Guess skyrockets 27% after beating earnings expectations and cutting costs

• Clothing brand Guess soared as much as 27% Thursday after blowing past second-quarter estimates and raising its fiscal 2020 estimates.
• The retailer shifted its outlook higher than prior expectations due to "effective expense management" and improved profit growth, CEO Carlos Alberini said.
• The executive also said a new set of business strategies is being finalized and will be revealed in October. He noted the initiatives will focus on global expansion and "value creation."
• Watch Guess trade live here.

Guess shares jumped as much as 27% in early Thursday trading after the company blew past second-quarter earnings estimates and forecast continued sales growth through the rest of the year.

The clothing brand and retailer also shifted its yearly outlook higher than previous expectations.

CEO Carlos Alberini said in a statement that the company saw "strong operating profit growth," effective cost management, and improved margins during the quarter.

"I'm very excited about our future, and I'm convinced that we are putting in place a solid plan to tackle our opportunities head on," Alberini said. "We have strong talent throughout our organization, and the commitment and passion that you will find in our team is at the top of the chart."

Here are the key numbers:

Adjusted earnings per share: $0.38, versus the $0.29 estimate

Revenue: $683.2 million, versus the $671.4 million estimate

Fiscal 2020 adjusted earnings per share: $1.28 to $1.36, versus the $1.32 FactSet estimate

The CEO said the company's "strong inventory position" places it in an advantageous position ahead of the fall and holiday seasons. He also noted the company's wholesale businesses in the Americas and Europe were among the segments performing far more efficiently than previous estimates predicted.

Guess announced it will unveil a new set of business initiatives in late October. Alberini said the new plans will focus on worldwide expansion, margin improvement, and "value creation."

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The retailer's CEO also noted his surprise at how successfully the brand has grown in China despite increased trade tensions and the country's slowing economy. The brand has "successfully mitigated the tariff risk in China" and continues to reduce its dependency on the nation, he said.

Alberini added that, while the company is working on finding better products and marketing strategies for the country, he still sees its consumers interested in Guess' current offerings.

"I was completely amazed with how vibrant our Guess brand is in China, and I saw this with my own eyes there. It's just exciting," Alberini told investors in an earnings call.

The company traded at $18.92 per share as of 11:30 a.m. ET Thursday, down about 9% year-to-date.

The clothing brand has two "buy" ratings, three "hold" ratings, and no "sell" ratings from analysts, with a consensus price target of $21.40, according to Bloomberg data.

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