Guess earnings indicate strength for retailers

What really caught the market's attention was a better than expected fourth quarter forecast. Analysts had forecast that the retailer would be earning 69 cents for the fourth quarter on revenues of $564 million. After hours traders rushed into the stock, and pushed shares up over 6% after Guess forecast that fourth quarter earnings would probably fall somewhere between 77 and 80 cents on revenues of $585 million.

The recession really took its toll on consumer confidence, but that seems to be changing now, and as consumers start to hear reports that the recession has come to an end, they are starting to spend more. Today's report and forecast from Guess could be taken as an indication that the worst is over for retailers.

With the holiday season is full effect, there could be no better time for consumers to start spending again. Guess is known mostly for its jeans, and their product line is definitely one of the more expensive lines of clothing. Over the past year, consumers have moved towards lower priced clothing, so seeing a retailer like Guess showing growth is a very positive sign for the industry as a whole.

We will not get a true reading of the current situation until after the holiday season has passed, but over the weekend we did get some positive indicators on where the market is heading. Retail sales for the busy black Friday were not great, but did show an increase of 0.5% compared to last year. E-commerce sales were much higher than last year by roughly 11%, a sign that people were willing to spend, but just may not have wanted to deal with the early morning crowds to get in on the action.

While recession fears have definitely subsided over the past few months, we still have to keep a close eye on the unemployment picture. Nation wide, unemployment has risen through the 10% mark, rising to 10.2% in October. Most analysts agree that unemployment will continue to rise during the first half of 2010, and until we see unemployment start to drop retailer are still going to be under pressure, but we are starting to see positive indicators.

After hours traders have pushed Guess stock up 8% in after hours trading.