Disappointing Q3 From Guess Is A Tale Of 2 Regions

Guess?, Inc. GES reported disappointing Q3 results after market close on Wednesday and the share price was down nearly 13 percent in the pre-market Thursday.

Following the lower-than-expected results, Wunderlich analyst Eric Beder maintains a Buy rating for the stock, while lowering his price target around 26 percent from $27 to $20, still representing a nearly 50 percent upside from where the stock is currently trading.

Stark Contrast In Regional Comparables

Guess saw a comparable decline of 4.9 percent, while Q3 last year saw same-store sales down 6 percent. However, according to Guess management, the trend in units/transactions was flat, and the average-unit-retail decline was due to weakness in seasonal items and promotional activities.

While comparables continued to suffer domestically, European sales grew by 16 percent compared to Q3 2015 and Asian sales by 6 percent.

Management outlined a four-point America’s Retail segment plan to streamline the domestic market and allow overseas growth to “shine through”:

1. Focus on rent reduction.
2. Store rationalization.
3. Infrastructure improvements.
4. Digital marketplace initiative.

At time of writing, shares of Guess were trading down 13 percent.