Guess ? (GES) pays a Special Dividend

It would be hard to turn up your nose at a $2 special dividend that arrives just in time for Christmas.

That is what is on offer for investors in clothing and apparel group Guess? Inc. (GES) which has been on fire in the last 18 months despite the global economic meltdown.

Reporting third quarter results at the end of November 2010, the group raised its quarterly dividend by 25% and threw in an extra $2 which is payable two days before Christmas. That leaves the company trading on a dividend yield of 5.7% if one takes the special dividend into account.

Despite the global consumer being under pressure, Guess? (GES) has been a solid performer delivering record results when it reported for the full year in March 2010.

At the time Paul Marciano, the group CEO told investors "Today, our brands enjoy outstanding momentum worldwide and a very strong competitive position. We believe our reported results clearly validate the relevance of our brands and our success. We remain focused on our long-term strategies and we continue to see tremendous opportunities to increase sales productivity and expand further across the globe."

He indicated that this would include further investment in North America and Europe as the group cemented its position as one of the up and coming branded goods companies in the world. This includes clothing, watches and shoes.

This trend has continued into the first three quarters of the new financial year with the company serving up net earnings of $69.1m. This equates to a 7.8% increase compared third quarter in the previous financial year with diluted earnings per share increased 8.7%, reaching $0.75, compared to $0.69 for the prior-year quarter. The company also opened another 84 stores across the globe in the first nine months and the group was already seeing benefits from its moves into Europe and Asia.

The company has a strong capital structure and significant cash position, allowing for the flexibility to significantly enhance the dividend program while continuing to invest in the future.

Investors sometimes forget that Guess? (GES) was founded in the 1980s and unlike many other "fad" brands which have come and gone, Guess? (GES) is still around and still looking for ways to return cash to shareholders.

If one steps back and considers that five years ago Guess? (GES) was a $17 stock which was showing solid growth, temporarily halted by the fallout from the stock market in 2008/2009, then Guess? (GES) at $50 in 2010 is a company well back on track.