PART I. FINANCIAL INFORMATION [ITEM 1. Financial Statements (unaudited)](index=4&type=section&id=ITEM%201.%20Financial%20Statements%20(unaudited)) This section presents the company's unaudited condensed consolidated financial statements, including balance sheets, income statements, comprehensive income statements, cash flow statements, and statements of stockholders' equity, along with detailed notes covering key accounting information [Condensed Consolidated Balance Sheets as of August 2, 2025 and February 1, 2025](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets%20as%20of%20August%202,%202025%20and%20February%201,%202025) This section provides a snapshot of the company's financial position, detailing assets, liabilities, and stockholders' equity at specific reporting dates Condensed Consolidated Balance Sheets (USD thousands) | Indicator | August 2, 2025 (USD thousands) | February 1, 2025 (USD thousands) | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | 189,635 | 187,696 | | Inventories | 668,378 | 562,649 | | Total assets | 2,976,298 | 2,766,678 | | **Liabilities and Stockholders' Equity** | | | | Total liabilities | 2,435,480 | 2,215,903 | | Stockholders' equity attributable to Guess?, Inc. | 487,551 | 505,007 | | Total stockholders' equity | 540,402 | 550,407 | - As of August 2, 2025, the company's total assets were **$2.976 billion**, representing a **7.58% increase** from February 1, 2025[12](index=12&type=chunk) - As of August 2, 2025, the company's inventories were **$668 million**, representing an **18.79% increase** from February 1, 2025[12](index=12&type=chunk) [Condensed Consolidated Statements of Income (Loss) — Three and Six Months Ended August 2, 2025 and August 3, 2024](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income%20(Loss)%20%E2%80%94%20Three%20and%20Six%20Months%20Ended%20August%202,%202025%20and%20August%203,%202024) This section presents the company's financial performance over three and six-month periods, detailing net revenue, gross profit, operating income (loss), and net income (loss) attributable to Guess?, Inc Condensed Consolidated Statements of Income (Loss) (USD thousands) | Indicator (USD thousands) | August 2, 2025 (3 months) | August 3, 2024 (3 months) | August 2, 2025 (6 months) | August 3, 2024 (6 months) | | :--- | :--- | :--- | :--- | :--- | | Net revenue | 772,937 | 732,560 | 1,420,738 | 1,324,503 | | Gross profit | 328,769 | 319,943 | 587,226 | 568,044 | | Operating income (loss) | 18,086 | 47,776 | (15,222) | 27,888 | | Net income (loss) attributable to Guess?, Inc. | 6,242 | (10,603) | (26,686) | 2,419 | | Basic earnings (loss) per share | 0.12 | (0.21) | (0.53) | 0.04 | | Diluted earnings (loss) per share | 0.12 | (0.28) | (0.53) | 0.04 | - For the three months ended August 2, 2025, net revenue increased by **5.51%** year-over-year, but operating income decreased by **62.13%** year-over-year, and net income attributable to Guess?, Inc. **shifted from a loss to a profit**[13](index=13&type=chunk) - For the six months ended August 2, 2025, net revenue increased by **7.27%** year-over-year, but operating income **shifted from a profit to a loss**, and net income attributable to Guess?, Inc. **shifted from a profit to a significant loss**[13](index=13&type=chunk) [Condensed Consolidated Statements of Comprehensive Income (Loss) — Three and Six Months Ended August 2, 2025 and August 3, 2024](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income%20(Loss)%20%E2%80%94%20Three%20and%20Six%20Months%20Ended%20August%202,%202025%20and%20August%203,%202024) This section outlines the company's comprehensive income (loss), including net income (loss) and other comprehensive income (loss) components, such as foreign currency translation adjustments Condensed Consolidated Statements of Comprehensive Income (Loss) (USD thousands) | Indicator (USD thousands) | August 2, 2025 (3 months) | August 3, 2024 (3 months) | August 2, 2025 (6 months) | August 3, 2024 (6 months) | | :--- | :--- | :--- | :--- | :--- | | Net income (loss) | 8,290 | (8,636) | (22,949) | 7,270 | | Foreign currency translation adjustments | 12,860 | (1,952) | 53,876 | (4,308) | | Comprehensive income (loss) attributable to Guess?, Inc. | 13,116 | (11,213) | 2,248 | 1,771 | - For the three months ended August 2, 2025, comprehensive income attributable to Guess?, Inc. was **$13.116 million**, a **significant improvement** from the **$11.213 million loss** in the prior-year period, primarily due to **gains from foreign currency translation adjustments**[15](index=15&type=chunk) - For the six months ended August 2, 2025, comprehensive income attributable to Guess?, Inc. was **$2.248 million**, which **increased** from **$1.771 million** in the prior-year period, with foreign currency translation adjustments contributing a **$53.876 million gain**[15](index=15&type=chunk) [Condensed Consolidated Statements of Cash Flows — Six Months Ended August 2, 2025 and August 3, 2024](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows%20%E2%80%94%20Six%20Months%20Ended%20August%202,%202025%20and%20August%203,%202024) This section details the company's cash inflows and outflows from operating, investing, and financing activities over the six-month periods, reflecting changes in liquidity Condensed Consolidated Statements of Cash Flows (USD thousands) | Indicator (USD thousands) | August 2, 2025 (6 months) | August 3, 2024 (6 months) | | :--- | :--- | :--- | | Net cash provided by operating activities | 1,500 | 21,734 | | Net cash used in investing activities | (46,310) | (60,894) | | Net cash provided by (used in) financing activities | 38,164 | (95,441) | | Cash, cash equivalents, and restricted cash, end of period | 190,447 | 220,250 | - For the six months ended August 2, 2025, net cash provided by operating activities was **$1.5 million**, a **significant decrease** from **$21.734 million** in the prior-year period[18](index=18&type=chunk) - During the same period, net cash provided by financing activities was **$38.164 million**, compared to a net outflow of **$95.441 million** in the prior-year period, primarily due to **increased borrowings and reduced dividend payments**[18](index=18&type=chunk) [Condensed Consolidated Statements of Stockholders' Equity — Three and Six Months Ended August 2, 2025 and August 3, 2024](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity%20%E2%80%94%20Three%20and%20Six%20Months%20Ended%20August%202,%202025%20and%20August%203,%202024) This section outlines the changes in the company's stockholders' equity, including net income (loss), other comprehensive income (loss), and dividend distributions Condensed Consolidated Statements of Stockholders' Equity (USD thousands) | Indicator (USD thousands) | August 2, 2025 (End of Period) | February 1, 2025 (Beginning of Period) | | :--- | :--- | :--- | | Stockholders' equity attributable to Guess?, Inc. | 487,551 | 505,007 | | Retained earnings | 1,231,417 | 1,289,233 | | Accumulated other comprehensive loss | (130,262) | (159,196) | - As of August 2, 2025, stockholders' equity attributable to Guess?, Inc. was **$487.551 million**, which **decreased** from February 1, 2025, primarily impacted by **net loss and dividend payments**[21](index=21&type=chunk) - For the six months ended August 2, 2025, the company paid **$31.641 million** in dividends, a **significantly reduced** amount compared to **$151.696 million** in the prior-year period[18](index=18&type=chunk)[21](index=21&type=chunk)[24](index=24&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations and additional information supporting the condensed consolidated financial statements, covering critical accounting policies and significant transactions [(1) Basis of Presentation](index=12&type=section&id=(1)%20Basis%20of%20Presentation) This note describes the company's business, the proposed take-private transaction, financial statement preparation, accounting periods, macroeconomic trends, and key accounting policies - The company announced a merger agreement with Authentic Brands Group LLC on **August 20, 2025**, for a proposed take-private transaction, where Authentic will own **51%** of the company's intellectual property, and existing shareholders (Rolling Stockholders) will own **49%** of the intellectual property and **100%** of the company's operating assets, with other Guess? shareholders receiving **$16.75 per share in cash** and the company ceasing to be publicly traded[27](index=27&type=chunk)[29](index=29&type=chunk) - Macroeconomic conditions, including declining consumer spending, inflation, rising interest rates, foreign currency volatility, the wars in Ukraine and Gaza, and the Red Sea crisis, continue to negatively impact the company's business, with the U.S. announcing a **10% universal baseline tariff** on all U.S. imports on **April 2, 2025**, potentially increasing product costs[37](index=37&type=chunk)[38](index=38&type=chunk) Cash, Cash Equivalents, and Restricted Cash (USD thousands) | Indicator (USD thousands) | August 2, 2025 | August 3, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | 189,635 | 218,856 | | Restricted cash | 812 | 1,394 | | Total cash, cash equivalents, and restricted cash | 190,447 | 220,250 | - As of August 2, 2025, approximately **46% of trade accounts receivable** and **55% of European trade accounts receivable** were covered by credit insurance, bank guarantees, or letters of credit[50](index=50&type=chunk) [(2) Acquisition of rag & bone](index=18&type=section&id=(2)%20Acquisition%20of%20rag%20%26%20bone) This note details the acquisition of rag & bone's operating assets and liabilities, including the cash consideration, supplier consideration liability, and the company's equity method investment - The company completed the acquisition of rag & bone's operating assets and liabilities on **April 2, 2024**, paying approximately **$57.1 million** in cash consideration and co-owning rag & bone's intellectual property with WHP Global[58](index=58&type=chunk)[59](index=59&type=chunk) - A supplier consideration liability of **$46.5 million** was recorded in the acquisition, to be amortized to selling, general, and administrative expenses (SG&A) over five years, with no goodwill recognized[63](index=63&type=chunk) rag & bone Acquisition Fair Value (USD thousands) | Indicator (USD thousands) | April 2, 2024 | | :--- | :--- | | Cash and cash equivalents | 2,083 | | Inventories | 52,105 | | Total assets | 202,317 | | Total liabilities | 96,759 | | Fair value of net assets | 105,558 | | Cash consideration | 57,064 | | Supplier consideration | 46,454 | - The company's **50% equity interest** in the joint venture owning rag & bone's intellectual property was valued at approximately **$41.3 million** and **$45.4 million** as of August 2, 2025, and February 1, 2025, respectively[67](index=67&type=chunk) [(3) Lease Accounting](index=21&type=section&id=(3)%20Lease%20Accounting) This note describes the company's operating lease arrangements for various facilities, including the sale-leaseback transaction of a US distribution center and unrecorded lease commitments - The company primarily leases showrooms, offices, distribution and warehouse facilities, and retail stores, with lease agreements extending through **August 2044**[70](index=70&type=chunk) - As of August 2, 2025, the company had estimated approximately **$39.8 million** in additional operating lease commitments not yet recognized on the condensed consolidated balance sheets[73](index=73&type=chunk) Operating Lease Liabilities (USD thousands) | Indicator (USD thousands) | August 2, 2025 | February 1, 2025 | | :--- | :--- | :--- | | Operating lease right-of-use assets | 933,717 | 839,879 | | Operating lease liabilities (current) | 189,254 | 176,972 | | Operating lease liabilities (non-current) | 793,515 | 715,755 | | Total lease liabilities | 990,779 | 902,560 | - For the six months ended August 2, 2025, operating lease cash outflows were **$125.919 million**, compared to **$108.179 million** in the prior-year period[79](index=79&type=chunk) [(4) Earnings (Loss) per Share](index=23&type=section&id=(4)%20Earnings%20(Loss)%20per%20Share) This note details the calculation of basic and diluted earnings (loss) per share, highlighting the impact of net income (loss) and potential dilutive securities Earnings (Loss) per Share (USD thousands, per share data) | Indicator | August 2, 2025 (3 months) | August 3, 2024 (3 months) | August 2, 2025 (6 months) | August 3, 2024 (6 months) | | :--- | :--- | :--- | :--- | :--- | | Net income (loss) attributable to Guess?, Inc. (USD thousands) | 6,242 | (10,603) | (26,686) | 2,419 | | Basic earnings (loss) per share | 0.12 | (0.21) | (0.53) | 0.04 | | Diluted earnings (loss) per share | 0.12 | (0.28) | (0.53) | 0.04 | | Basic weighted-average common shares (thousands) | 51,499 | 52,436 | 51,437 | 52,672 | | Diluted weighted-average common shares (thousands) | 52,115 | 67,092 | 51,437 | 54,118 | - For the three months ended August 2, 2025, diluted earnings per share were **$0.12**, compared to a diluted loss per share of **$0.28** in the prior-year period, indicating **improved profitability**[80](index=80&type=chunk) - For the six months ended August 2, 2025, diluted loss per share was **$0.53**, compared to diluted earnings per share of **$0.04** in the prior-year period, indicating **decreased profitability**[80](index=80&type=chunk) [(5) Stockholders' Equity](index=24&type=section&id=(5)%20Stockholders'%20Equity) This note outlines changes in stockholders' equity, including share repurchase programs, dividend policies, and accumulated other comprehensive income (loss), with restrictions due to a proposed transaction - The company authorized a **$200 million** share repurchase program on **March 25, 2024**, but no share repurchases were made during the six months ended August 2, 2025, with **$139.8 million** remaining authorized as of that date[85](index=85&type=chunk)[86](index=86&type=chunk) - During the proposed transaction period, the company is **prohibited from repurchasing common stock** without prior written consent from Authentic[87](index=87&type=chunk) Cash Dividends per Share | Indicator | August 2, 2025 (3 months) | August 3, 2024 (3 months) | August 2, 2025 (6 months) | August 3, 2024 (6 months) | | :--- | :--- | :--- | :--- | :--- | | Cash dividends per share | 0.30 | 0.30 | 0.60 | 2.85 | - During the proposed transaction period, the company is prohibited from declaring or paying regular quarterly dividends exceeding **$0.225 per share** without prior written consent from Authentic[89](index=89&type=chunk) [(6) Accounts Receivable](index=27&type=section&id=(6)%20Accounts%20Receivable) This note details the composition of accounts receivable, including trade, royalty, and other receivables, along with the provision for doubtful accounts Accounts Receivable (USD thousands) | Indicator (USD thousands) | August 2, 2025 | February 1, 2025 | | :--- | :--- | :--- | | Trade accounts receivable | 344,757 | 353,375 | | Royalty accounts receivable | 26,654 | 35,163 | | Other accounts receivable | 5,271 | 9,277 | | Total accounts receivable | 376,682 | 397,815 | | Less: Allowance for doubtful accounts | 8,008 | 6,654 | | Net accounts receivable | 368,674 | 391,161 | - As of August 2, 2025, net accounts receivable were **$368.674 million**, representing a **5.75% decrease** from February 1, 2025[95](index=95&type=chunk) [(7) Inventories](index=27&type=section&id=(7)%20Inventories) This note presents the breakdown of inventories, including raw materials, work-in-process, and finished goods, along with the provision for inventory obsolescence Inventories (USD thousands) | Indicator (USD thousands) | August 2, 2025 | February 1, 2025 | | :--- | :--- | :--- | | Raw materials | 1,042 | 2,801 | | Work-in-process | 1,400 | 0 | | Finished goods | 665,936 | 559,848 | | Total inventories | 668,378 | 562,649 | | Inventory obsolescence reserve | 30,600 | 26,900 | - As of August 2, 2025, total inventories were **$668.378 million**, representing an **18.79% increase** from February 1, 2025, primarily driven by finished goods[96](index=96&type=chunk) - As of August 2, 2025, the inventory obsolescence reserve was **$30.6 million**, representing a **13.75% increase** from February 1, 2025[96](index=96&type=chunk) [(8) Income Taxes](index=27&type=section&id=(8)%20Income%20Taxes) This note discusses the company's income tax position, including effective tax rates, unrecognized tax benefits, and the impact of recent tax law changes - For the six months ended August 2, 2025, the company's effective income tax rate was **-2.2%**, compared to **49.4%** in the prior-year period, primarily due to changes in the distribution of earnings across tax jurisdictions and a loss during the six months of 2025[97](index=97&type=chunk) - As of August 2, 2025, the company had accrued a cumulative reserve of **$42.6 million** for uncertain income tax positions, including **$20.6 million** related to an intercompany intellectual property transfer in fiscal 2022[99](index=99&type=chunk) - The company has determined that approximately **$300 million** of foreign undistributed earnings are no longer indefinitely reinvested, but the additional tax on repatriation is not material[102](index=102&type=chunk) - The **2025 Tax Act**, signed into law on July 4, 2025, made several modifications to U.S. corporate income tax provisions but did not have a material impact on the company's condensed consolidated financial statements for the three months ended August 2, 2025[103](index=103&type=chunk) [(9) Segment Information](index=28&type=section&id=(9)%20Segment%20Information) This note provides financial data for the company's five reportable segments, detailing net revenue, operating income (loss), and capital expenditures, along with geographical revenue disclosures - The company's operations are organized into **five reportable segments**: Europe, Americas Retail, Americas Wholesale, Asia, and Licensing, with the rag & bone acquisition integrated into existing segments[104](index=104&type=chunk) Segment Net Revenue and Operating Income (Loss) for the Three Months Ended August 2, 2025 (USD thousands) | Segment | Net Revenue | Operating Income (Loss) | | :--- | :--- | :--- | | Europe | 436,911 | 46,381 | | Americas Retail | 178,810 | (6,648) | | Americas Wholesale | 75,194 | 14,730 | | Asia | 55,765 | (3,803) | | Licensing | 26,257 | 25,056 | | Total Company | 772,937 | 75,716 | Segment Net Revenue and Operating Income (Loss) for the Six Months Ended August 2, 2025 (USD thousands) | Segment | Net Revenue | Operating Income (Loss) | | :--- | :--- | :--- | | Europe | 742,983 | 37,492 | | Americas Retail | 336,008 | (23,156) | | Americas Wholesale | 176,625 | 34,881 | | Asia | 113,870 | (5,596) | | Licensing | 51,252 | 48,075 | | Total Company | 1,420,738 | 91,696 | Net Revenue by Geographic Area for the Six Months Ended August 2, 2025 (USD thousands) | Region | Product Sales | Net Royalties | Total Net Revenue | | :--- | :--- | :--- | :--- | | United States | 377,052 | — | 377,052 | | Italy | 142,671 | — | 142,671 | | Germany | 97,880 | — | 97,880 | | Spain | 79,467 | — | 79,467 | | South Korea | 66,561 | — | 66,561 | | Canada | 57,837 | — | 57,837 | | Other Countries | 548,018 | — | 548,018 | | Total Product Sales | 1,369,486 | — | 1,369,486 | | Total Net Royalties | — | 51,252 | 51,252 | | Total Net Revenue | 1,369,486 | 51,252 | 1,420,738 | [(10) Borrowings and Finance Lease Obligations](index=34&type=section&id=(10)%20Borrowings%20and%20Finance%20Lease%20Obligations) This note details the company's outstanding borrowings and finance lease obligations, including credit arrangements and available borrowing capacity Borrowings and Finance Lease Obligations (USD thousands) | Indicator (USD thousands) | August 2, 2025 | February 1, 2025 | | :--- | :--- | :--- | | Term loan | — | 2,507 | | Finance lease obligations | 8,010 | 9,833 | | Credit arrangement borrowings | 268,075 | 170,327 | | Other | 9,405 | 8,949 | | Total debt and finance lease obligations | 285,490 | 191,616 | | Less: Current portion | 27,120 | 40,948 | | Long-term debt and finance lease obligations | 258,370 | 150,668 | - As of August 2, 2025, the company had **no outstanding term loan borrowings**, compared to **$2.507 million** as of February 1, 2025[113](index=113&type=chunk) - As of August 2, 2025, the company had **$249.1 million** in outstanding borrowings and **$156.4 million** in available borrowing capacity under its 2024 Credit Arrangement[123](index=123&type=chunk) - As of August 2, 2025, the company had **no outstanding borrowings** but **$176.1 million** in available borrowing capacity under its 2023 Credit Arrangement[116](index=116&type=chunk) [(11) Convertible Senior Notes and Related Transactions](index=36&type=section&id=(11)%20Convertible%20Senior%20Notes%20and%20Related%20Transactions) This note describes the company's convertible senior notes, including their conversion into 2028 notes, the associated debt extinguishment losses, and the fair value measurement of related derivative instruments - The company converted its 2024 Notes into 2028 Notes through a series of exchange and subscription agreements, resulting in the recognition of **debt extinguishment losses** in fiscal 2024 and fiscal 2025[127](index=127&type=chunk)[129](index=129&type=chunk)[130](index=130&type=chunk) 2028 Convertible Senior Notes Net Carrying Value (USD thousands) | Indicator (USD thousands) | August 2, 2025 | February 1, 2025 | | :--- | :--- | :--- | | 2028 Initial Notes net carrying value | 269,631 | 268,710 | | 2028 Additional Notes net carrying value | 68,591 | 67,817 | | Total 2028 Notes net carrying value | 338,222 | 336,527 | - The initial conversion price for the 2028 Notes was approximately **$24.70 per share**, which has been adjusted to approximately **$21.80 per share** as of August 2, 2025, to reflect quarterly dividends[132](index=132&type=chunk) - The 2024 Notes matured in April 2024, with the company settling the remaining **$33.5 million in principal** with **$33.3 million in cash** and **122,313 shares of common stock**, leaving no 2024 Notes outstanding as of August 2, 2025[141](index=141&type=chunk) - The 2028 Bond Hedge no longer qualifies for the derivative scope exception and is therefore recognized as a **derivative asset** and **remeasured at fair value** at each reporting period end[148](index=148&type=chunk) [(12) Share-Based Compensation](index=41&type=section&id=(12)%20Share-Based%20Compensation) This note summarizes the company's share-based compensation expense, unrecognised compensation costs, and the impact of the proposed transaction on unvested equity awards Share-Based Compensation Expense (USD thousands) | Indicator (USD thousands) | August 2, 2025 (3 months) | August 3, 2024 (3 months) | August 2, 2025 (6 months) | August 3, 2024 (6 months) | | :--- | :--- | :--- | :--- | :--- | | Stock awards/units | 5,329 | 4,307 | 10,796 | 8,907 | | Employee stock purchase plan | 58 | 8 | 117 | 99 | | Total share-based compensation expense | 5,387 | 4,315 | 10,913 | 9,006 | - As of August 2, 2025, unrecognized compensation cost related to non-vested stock awards/units was approximately **$43.5 million**, expected to be recognized over a weighted-average period of **1.9 years**[149](index=149&type=chunk) - Upon completion of the proposed transaction, all outstanding and unvested equity awards (except for certain awards held by Rolling Stockholders) will **accelerate vesting and be paid in cash**[150](index=150&type=chunk) [(13) Related Party Transactions](index=42&type=section&id=(13)%20Related%20Party%20Transactions) This note discloses various related party transactions with Marciano family entities, including lease agreements, aircraft leases, investments, and procurement, as well as the proposed take-private transaction - The company has five lease agreements with Marciano entities for warehouse and administrative facilities, with terms ranging from 2026 to 2037, including an extended lease for its Los Angeles headquarters until September 2037 with annual rent of approximately **$7.6 million**[157](index=157&type=chunk)[158](index=158&type=chunk) - For the six months ended August 2, 2025, the company paid approximately **$2.1 million** for aircraft leases to a third-party management company, compared to **$1.4 million** in the prior-year period[165](index=165&type=chunk) - The company holds a **30% minority interest** in a men's footwear company and has provided a **$2 million** revolving line of credit, along with fulfillment and distribution agreements, and sells its products in rag & bone retail stores[167](index=167&type=chunk)[168](index=168&type=chunk)[169](index=169&type=chunk)[170](index=170&type=chunk) - The company purchases faux fur products from a fashion accessories company in which Marciano entities own a **16% interest** and the company's CEO, Carlos Alberini, owns a **4% interest**, with total payments of approximately **$0.3 million** for the six months ended August 2, 2025[171](index=171&type=chunk) [(14) Commitments and Contingencies](index=45&type=section&id=(14)%20Commitments%20and%20Contingencies) This note discloses the company's investment commitments, legal proceedings, and other contingent liabilities, including tax assessments and settlement agreements - As of August 2, 2025, the company had committed to invest **€3.0 million ($3.5 million)** in certain private equity funds[176](index=176&type=chunk) - The company received customs duty assessment notices from the Italian Customs Agency (ICA) for **€9.8 million ($11.4 million)** for the periods 2010-2012, with **€8.5 million** ruled in the company's favor and **€1.2 million** in ICA's favor, with some cases appealed to the Italian Supreme Court[178](index=178&type=chunk) - The company reached a settlement of **$0.29 million** with an individual regarding allegations of mistreatment by Mr. Paul Marciano and the company[179](index=179&type=chunk) - A put arrangement exists for the redeemable noncontrolling interest in Guess Brazil, with a carrying value of **$0.4 million** as of August 2, 2025, and February 1, 2025[180](index=180&type=chunk) [(15) Defined Benefit Plans](index=47&type=section&id=(15)%20Defined%20Benefit%20Plans) This note details the company's defined benefit plans, including the Supplemental Executive Retirement Plan (SERP) and overseas pension plans, outlining their obligations and assets - As of August 2, 2025, the cash surrender value of the insurance policies for the Supplemental Executive Retirement Plan (SERP) was **$64.4 million**, with a projected benefit obligation of **$33.5 million**[182](index=182&type=chunk) - For the six months ended August 2, 2025, SERP benefit payments were **$1.1 million**[182](index=182&type=chunk) - As of August 2, 2025, the total projected benefit obligation for overseas pension plans was **$76 million**, with plan assets of **$62.2 million**, resulting in a net liability of **$13.8 million**[184](index=184&type=chunk) Net Periodic Defined Benefit Pension Cost for the Six Months Ended August 2, 2025 (USD thousands) | Indicator | SERP | Overseas Pension Plans | Total | | :--- | :--- | :--- | :--- | | Service cost | — | 2,737 | 2,737 | | Interest cost | 878 | 325 | 1,203 | | Expected return on plan assets | — | (398) | (398) | | Net amortization of unrecognized prior service credit | — | (92) | (92) | | Net amortization of actuarial (gain) loss | (228) | 286 | 58 | | Net periodic defined benefit pension cost | 650 | 2,858 | 3,508 | [(16) Fair Value