Guess?, Inc. GES has been able to achieve the December 2016 pricing results, which outpaced the decline in the aggregate contemporary segment, unlike the earlier months of 2016.
Wunderlich’s Eric Beder maintained a Buy rating on the company, with a price target of $20.
Comparatively Strong
Beder mentioned that compared to the 41.3 percent AUR decline in the year-ago period, the company achieved only a 7 percent decline in pricing in December 2016.
Although December was the fourth successive month in which Guess failed to meet the brand’s long-term AUR level average, the analyst noted that “such results are reasonably notable given management’s prior indication that its redeveloped fashion collections would have altogether lower price points.”
After the Q3 results, management had noted that there was a meaningful buildup of excess inventory at the end of the quarter in the company’s domestic operations, driven by the aggressive rollout of heavy outwear products.
Beder stated that his made the December results appear “more constructive than expected.”
Inventory Overhang
However, the analyst expects the inventory overhang to impact domestic retail results, with accelerating outerwear clearance expected to continue through December and into 2017.
Beder pointed out that the “monthly results were quite strong on a product and segment basis, with a 11.8 percent decline in women’s segment pricing offset by the second consecutive month of YoY AUR growth in the brand’s men’s business.”
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