Guess? Shares Plunged: What You Need to Know

Updated

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of apparel retailer Guess? (NYS: GES) sank 11% on Thursday after management issued guidance well below Wall Street expectations.

So what: Guess?' fourth-quarter results were largely in line with estimates, but a disappointing current-quarter and full-year outlook are forcing investors to lower their growth expectations. Weakness in Europe -- where Guess? generates about 40% of its business -- continues to pressure sales, while margins remain squeezed by higher costs, triggering fresh fears over the company's long-term profitability.

Now what: Management expects 2012 EPS of $2.50-$2.65 on revenue of $2.74 billion-$2.78 billion, versus the consensus of $3.21 on revenue of $2.84 billion. "We enter this fiscal year in a challenging macroeconomic environment, especially in Europe, though there are some signs of improvement in the United States," CEO Paul Marciano said. "As always, we plan to focus on what we can control." Given Guess?' still-juicy growth prospects in Asia and cheapish P/E, this short-term turbulence might be providing a decent entry point for long-term investors.

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At the time thisarticle was published Fool contributor Brian Pacampara owns no position in any of the companies mentioned. The Motley Fool owns shares of Guess?. Motley Fool newsletter services have recommended creating a put write position in Guess?. Try any of our Foolish newsletter services free for 30 days.We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool's disclosure policy always gets a perfect score.

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