Guess Leaps On Better Fourth Quarter Profit Margins, Accelerates Stock Buyback By

© Reuters.

By Dhirendra Tripathi – Guess (NYSE:) stock soared 8% on Thursday after the retailer posted better-than-expected fourth-quarter margins, persuading traders to ignore losses on the sales and earnings fronts.

Adding to the gains is the company’s plan to conduct an accelerated stock buyback of $175 million.

Fourth quarter adjusted operating margin increased 3.6% to 15.7% due to higher markups, lower discounts and lower occupancy costs. Retailers were able to reduce discounts as demand remained high while inventories stabilized.

The gains were partially offset by lower comparable sales in Europe and higher inbound freight costs.

Assuming there are no significant COVID-related shutdowns, the company expects 2023 revenue to grow in single digits. He forecasts a deterioration in the operating margin, but still sees it close to 10.5% over the year. Revenue in 2022 was $2.6 billion.

The fourth quarter was $1.14, while revenue was down 5% to $800 million.

CEO Carlos Alberini said the company’s return on invested capital of 26% for the year was the highest in a decade.

“Our balance sheet is strong and we plan to use our capital opportunistically to return value to our shareholders through increased dividends and share buybacks.”

The company will pay a quarterly dividend of 22 cents.

For the current quarter, the company expects first quarter revenues to be up in the 1990s.

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