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Guess' profits leap but still fall short of expectations

Denim brand Guess has said its first quarter sales will be lower than projections despite a 19% increase in profits in the fourth quarter.

The company reported net earnings of $103.3m (£64.2m) in its fourth quarter ending January 29, rising from $86.6m (£53.8m) in the last quarter of the previous year. Net revenues for the fourth quarter increased by 17.9% to $756.9m (£470.5m)

Net revenue from Guess’ European segment increased 32.5% to $294.9m (£183.3m) in the fourth quarter of fiscal 2011, compared to $222.6m (£138.4) in the previous financial year.

For the full year to January 29 Guess reported net earnings of $289.5m (£179.9m), an increase of 19.3% on the year before. Total net revenue for year increased 16.9% to $2.49bn (£1.5bn). Net revenue from the in Europe increased 23.2% to $920.3m (£571.9m) in year, compared to $747.2m (£464.3m) in the prior year.

Despite reporting strong sales, Guess said its first quarter sales and earnings would be below Wall Street’s expectations. So far this quarter, same-store sales are down by a low single digit percentage and Guess’ first quarter profit forecast of 41 to 44 cents per share is below the 61 cents expected by analysts.

Chief executive officer Paul Marciano said: “This has been another successful year of record results where we made substantial progress toward many important objectives. We increased annual revenues in each of our businesses, which combined to drive double-digit revenue growth and a 19% increase in earnings per share. Our focus on international expansion continues to pay off, with Europe and Asia contributing nearly two-thirds of our annual revenue increase.”

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