Guess Profit Rises 26%

Guess Inc., which features the ubiquitous celebrity Paris Hilton in its marketing campaign, said Wednesday that earnings jumped 26% in the fourth quarter on strong wholesale and licensing revenue, despite a slowdown in the growth of comparable-store sales.

The Los Angeles-based seller of trendy clothes and accessories said earnings were $14.9 million, or 33 cents a share, compared with $11.8 million, or 27 cents, in the fourth quarter of 2003. The results beat the 31-cent profit consensus of analysts polled by Thomson First Call. (The 2003 period included impairment charges of $1.6 million, or 2 cents a share, most of which was related to the company’s decision to close its poorly performing Guess Kids stores.)

Revenue for the quarter increased 12.4% to $224 million from $199.3 million. Sales at stores open at least a year -- a barometer of a retailer’s health -- were up 4.4% as competition intensified during the holiday shopping season. Wholesale revenue did better, climbing 16% to $39.6 million. And licensing revenue rose 13.7% to $12.4 million.

For the year, Guess’ net income quadrupled to $29.6 million, or 66 cents a share, from $7.3 million, or 17 cents. Analysts expected profit of 64 cents a share. (The year-earlier results included impairment and severance charges of $2.4 million, or 3 cents.)

Revenue for the year grew 14.6% to $729.3 million, from $636.6 million. Same-store sales rose 9.9%.

The company’s stock closed Wednesday at $14.60, down 35 cents, on the New York Stock Exchange.

In a conference call with analysts, President Carlos Alberini said Guess was positioning itself for growth with the development of two new retail concepts: Marciano, a new chain targeting a slightly older and more sophisticated customer, and Guess Accessories stores. The company expects that the recent completion of its purchase of its Italian licensee will help expand its presence in Europe.

“We are excited about the progress we made in 2004, both our financial performance and the many initiatives that have been put in place to pave the way for future growth,” Alberini told analysts.

Guess, which operates about 290 stores in North America, has been getting marketing mileage from its association with socialite Hilton, star of the television show “The Simple Life: Interns.”

The ad campaign conjures up the company’s glory days, when Claudia Schiffer was the face (and body) behind the brand, analyst Joseph Teklits wrote in a report last month.

The March 2005 edition of Vanity Fair magazine features a two-page spread showing a topless Hilton in faded, unsnapped jeans, hugging a strategically placed snake to her chest.

Teklits, with Wachovia Securities, said 2005 would probably be a transition year for Guess, given its plans for growth. But the company also faces challenges, his report said, including tough same-store sales comparisons in the first half of 2005 and juggling several store concepts at once. Guess stock could be volatile over the next few quarters, it said.