Guess forecasts strong sales this quarter; shares rise

Thu May 30, 2013 6:47pm EDT
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By Siddharth Cavale

(Reuters) - Apparel retailer Guess Inc (GES.N: Quote) forecast current-quarter sales above Wall Street's estimates after reporting a higher-than-expected quarterly profit, sending its shares up 10 percent in trading after the bell.

The retailer forecast total second-quarter sales of $620 million to $635 million, which beat analysts' average estimate of $618.4 million.

"So far in the second quarter, comparable-store sales have improved (in North America) and are roughly flat for the quarter to date," Russell Bowers, Chief Financial Officer of North American Retail said on a post earnings call with analysts.

Piper Jaffray & Co analyst Erinn Murphy said the signs of improving trends in North American retail as new product initiatives unfold are encouraging for potential margin recovery. She has the stock as a 'top pick' with an "overweight" rating.

The company, however, cautioned cold weather conditions in Europe were a cause for concern.

"What we have not expected has been ... the drastic weather conditions that continue to beat Europe like we have not seen for some time in a half century. The weather has been a big factor," Chief Executive Paul Marciano said. France and Italy were the most affected, he added.

The company said it expects sales in Europe to decline in the low-single-digit percentage range in the second quarter, assuming the Euro remained at its current rate. It expects Europe sales to improve in the third quarter, which begins in August.