Guess Stock Down on Sales Growth Warning

Guess Inc. (GES) shares declined Thursday after the jeans and fashion retailer warned of moderated first-quarter sales growth.

Stock of the Los Angeles-based company fell $6.05, or 13 percent, to close at $40.15 in heavy trading on the New York Stock Exchange.

On a 52-week basis, there was a low of $12.51 last April 29 and a high of $46.30 on Wednesday.

For the first quarter, Guess expects same-store sales, or sales at stores open a year or more, to rise 10 percent. The company expects overall sales to rise in the mid-teen percentage range, a slower rate of growth than in the last couple of quarters.

Wall Street had expected revenue of about $249.6 million, about 16 percent higher than revenue of $215.6 million in the prior first quarter.

On a conference call, Chief Operating Officer Carlos Alberini noted the snowstorms in the Northeast and the occurrence of Easter in April in 2006, rather than in March a year earlier, would hurt comparisons.

For the month of March, for example, Alberini expects same-store sales to be "nearly flat," according to a transcript provided by Thomson StreetEvents. For the second quarter, the company expects same-store sales growth of 10 percent.

The company said it expects to increase selling, general and administrative spending significantly as a percentage or revenue in the first quarter.

Merriman Curhan Ford analyst Erin Moloney said that likely reflected investment in its international operations.

"I think their guidance for the first quarter is a little bit conservative, a little below expectations," said Moloney, who rates the shares "buy" and doesn't own any shares.

Fourth-quarter earnings at Guess rose sharply to $25.8 million, or 57 cents a share, from $14.9 million, or 33 cents a share, in the previous fourth quarter. Those earnings beat the 49 cents a share expected by Wall Street.

Revenue rose 24 percent to $276.6 million from $224.0 million, also exceeding Wall Street's expectations.