asia segment ticked down a little more than 1%.

Although a small portion of overall revenue, Guess'? North American wholesale segment was the most adversely affected on a percentage basis. During the quarter, the company saw sales fall nearly 20% from $50.9 million to $40.8 million.

  Estimate Actual Last Year Surprise
Revenue $758.5m $768.4m $815.1m +1.3%
EPS $0.78 $0.82 $0.85 +5.1%

Source: Guess?

In terms of profits, Guess? saw mediocre performance for the quarter but did better than analysts expected. Earnings per share came in at $0.82. This represents a 5% gain compared to analysts' estimates but fell shy of the $0.85 the company reported in the year-ago quarter. This drop, when placed next to last year's results, was mainly due to the company's revenue decline; it  was partially offset by fewer shares outstanding and lower selling, general, and administrative expenses and income taxes as a percentage of sales.

Even though these results weren't bad on a stand-alone basis, investors are uncertain about the company. This is because of where management believes performance is headed in the near future. As opposed to the revenue of $2.6 billion forecast by analysts for the 2015 fiscal year, management believes its top line will come in between $2.53 billion and $2.58 billion; earnings per share will be between $1.40 and $1.60, significantly lower than the expected $2.

Source: Wikimedia Commons

Guess? isn't alone in its plight
Guess? isn't the only retailer to take some blows lately. In its most recent quarter, Aeropostale (NYSE:AROPQ) saw its numbers come in far worse than anticipated, pushing shares down 20% after the news became public. For the quarter, the company reported $670 million in revenue. This was 16% lower than the $797.7 million the retailer reported in the year-ago quarter and fell below the $685 million analysts anticipated.

In terms of profits, Aeropostale did even worse. For the quarter, the company experienced a loss per share of -$0.90. This was significantly worse than forecast and lower than the -$0.01 loss analysts hoped to see. In addition to being negatively affected by a drop in sales, the company cited rising costs as a contributor to its woes.

Whereas the cost of goods sold was 80.2% of the company's expenses (as a percent of sales) last year, it accounted for 87% in 2013. Similarly, Aeropostale's selling, general, and administrative expenses rose from 19.9% of sales to 24.9%. These soaring costs were, in part, attributed to impairment charges and litigation expenses, respectively.

Source: Wikimedia Commons

Another poor performer was American Eagle Outfitters (NYSE:AEO). After the retailer on March 11 reported that its revenue declined 7% from $1.1 billion to $1.04 billion, shares fell 8%. Admittedly, this drop in its top line still allowed the business to beat revenue forecasts of $1.03 billion, but its lackluster earnings left investors worried.

Looking at profits, American Eagle's results were poor but not as poor as Aeropostale's. American Eagle saw its earnings per share come in at $0.05. This was a whopping 89% lower than the $0.47 analysts hoped to see and was, like Aeropostale, due to lower revenue and higher costs. Chief among these was the business' cost of goods sold, which soared from 58.8% of sales to 70.6%.

Foolish takeaway
There's no hiding that Guess'? forecast is, to some extent, foreboding. However, investors can take comfort in the idea that the business' performance over its most recent quarter was superior to both Aeropostale and American Eagle.

Moving forward, this does not mean that Guess? or any of its peers are attractive investments. But it does suggest that Guess? may have a better position than its rivals. Should the retail market turn around, this could present the Foolish investor with a nice opportunity. But it's important to keep in mind the risks associated with the industry.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.