Measurements](index=48&type=section&id=(16)%20Fair%20Value%20Measurements) This note defines fair value measurements, categorizes assets and liabilities by fair value hierarchy, and discusses impairment tests for long-lived assets and goodwill Recurring Fair Value Measurements as of August 2, 2025 (USD thousands) | Asset/Liability | Level 1 | Level 2 | Level 3 | Total | | :--- | :--- | :--- | :--- | :--- | | **Assets:** | | | | | | Foreign currency forward contracts | — | 38 | — | 38 | | 2028 Bond Hedge | — | — | 7,181 | 7,181 | | **Liabilities:** | | | | | | Foreign currency forward contracts | — | 16,470 | — | 16,470 | | Embedded derivative | — | — | 1,570 | 1,570 | | Deferred compensation obligations | — | 19,731 | — | 19,731 | - The fair values of the 2028 Bond Hedge and embedded derivative are measured using a binomial lattice model, which utilizes observable inputs (e.g., company stock price) and unobservable inputs (e.g., expected volatility and instrument-specific credit spread), thus classified as Level 3[189](index=189&type=chunk) - For the six months ended August 2, 2025, the company recorded **$8.4 million** in asset impairment charges, primarily related to underperforming retail stores in Europe and North America and anticipated store closures[198](index=198&type=chunk) - For the six months ended August 2, 2025, the company assessed qualitative factors for goodwill and determined that the fair value of its reporting units was not more likely than not to be less than their carrying value, so **no goodwill impairment occurred**[200](index=200&type=chunk) [(17) Derivative Financial Instruments](index=52&type=section&id=(17)%20Derivative%20Financial%20Instruments) This note details the company's derivative financial instruments and hedging strategies, including foreign currency forward contracts and interest rate swaps, and their fair value impact on net income (loss) - The company primarily uses **foreign currency forward contracts** to hedge against foreign currency exchange rate fluctuations in future cash flows and previously used **interest rate swap agreements** to convert floating-rate debt to fixed-rate debt (now settled)[201](index=201&type=chunk)[202](index=202&type=chunk) Fair Value of Derivative Instruments (USD thousands) | Asset/Liability | August 2, 2025 Fair Value | February 1, 2025 Fair Value | | :--- | :--- | :--- | | **Assets:** | | | | Total derivatives designated as hedging instruments | 29 | 7,456 | | Total derivatives not designated as hedging instruments | 7,190 | 14,263 | | **Liabilities:** | | | | Total derivatives designated as hedging instruments | 11,125 | — | | Total derivatives not designated as hedging instruments | 6,915 | 2,468 | - As of August 2, 2025, the company had **$182 million** in outstanding European forward contracts to hedge anticipated merchandise purchases, expected to mature within the next 15 months[204](index=204&type=chunk) - Fair value changes for derivative instruments not designated as hedging instruments (including embedded derivatives and the 2028 Bond Hedge) are recognized in **other income (expense)** in net income (loss)[207](index=207&type=chunk) [(18) Subsequent Events](index=55&type=section&id=(18)%20Subsequent%20Events) This note discloses significant events occurring after the reporting period, including the declaration of a quarterly cash dividend and the proposed take-private transaction with Authentic Brands Group - The company announced a regular quarterly cash dividend of **$0.225 per share** on **August 27, 2025**, payable on **September 26, 2025**, to shareholders of record at the close of business on **September 10, 2025**[209](index=209&type=chunk) - The company announced on **August 20, 2025**, that it had entered into a proposed transaction agreement with Authentic Brands Group LLC, which would result in the company's privatization[210](index=210&type=chunk) [ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=56&type=section&id=ITEM%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's detailed analysis of the company's financial condition and operating results, covering macroeconomic factors, segment performance, strategic initiatives, and liquidity - The company announced a merger agreement with Authentic Brands Group LLC on **August 20, 2025**, for a proposed take-private transaction, expected to close in the **fourth quarter of fiscal 2026**[221](index=221&type=chunk) - For the three months ended August 2, 2025, the company's net revenue increased by **5.5%**, or **3.0% at constant currency**, while operating margin decreased by **420 basis points** to **2.3%**[260](index=260&type=chunk) - For the six months ended August 2, 2025, the company's net revenue increased by **7.3%**, or **7% at constant currency**, while operating income **shifted from a profit to a loss**, decreasing by **154.6%**[295](index=295&type=chunk)[304](index=304&type=chunk) - As of August 2, 2025, the company had **$189.6 million** in cash and cash equivalents and approximately **$350 million** in global available borrowing capacity, totaling approximately **$540 million** in cash, cash equivalents, and borrowing capacity[342](index=342&type=chunk) - For the six months ended August 2, 2025, net cash provided by operating activities was **$1.5 million**, a **significant decrease** from **$21.7 million** in the prior-year period, primarily due to an upfront payment for a handbag license renewal received in the prior-year period and lower cash earnings in the current period[343](index=343&type=chunk) [General](index=56&type=section&id=General) This section clarifies the scope of "we," "our," or "the Company" within the quarterly report, referring to Guess?, Inc. and its consolidated subsidiaries - In this quarterly report, "we," "our," or "the Company" refers to **Guess?, Inc. and its consolidated subsidiaries**[211](index=211&type=chunk) [Forward-Looking Statements](index=56&type=section&id=Forward-Looking%20Statements) This section highlights that the report contains forward-looking statements subject to known and unknown risks and uncertainties that could cause actual results to differ materially from expectations - This quarterly report contains forward-looking statements as defined by the **Private Securities Litigation Reform Act of 1995**, involving expectations, analyses, and estimates regarding future results, the proposed transaction, rag & bone business, macroeconomic conditions, war impacts, convertible senior notes, future capital expenditures, and financial condition[212](index=212&type=chunk)[213](index=213&type=chunk) - These forward-looking statements involve **known and unknown risks and uncertainties** that could cause actual future results to differ materially from current expectations, including risks related to brand image, consumer confidence, competition, inventory management, supply chain disruptions, weather conditions, growth strategy execution, acquisition integration, foreign currency volatility, and inflation[213](index=213&type=chunk)[214](index=214&type=chunk) [Business Update, Market Trends and Uncertainties](index=57&type=section&id=Business%20Update,%20Market%20Trends%20and%20Uncertainties) This section addresses ongoing macroeconomic challenges, including declining consumer spending, inflation, and geopolitical conflicts, and the company's strategies to mitigate their impact - Macroeconomic conditions, including **declining consumer spending, inflation, rising interest rates, foreign currency volatility, the wars in Ukraine and Gaza, and the Red Sea crisis**, continue to negatively impact the company's business[215](index=215&type=chunk) - The company continues to closely monitor global and regional geopolitical and economic developments, strategically managing expenses to protect profitability and mitigating residual impacts of **supply chain disruptions resulting from changes in global trade policies and practices** where possible[216](index=216&type=chunk) - The U.S. announced a **10% universal baseline tariff** on all U.S. imports on **April 2, 2025**, along with additional country-specific tariffs on certain trading partners, which could significantly increase the cost of the company's products[216](index=216&type=chunk) [Business Segments](index=57&type=section&id=Business%20Segments) This section outlines the company's five reportable business segments and how the Chief Operating Decision Maker assesses their performance based on net revenue and operating income - The company's operations are organized into **five reportable segments**: Europe, Americas Retail, Americas Wholesale, Asia, and Licensing, with the rag & bone acquisition integrated into existing segments[217](index=217&type=chunk)[218](index=218&type=chunk) - The company's Chief Operating Decision Maker (CODM) primarily evaluates segment performance based on **net revenue and operating income** before certain corporate costs[219](index=219&type=chunk) [Products](index=58&type=section&id=Products) This section identifies the company's primary revenue sources, including sales of various apparel and accessory brands and royalty income from global licensing activities - The company's net revenue is derived from sales of **GUESS?, G by GUESS (GbG), GUESS Kids, GUESS JEANS, MARCIANO, and rag & bone apparel and certain accessories**, as well as royalty income from global licensing activities[220](index=220&type=chunk) [Proposed Take-Private Transaction with Authentic Brands Group](index=58&type=section&id=Proposed%20Take-Private%20Transaction%20with%20Authentic%20Brands%20Group) This section details the proposed merger agreement with Authentic Brands Group LLC, which would result in the company's privatization and a cash payout to shareholders - The company announced a merger agreement with Authentic Brands Group LLC on **August 20, 2025**, for a proposed take-private transaction, where Authentic will acquire **51%** of the company's intellectual property, and existing shareholders (Rolling Stockholders) will acquire **49%** of the intellectual property and **100%** of the company's operating assets[221](index=221&type=chunk) - Upon completion of the transaction, Guess? shareholders (other than Rolling Stockholders) will receive **$16.75 per share in cash**, and the company's common stock will no longer be listed on any public market[221](index=221&type=chunk) - The proposed transaction is expected to close in the **fourth quarter of fiscal 2026**, subject to certain conditions, including approval by a majority of outstanding common stock shareholders and disinterested shareholders[221](index=221&type=chunk) [rag & bone Acquisition](index=58&type=section&id=rag%20%26%20bone%20Acquisition) This section describes the acquisition of rag & bone, including the cash investment, ownership of operating assets, and the exclusive licensing agreement for intellectual property - The company completed the acquisition of New York fashion brand rag & bone on **April 2, 2024**, investing **$57.1 million** to own all of rag & bone's operating assets and co-own its intellectual property with WHP Global[223](index=223&type=chunk) - Guess Europe Sagl, a wholly-owned subsidiary of the company, entered into an intellectual property license agreement, granting it **exclusive rights** to manufacture and sell licensed products using rag & bone intellectual property globally[223](index=223&type=chunk) [Foreign Currency Volatility](index=59&type=section&id=Foreign%20Currency%20Volatility) This section discusses the significant impact of foreign currency fluctuations on the company's international revenue and earnings, and its use of derivative instruments to mitigate some of this risk - A significant portion of the company's international operations are conducted in **non-U.S. dollar currencies** (primarily the Euro, British Pound, Canadian Dollar, Chinese Yuan, Korean Won, Mexican Peso, Polish Zloty, Russian Ruble, and Turkish Lira), making currency fluctuations a significant factor in the U.S. dollar translation of international revenue and earnings[225](index=225&type=chunk) - In the first six months of fiscal 2026, the U.S. dollar strengthened against the Canadian Dollar, Chinese Yuan, Korean Won, Mexican Peso, and Turkish Lira, and weakened against the British Pound, Euro, Japanese Yen, Polish Zloty, and Russian Ruble, which had a favorable impact on net revenue and a favorable impact on operating income for the three months, but an unfavorable impact on operating income for the six months[228](index=228&type=chunk) - The company enters into **derivative financial instruments** to offset a portion, but not all, of its foreign currency risk[230](index=230&type=chunk) [Inflation Impacts](index=59&type=section&id=Inflation%20Impacts) This section addresses the ongoing inflationary pressures affecting the company's cost structure, including transportation, employee compensation, and raw material costs, and their negative impact on margins - The company's financial results continue to be impacted by **inflationary pressures** affecting its overall cost structure, including transportation, employee compensation, raw materials, and other costs[230](index=230&type=chunk) - **Increased transportation costs** are primarily attributable to higher inbound freight rates, **employee compensation** has risen due to talent shortages and retention competition, and **raw material costs** have increased due to inflation and product quality enhancements[230](index=230&type=chunk)[231](index=231&type=chunk)[232](index=232&type=chunk) - These cost increases have negatively impacted the company's **gross margins and expenses**, with inflationary pressures expected to persist in the near term[234](index=234&type=chunk)[235](index=235&type=chunk) [Russia-Ukraine War](index=60&type=section&id=Russia-Ukraine%20War) This section outlines the company's operations in Russia and Ukraine, noting the limited impact on overall revenue but restrictions on business expansion in Russia due to sanctions - The company currently operates in Russia through wholesale and retail channels and has minimal wholesale operations in Ukraine through local partners, with Russia representing **less than 4%** of total net revenue for the first six months of fiscal 2025[236](index=236&type=chunk)[237](index=237&type=chunk) - The Russia-Ukraine war has had **no material impact** on the company's existing operations, but U.S. prohibitions on new investments in Russia have **limited business expansion** in the region[238](index=238&type=chunk)[240](index=240&type=chunk) - While **increased transportation costs and transit times** have affected Russian operations, they have not had a material impact on the company's business or results of operations[238](index=238&type=chunk)[239](index=239&type=chunk) [Strategy](index=62&type=section&id=Strategy) This section details the company's strategic vision, focusing on organizational development, growth, brand relevance, customer-centricity, product excellence, and optimizing profitability and return on invested capital - The company's strategic vision and implementation plan include **six key priorities**: organization and talent, growth, brand relevance, customer-centricity and digital expansion, product excellence, and optimization, efficiency, profitability, and return on invested capital[245](index=245&type=chunk) - The company plans to drive revenue growth by **leveraging infrastructure and brand strength**, focusing on increasing productivity in its existing network, growing organically in existing and new markets, expanding brands and categories, and considering opportunities to leverage its global infrastructure and partner network[246](index=246&type=chunk) - The company is committed to **elevating the Guess and Marciano brands**, improving product quality and sustainability to achieve more full-price sales and reduce promotional activities, with the addition of the rag & bone brand helping to reach a customer base complementary to Guess and Marciano[247](index=247&type=chunk) [Capital Allocation](index=62&type=section&id=Capital%20Allocation) This section describes the company's capital allocation strategy, prioritizing investments in growth and infrastructure, returning value to shareholders, and considering opportunistic strategic acquisitions - The company plans to continue prioritizing capital allocation to **investments that support growth and infrastructure**, while maintaining strict discipline in project capital allocation, including new store development, store remodels, and technology and logistics investments[251](index=251&type=chunk) - The company plans to consistently return value to shareholders through **dividends and share repurchases** (subject to proposed transaction restrictions) and consider opportunistic strategic acquisitions of brands and businesses that can leverage its global infrastructure and partner network[251](index=251&type=chunk) [Retail Comparable Sales](index=63&type=section&id=Retail%20Comparable%20Sales) This section explains how the company reports quarterly retail comparable sales, which include both brick-and-mortar stores and e-commerce websites after a 13-month operational period - The company reports National Retail Federation calendar retail comparable sales on a quarterly basis, which include combined results from both brick-and-mortar retail stores and e-commerce websites[252](index=252&type=chunk) - Store sales are considered comparable **after 13 full fiscal months of operation**, and e-commerce sales are considered comparable after the online website has been operational in a country for **13 full fiscal months**[254](index=254&type=chunk) [Other](index=63&type=section&id=Other) This section clarifies the company's fiscal year calendar, which operates on a 52/53-week basis, ending on the Saturday closest to January 31st each year - The company operates on a **52/53-week fiscal year calendar**, ending on the Saturday closest to January 31st each year[255](index=255&type=chunk) [Executive Summary](index=63&type=section&id=Executive%20Summary) This section provides a high-level overview of the company's financial performance, key balance sheet items, and global store count for the reporting period [Overview](index=63&type=section&id=Overview) This section summarizes the company's net income and diluted earnings per share for the quarter, including adjustments for non-recurring