Guess?, Inc. (GES), Abercrombie & Fitch Co. (ANF): This Fashion Retailer Is Ahead of the Pack

American Eagle Outfitters (NYSE:AEO), another US competitor, is also struggling as a result of the macro-economic backdrop. While the company met EPS expectations for its most recent quarter, guidance came in well below analyst estimates . Like its peers, American Eagle Outfitters (NYSE:AEO) has been suffering from poor demand, especially from teens, an age group that normally fuels much of the industry’s profits. Like Abercrombie & Fitch Co. (NYSE:ANF), the company expects its sales to drop in the third quarter .

One of the few competitors that actually seem to be doing alright is The Gap Inc. (NYSE:GPS). Following a recent earnings beat that showed healthy revenue growth, the company raised its full-year outlook, as Old Navy and The Gap Inc. (NYSE:GPS) Global brands especially have been performing very well. Encouragingly, the company raised its dividend for the second time this year, and furthermore expects to open another 160 stores in fiscal 2013 while closing around 80.

Valuations and metrics
Guess?, Inc. (NYSE:GES) currently trades at a bit of a discount to the industry, at 16.52 times trailing earnings versus the 19.1 industry average. Abercrombie & Fitch Co. (NYSE:ANF) and American Eagle Outfitters (NYSE:AEO) are even cheaper at 11.91 and 13.18 times trailing earnings respectively, but this is probably largely a result of their poor performance. The most expensive stock mentioned here is Aeropostale Inc (NYSE:ARO), trading at 55 times trailing earnings. Guess?’ price-to-sales of 0.99 is quite reasonable, as is its 14.52% return on equity. The company has a fairly solid balance sheet with only $10.23 million in debt and more than $300 million in cash.

The bottom line
It is becoming increasingly clear that the American consumer is not in as good shape as the talk of economic recovery would suggest. As a result of higher taxes and gas prices, many US consumers are hesitant to open up the purse strings for non-essential items, which has clearly been hurting many fashion retailers. Despite this tough environment, Guess? has performed quite well, and additionally isn’t too expensive at the moment.

The article This Fashion Retailer Is Ahead of the Pack originally appeared on Fool.com is written by Daniel James.

Daniel James has no position in any stocks mentioned. The Motley Fool recommends Guess?. The Motley Fool owns shares of Guess?

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