items Net Income (Loss) Attributable to Guess?, Inc. and Diluted Earnings (Loss) per Share (USD thousands, per share data) | Indicator | August 2, 2025 (Quarter) | August 3, 2024 (Quarter) | | :--- | :--- | :--- | | Net income (loss) | 6,242 | (10,603) | | Diluted earnings (loss) per share | 0.12 | (0.28) | | Adjusted net income (loss) | 13,755 | 22,950 | | Adjusted diluted earnings (loss) per share | 0.26 | 0.42 | - For the quarter ended August 2, 2025, the company recognized **$2.3 million** in asset impairment charges, **$1.1 million** in net gains from derivative fair value remeasurements, **$6 million** in proposed transaction costs, **$0.8 million** in debt discount amortization, **$1.6 million** in restructuring charges, and **$0.5 million** in professional services and legal fees[257](index=257&type=chunk) [Highlights of our performance for the quarter ended August 2, 2025 compared to the same prior-year quarter are presented below, followed by a more comprehensive discussion below under "Results of Operations" (references to constant currency results are non-GAAP measures and are addressed under "Non-GAAP Measures")](index=64&type=section&id=Highlights%20of%20our%20performance%20for%20the%20quarter%20ended%20August%202,%202025%20compared%20to%20the%20same%20prior-year%20quarter%20are%20presented%20below,%20followed%20by%20a%20more%20comprehensive%20discussion%20below%20under%20%22Results%20of%20Operations%22%20(references%20to%20constant%20currency%20results%20are%20non-GAAP%20measures%20and%20are%20addressed%20under%20%22Non-GAAP%20Measures%22)) This section highlights key financial performance metrics for the quarter, including net revenue growth, changes in gross margin, SG&A expenses, operating margin, and effective tax rate Highlights of Quarterly Performance as of August 2, 2025 (USD thousands, percentage) | Indicator | August 2, 2025 (Quarter) | August 3, 2024 (Quarter) | Change (%) | | :--- | :--- | :--- | :--- | | Total net revenue | 772,937 | 732,560 | 5.5% | | Gross margin | 42.5% | 43.7% | -120 bps | | SG&A expense as % of net revenue | 39.9% | 38.7% | +120 bps | | Operating margin | 2.3% | 6.5% | -420 bps | | Operating income | 18,086 | 47,776 | -62.1% | | Other income (expense), net | 2,091 | (39,873) | +41,964 (USD thousands) | | Effective income tax rate | 45.8% | 373.9% | -328.1 bps | - The decrease in operating margin was primarily due to a **gain on asset sale** recognized in the prior-year period, **higher expenses** (including store labor and advertising), **higher proposed transaction costs**, an **unfavorable business mix**, and **higher markdowns**[260](index=260&type=chunk) [Key Balance Sheet Accounts](index=65&type=section&id=Key%20Balance%20Sheet%20Accounts) This section summarizes critical balance sheet items, including cash, restricted cash, outstanding borrowings, inventory, and accounts receivable, highlighting significant changes and their drivers Key Balance Sheet Accounts (USD thousands) | Indicator (USD thousands) | August 2, 2025 | August 3, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | 189,635 | 218,900 | | Restricted cash | 812 | 1,400 | | Term loan outstanding | — | 7,400 | | Credit arrangement outstanding | 268,100 | 206,100 | | Inventories | 668,400 | 603,300 | | Accounts receivable | 368,700 | 332,000 | - No share repurchases were made during the six months ended August 2, 2025, compared to approximately **2.6 million shares of common stock** repurchased at a total cost of **$60.8 million** in the prior-year period[264](index=264&type=chunk) - Inventories increased by **10.8%** (**8.0% at constant currency**), primarily driven by **accelerated receipts** to mitigate the Red Sea crisis[264](index=264&type=chunk) - Accounts receivable increased by **11.0%** (**8.0% at constant currency**), primarily driven by **increased European wholesale shipments**[264](index=264&type=chunk) [Global Store Count](index=65&type=section&id=Global%20Store%20Count) This section provides an overview of the company's global store footprint, detailing the number of new openings, closures, and total directly operated and partner-operated stores - For the quarter ended August 2, 2025, the company and its partners **opened 28 stores and closed 40 stores globally**[262](index=262&type=chunk) Global Store and Concession Count as of August 2, 2025 | Region | Total Stores | Directly Operated Stores | Partner Operated Stores | Total Concessions | Directly Operated Concessions | Partner Operated Concessions | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | United States | 263 | 263 | — | — | — | — | | Canada | 51 | 51 | — | — | — | — | | Central & South America | 109 | 93 | 16 | 48 | 48 | — | | Total Americas | 423 | 407 | 16 | 48 | 48 | — | | Europe & Middle East | 783 | 576 | 207 | 69 | 69 | — | | Asia & Pacific | 383 | 79 | 304 | 202 | 127 | 75 | | Total | 1,589 | 1,062 | 527 | 319 | 244 | 75 | [Results of Operations](index=66&type=section&id=Results%20of%20Operations) This section provides a detailed analysis of the company's consolidated and segment-level financial performance for the three and six-month periods, explaining key revenue and expense drivers [Three Months Ended August 2, 2025 and August 3, 2024](index=66&type=section&id=Three%20Months%20Ended%20August%202,%202025%20and%20August%203,%202024) This section analyzes the company's consolidated and segment-level performance for the three-month period, detailing changes in net revenue, margins, expenses, and operating income Consolidated Statements of Income Summary for the Three Months Ended August 2, 2025 (USD thousands, percentage) | Indicator | August 2, 2025 | August 3, 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Net revenue | 772,937 | 732,560 | 5.5% | | Cost of sales | 444,168 | 412,617 | 7.6% | | Gross profit | 328,769 | 319,943 | 2.8% | | SG&A expenses | 308,588 | 282,951 | 9.1% | | Operating income | 18,086 | 47,776 | -62.1% | | Net income (loss) attributable to Guess?, Inc. | 6,242 | (10,603) | -158.9% | | Effective income tax rate | 45.8% | 373.9% | -328.1 bps | - Net revenue increased by **5.5%** (or **3% at constant currency**), driven by **$16 million from new acquired business**, **$8 million from new store openings**, and **$3 million from comparable store sales growth**, partially offset by a **$3 million decrease in royalty revenue** and a **$2 million decrease in e-commerce revenue**[265](index=265&type=chunk) - Operating margin decreased by **420 basis points**, primarily due to a **190 basis point impact from a gain on asset sale** in the prior-year period, **90 basis points from increased store labor and advertising expenses**, **80 basis points from increased proposed transaction costs**, and **60 basis points each from unfavorable business mix and markdowns**[272](index=272&type=chunk) - Other income, net, was **$2.1 million**, compared to a net expense of **$39.9 million** in the prior-year period, primarily due to the fair value remeasurement of derivative instruments related to the 2028 Notes and associated convertible bond hedges shifting from a net loss to a net gain[274](index=274&type=chunk) [Consolidated Results](index=66&type=section&id=Consolidated%20Results) This section details the consolidated financial performance for the three-month period, including net revenue, gross margin, SG&A expenses, operating margin, and net income (loss) Consolidated Results for the Three Months Ended August 2, 2025 (USD thousands, percentage) | Indicator | August 2, 2025 | August 3, 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Net revenue | 772,937 | 732,560 | 5.5% | | Gross margin | 42.5% | 43.7% | -120 bps | | SG&A expense rate | 39.9% | 38.7% | +120 bps | | Operating margin | 2.3% | 6.5% | -420 bps | | Net income (loss) attributable to Guess?, Inc. | 6,242 | (10,603) | -158.9% | - Gross margin decreased by **120 basis points**, primarily driven by **mark-downs (60 basis points)** and an **unfavorable business mix (50 basis points)**[266](index=266&type=chunk) - The SG&A expense rate increased by **120 basis points**, primarily driven by **increased proposed transaction costs (80 basis points)** and **increased store labor and advertising expenses (70 basis points)**[269](index=269&type=chunk) [Information by Business Segment](index=68&type=section&id=Information%20by%20Business%20Segment) This section provides a breakdown of net revenue and operating income (loss) for each business segment, highlighting key drivers of performance changes Segment Net Revenue and Operating Income (Loss) for the Three Months Ended August 2, 2025 (USD thousands) | Segment | Net Revenue | Change (%) | Operating Income (Loss) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Europe | 436,911 | 14.0% | 46,381 | 24.0% | | Americas Retail | 178,810 | -1.5% | (6,648) | -346.9% | | Americas Wholesale | 75,194 | -10.9% | 14,730 | -7.8% | | Asia | 55,765 | 2.6% | (3,803) | 210.7% | | Licensing | 26,257 | -9.8% | 25,056 | -7.7% | | Total Company | 772,937 | 5.5% | 18,086 | -62.1% | - The Europe segment's net revenue increased by **14%** (or **9% at constant currency**), driven by new acquired business, comparable store sales growth, and increased wholesale revenue, with operating income increasing by **24%**[280](index=280&type=chunk)[283](index=283&type=chunk) - The Americas Retail segment's net revenue decreased by **1%** (or **1% at constant currency**), primarily due to lower comparable store sales and decreased e-commerce sales, with operating loss **shifting from a profit to a $7 million loss**[284](index=284&type=chunk)[286](index=286&type=chunk) - The Asia segment's operating loss increased from **$1 million** in the prior-year period to **$4 million**, primarily due to lower revenue and an unfavorable business mix[292](index=292&type=chunk) [Six months ended August 2, 2025 and August 3, 2024](index=71&type=section&id=Six%20months%20ended%20August%202,%202025%20and%20August%203,%202024) This section analyzes the company's consolidated and segment-level performance for the six-month period, detailing changes in net revenue, margins, expenses, and operating income (loss) Consolidated Statements of Income Summary for the Six Months Ended August 2, 2025 (USD thousands, percentage) | Indicator | August 2, 2025 | August 3, 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Net revenue | 1,420,738 | 1,324,503 | 7.3% | | Cost of sales | 833,512 | 756,459 | 10.2% | | Gross profit | 587,226 | 568,044 | 3.4% | | SG&A expenses | 595,124 | 549,799 | 8.2% | | Operating income (loss) | (15,222) | 27,888 | -154.6% | | Net income (loss) attributable to Guess?, Inc. | (26,686) | 2,419 | -1203.2% | | Effective income tax rate | -2.2% | 49.4% | -51.6 bps | - Net revenue increased by **7.3%** (or **7% at constant currency**), driven by **$92 million from new acquired business**, **$26 million from increased wholesale shipments**, and **$10 million from new store openings**, partially offset by a **$20 million decrease in comparable retail store sales**, a **$9 million decrease in e-commerce revenue**, and a **$7 million decrease in royalty revenue**[295](index=295&type=chunk) - Operating margin decreased by **320 basis points**, primarily due to a **100 basis point impact from a gain on asset sale** in the prior-year period, **90 basis points from unfavorable business mix**, **80 basis points from increased store labor and advertising expenses**, and **50 basis points from markdowns**[303](index=303&type=chunk) - Net loss attributable to Guess?, Inc. was **$26.7 million**, compared to net income of **$2.4 million** in the prior-year period, with diluted loss per share of **$0.53** compared to diluted earnings per share of **$0.04**[308](index=308&type=chunk) [Consolidated Results](index=71&type=section&id=Consolidated%20Results) This section details the consolidated financial performance for the six-month period, including net revenue, gross margin, SG&A expenses, operating income (loss), and net income (loss) Consolidated Results for the Six Months Ended August 2, 2025 (USD thousands, percentage) | Indicator | August 2, 2025 | August 3, 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Net revenue | 1,420,738 | 1,324,503 | 7.3% | | Gross margin | 41.3% | 42.9% | -160 bps | | SG&A expense rate | 41.9% | 41.4% | +50 bps | | Operating income (loss) | (15,222) | 27,888 | -154.6% | | Net income (loss) attributable to Guess?, Inc. | (26,686) | 2,419 | -1203.2% | - Gross margin decreased by **160 basis points**, primarily driven by an **unfavorable business mix (70 basis points)**, **mark-downs (50 basis points)**, and **lower product gross margins (30 basis points)**[296](index=296&type=chunk) - The SG&A expense rate increased by **50 basis points**, primarily driven by **increased store labor and advertising expenses (70 basis points)** and **increased proposed transaction costs (50 basis points)**[299](index=299&type=chunk) - Other income, net, was **$3 million**, compared to a net expense of **$4 million** in the prior-year period, primarily due to foreign exchange exposure **shifting from a net loss to a net gain**, partially offset by increased net realized and unrealized losses on foreign currency forward contracts[306](index=306&type=chunk) [Information by Business Segment](index=74&type=section&id=Information%20by%20Business%20Segment) This section provides a breakdown of net revenue and operating income (loss) for each business segment over the six-month period, highlighting key drivers of performance changes Segment Net Revenue and Operating Income (Loss) for the Six Months Ended August 2, 2025 (USD thousands) | Segment | Net Revenue | Change (%) | Operating Income (Loss) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Europe | 742,983 | 11.4% | 37,492 | 1.5% | | Americas Retail | 336,008 | 3.2% | (23,156) | 200.8% | | Americas Wholesale | 176,625 | 20.5% | 34,881 | 15.9% | | Asia | 113,870 | -10.4% | (5,596) | -322.3% | | Licensing | 51,252 | -11.8% | 48,075 | -10.7% | | Total Company | 1,420,738 | 7.3% | (15,222) | -154.6% | - The Europe segment's net revenue increased by **11%** (or **9% at constant currency**), driven by new acquired business, increased wholesale revenue, and new store openings, with operating income increasing by **1%**[312](index=312&type=chunk)[315](index=315&type=chunk) - The Americas Retail segment's net revenue increased by **3%** (or **5% at constant currency**), driven by new acquired business, but partially offset by lower comparable retail store sales and decreased e-commerce sales, with operating loss increasing from **$8 million to $23 million**[316](index=316&type=chunk)[318](index=318&type=chunk) - The Asia segment's net revenue decreased by **10%** (or **9% at constant currency**), primarily due to lower comparable retail sales and decreased e-commerce revenue, with operating loss **shifting from a $3 million profit to a $6 million loss**[322](index=322&type=chunk)[325](index=325&type=chunk) [Non-GAAP Measures](index=76&type=section&id=Non-GAAP%20Measures) This section explains the company's use of non-GAAP financial measures, such as adjusted net income and diluted earnings per share, and provides reconciliations to GAAP results - The company provides non-GAAP financial measures such as **adjusted net income (loss) and adjusted diluted earnings per share** to exclude the impact of certain non-recurring items, thereby enhancing visibility into underlying business trends[328](index=328&type=chunk)[329](index=329&type=chunk) GAAP to Non-GAAP Performance Reconciliation (USD thousands, per share data) | Indicator | August 2, 2025 (3 months) | August 3, 2024 (3 months) | August 2, 2025 (6 months) | August 3, 2024 (6 months) | | :--- | :--- | :--- | :--- | :--- | | Reported GAAP net income (loss) | 6,242 | (10,603) | (26,686) | 2,419 | | Total adjustments | 7,513 | 33,553 | 18,181 | 6,721 | | Adjusted net income (loss) | 13,755 | 22,950 | (8,505) | 9,140 | | GAAP diluted earnings (loss) per share | 0.12 | (0.28) | (0.53) | 0.04 | | Adjusted diluted earnings (loss) per share | 0.26 | 0.42 | (0.17) | 0.16 | - For the three months ended August 2, 2025, adjusted net income was **$13.8 million** and adjusted diluted earnings per share were **$0.26**, compared to **$23 million** and **$0.42**, respectively, in the prior-year period[330](index=330&type=chunk) - **Constant currency information** is calculated by translating current period financial results into U.S. dollars using the prior period's average exchange rates to exclude the impact of changes in foreign currency translation rates[332](index=332&type=chunk) [Liquidity and Capital Resources](index=79&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the company's liquidity, capital resources, and cash flow activities, including working capital, capital expenditures, dividends, and share repurchases - The company primarily relies on **trade credit, available cash, real estate and other operating leases, finance leases, proceeds from credit arrangements, and internally generated funds** to meet its cash requirements for working capital, capital expenditures, debt payments, lease payments, and potential acquisitions and investments[336](index=336&type=chunk) - As of August 2, 2025, the company had **$189.6 million** in cash and cash equivalents, with approximately **$33.4 million** held in the U.S., and approximately **$350 million** in global available borrowing capacity, totaling approximately **$540 million** in cash, cash equivalents, and borrowing capacity[342](index=342&type=chunk) - For the six months ended August 2, 2025, net cash provided by operating activities was **$1.5 million**, a **significant decrease** from **$21.7 million** in the prior-year period, with net cash provided by financing activities of **$38.2 million** compared to a net outflow of **$95.4 million** in the prior-year period[343](index=343&type=chunk)[346](in

For those looking to find strong Consumer Discretionary stocks, it is prudent to search for companies in the group that are outperforming their peers. Is Betterware de Mexico SAPI de C (BWMX) one of those stocks right now? By taking a look at the stock's year-to-date performance in comparison to its Consumer Discretionary peers, we might be able to answer that question.Betterware de Mexico SAPI de C is a member of our Consumer Discretionary group, which includes 253 different companies and currently sits at ...

Core Viewpoint - Momentum investing focuses on "buying high and selling higher" rather than traditional strategies of "buying low and selling high" [1] Group 1: Momentum Investing Strategy - Momentum investors often face challenges in determining the right entry point, as stocks may lose momentum when their valuations exceed future growth potential [2] - Investing in bargain stocks that exhibit recent price momentum can be a safer strategy, utilizing tools like the Zacks Momentum Style Score to identify potential opportunities [3] Group 2: Case Study - Guess (GES) - Guess (GES) has shown significant price momentum, with a four-week price change of 29.9%, indicating growing investor interest [4] - Over the past 12 weeks, GES stock has gained 53.7%, with a beta of 1.24, suggesting it moves 24% more than the market [5] - GES has a Momentum Score of A, indicating a favorable time to invest based on its momentum characteristics [6] Group 3: Earnings Estimates and Valuation - GES has benefited from upward revisions in earnings estimates, earning a Zacks Rank 2 (Buy), which is associated with strong momentum effects [7] - The stock is currently trading at a Price-to-Sales ratio of 0.28, suggesting it is undervalued, as investors pay only 28 cents for each dollar of sales [7] Group 4: Additional Opportunities - Besides GES, there are other stocks that meet the criteria of the 'Fast-Paced Momentum at a Bargain' screen, presenting further investment opportunities [8] - The Zacks Premium Screens offer over 45 different strategies to help identify potential winning stocks based on various investing styles [9]

Core Insights - Guess?, Inc. reported second-quarter fiscal 2026 results with both net sales and earnings exceeding the Zacks Consensus Estimate, although earnings decreased compared to the previous year [1][3]. Financial Performance - Adjusted earnings were 26 cents per share, surpassing the Zacks Consensus Estimate of 14 cents, but down 38% from 42 cents in the same quarter last year [3][11]. - Net revenues reached $772.9 million, a 6% increase year over year, exceeding the consensus estimate of $757 million. On a constant-currency basis, revenues rose 3% [4][11]. - Adjusted earnings from operations were $28.5 million, down 25% from $37.9 million in the prior year, with an adjusted operating margin of 3.7%, down from 5.2% [5]. Segment Performance - Europe segment revenues increased by 14% on a reported basis and 9% at constant currency, with retail comparable sales rising 11% [6][11]. - Americas Retail segment revenues decreased by 1% in U.S. dollars, with retail comparable sales declining 5% [7]. - Americas Wholesale revenues fell by 11% on a reported basis, but the operating margin improved to 19.6% [8]. - Asia revenues increased by 3% on a reported basis, but retail comparable sales dropped by 2% [9]. Financial Health - The company ended the quarter with cash and cash equivalents of $189.6 million and long-term debt of approximately $258.4 million, with stockholders' equity around $487.6 million [10]. - Net cash provided by operating activities for the six months ended August 2, 2025, was $1.5 million, while free cash flow was negative $44.6 million [12]. Strategic Developments - On August 20, 2025, Guess? announced a strategic partnership with Authentic Brands Group, where Authentic will acquire 51% of the company's intellectual property [2].

Exhibit 99.1 LOS ANGELES, August 27, 2025 - Guess?, Inc. (NYSE: GES) today reported financial results for its second quarter ended August 2, 2025. Carlos Alberini, Chief Executive Officer, commented, "We are pleased with our second quarter performance, as we delivered revenues ahead of our expectations for the period. Our improved revenues were mainly driven by stronger than expected comparable store sales in our European business and in our Americas Retail segment, which showed continued improvement in sam ...

Core Insights - Guess?, Inc. (GES) is expected to report revenue growth of 3.4% year-over-year for Q2 fiscal 2026, with revenues estimated at $757.1 million [1] - However, a decline in bottom-line performance is anticipated, with earnings per share (EPS) projected at 14 cents, down from 42 cents in the prior year [2] Group 1: Revenue Drivers - Strategic acquisitions, strong wholesale momentum in Europe, and investments in digital innovation and loyalty programs are expected to support revenue growth [3] - The company is enhancing its direct-to-consumer channels and optimizing global operations for improved efficiency [3] - Management projected revenue growth of 2.9-4.7% for Q2 fiscal 2026, with currency fluctuations contributing approximately one percentage point to this growth [4] Group 2: Challenges and Costs - The company faces challenges from a complex consumer environment marked by economic pressures and changing purchasing behaviors, leading to a focus on value over premium products [5] - Higher selling, general & administrative (SG&A) expenses due to increased marketing and infrastructure investments are pressuring margins, with adjusted operating margins expected between 2.5% and 3.3% [6] Group 3: Earnings Outlook - The current Earnings ESP for Guess? is 0.00%, indicating uncertainty regarding an earnings beat this quarter [7] - The company’s Zacks Rank is 3, suggesting a hold position, which does not favor an earnings surprise [7]

今年以来，一直有市场传闻GUESS在寻找买家。3月，有公司曾对GUESS提出收购要约，对其股权的整 体估值约为7.5亿美元，但双方未能达成协议。 尽管收入因并购实现了一定的增长，但公司的盈利能力已经大幅下降。根据年初公布的业绩，GUESS 去年全年营收29.95亿美元，而上年为27.77亿美元；归属公司的净利润为6042万美元，上一年为1.98亿 美元。 GUESS私有化，ABG大规模全球扫货。 对未来市场的不确定，让美国时尚服饰品牌GUESS的母公司（NYSE: GES，下称GUESS）选择私有 化。公司日前宣布与品牌管理公司Authentic Brands Group LLC（下称 ABG）签署私有化战略合作协 议。 据悉，ABG将收购GUESS51% 股份，品牌创始人、高管团队等现有股东将持有其余股份。包含债务在 内，此次交易对 GUESS的整体估值约为14亿美元，预计该交易将在今年第四季度完成。 ABG是全球最大的体育和娱乐授权公司。自2010年成立以来，该公司一直在陆续收购全球知名运动、 时尚和娱乐品牌，再通过品牌授权的方式拓展市场。目前，ABG旗下有Reebok、Champion、Forever ...

Wall Street analysts expect Guess (GES) to post quarterly earnings of $0.14 per share in its upcoming report, which indicates a year-over-year decline of 66.7%. Revenues are expected to be $757.14 million, up 3.4% from the year-ago quarter. Over the last 30 days, there has been no revision in the consensus EPS estimate for the quarter. This signifies the covering analysts' collective reconsideration of their initial forecasts over the course of this timeframe. Prior to a company's earnings release, it is of ...

Core Insights - Guess is pursuing privatization through a $1.4 billion agreement with co-founders and Authentic Brands, which will acquire 51% of Guess's intellectual property [2] - Shareholders will receive $16.75 per share in cash, representing a 26% premium over the previous closing price, with the transaction expected to complete by Q4 of the fiscal year ending January 2026, pending regulatory approval [2] Financial Profile - Following the announcement, Guess shares increased nearly 26%, indicating strong investor confidence [3] - The company is currently facing $1.6 billion in debt against a market cap of $876 million, which may limit operational flexibility [5] - Revenue growth has been modest, with a three-year average of 4.7%, slightly below the S&P 500's 6.1%, but recent performance shows a 9% increase in revenues over the past twelve months to $3.1 billion, and a 10.6% year-over-year growth in the most recent quarter [5] - Profitability remains weak, with $157 million in operating income (5.1% margin), $71 million in operating cash flow (2.3%), and a net income of $14 million (0.5% margin), all below market averages [5] - Cash reserves are limited to $151 million (5.3% of assets), and the company has a high debt-to-equity ratio of 184.6% [5] Strategic Implications - The privatization initiative is expected to provide Guess with strategic flexibility and the ability to focus on long-term operational and brand initiatives without the pressures of quarterly results [3][6] - Authentic Brands' expertise in licensing and brand management may enhance Guess's global presence [3]

Group 1 - Guess? (GES) shares increased by 26.3% to $16.85, with a significant trading volume, contrasting with a 0.5% loss over the past four weeks [1][2] - The stock's rally is attributed to a $1.4 billion take-private deal with Authentic Brands Group, which will own 51% of Guess?'s intellectual property, while Rolling Stockholders retain 49% and operational control [2] - The upcoming quarterly earnings for Guess? are projected at $0.14 per share, reflecting a year-over-year decline of 66.7%, with revenues expected to reach $757.14 million, a 3.4% increase from the previous year [2] Group 2 - The consensus EPS estimate for Guess? has remained unchanged over the last 30 days, indicating that stock price movements may not sustain without earnings estimate revisions [4] - Guess? holds a Zacks Rank of 3 (Hold), similar to G-III Apparel Group (GIII), which closed at $25.85, down 0.8% in the last trading session [4] - G-III Apparel's consensus EPS estimate is $0.1, representing an 80.8% decline from the previous year, and it also holds a Zacks Rank of 3 (Hold) [5]