Guess', Inc. (NYSE:GES) Q1 2024 Earnings Conference Call May 24, 2023 4:45 PM ET Company Participants Fabrice Benarouche - VP, Finance and IR Carlos Alberini - CEO Dennis Secor - Interim CFO Conference Call Participants Corey Tarlowe - Jefferies Dana Telsey - Telsey Advisory Group Eric Beder - SCC Research Operator Good day everyone and welcome to the Guess' First Quarter Fiscal 2024 Earnings Conference Call. I would like to turn the call Fabrice Benarouche, Senior Vice President of Finance, Investor Relati ...

Financial Performance - The company reported a significant increase in revenue, reaching $1.5 billion, representing a 15% year-over-year growth[7]. - The company provided an optimistic outlook for the next quarter, projecting revenue growth of 10% to 12%[7]. - Cost-saving initiatives are anticipated to yield $30 million in annual savings, improving overall profitability[7]. - The company may not fully realize expected cost savings from cost-saving initiatives, impacting overall financial performance[19]. - The company’s financial performance could be adversely impacted by adverse developments affecting financial institutions with which it maintains cash balances[23]. User Engagement - User data showed a 20% increase in active users, totaling 5 million, indicating strong engagement and retention[7]. - The company is focusing on enhancing its omnichannel shopping experience to drive sales growth[7]. - The company’s ability to develop an omnichannel shopping experience is critical, as failure to do so could harm its business[19]. Market Expansion - Market expansion efforts include entering three new international markets, projected to increase market share by 5%[7]. - New product launches are expected to contribute an additional $200 million in revenue over the next fiscal year[7]. - The company completed a strategic acquisition of a smaller competitor for $300 million, expected to enhance product offerings and market presence[7]. Risks and Challenges - Risks related to global operations include potential impacts from currency fluctuations and geopolitical tensions[7]. - The company faces risks related to public health crises that have harmed its business and may continue to do so[19]. - The company is exposed to risks from fluctuations in quarterly performance, which could adversely affect earnings and stock price[20]. - The company’s Americas Wholesale business is highly concentrated, which poses a risk to its operations[19]. - The company relies on strong relationships with suppliers and manufacturers, and disruptions could negatively impact operations[19]. - The company may face difficulties in competing successfully in the apparel industry, affecting market position[19]. Financial Obligations - The company has a $300 million, 2.0% convertible senior notes due in 2024, and failure to meet obligations could harm its business[23]. - The company’s repurchases of common stock may influence the value of its convertible notes and common stock[23].

Financial Data and Key Metrics Changes - The company reported a revenue decline of almost 2% in U.S. dollars, while revenues grew by 10% in constant currency, primarily driven by strong performance in Europe [7][35] - Adjusted operating profit was $58 million, with an adjusted operating margin of 9.1%, reflecting a decrease of 180 basis points compared to the previous year [8][54] - The impact of foreign exchange (FX) is estimated to reduce operating profit by $60 million and adjusted EPS by $1.15 for the year [9][66] Performance by Business Segment - The Europe segment experienced a 2% revenue decline in U.S. dollars but a 17% increase in constant currency, with a 19% decrease in operating profit due to currency effects [10][41] - The Americas Retail segment reported a 2% revenue decline and a 53% decrease in operating profit, attributed to gross margin contraction and increased expenses [11][48] - The Americas Wholesale segment saw a 10% decline in revenues and a 41% decrease in operating profit due to increased order cancellations [12][49] - The Asia segment reported a 10% revenue increase in U.S. dollars and a 28% increase in constant currency, achieving breakeven in operating results [13][50] - The Licensing segment had a 4% revenue growth, driven by strong handbag sales [14][51] Market Data and Key Metrics Changes - The company noted strong demand in Europe, Canada, and South Korea, while the U.S. market showed signs of softening due to high inventory levels [62][63] - The overall gross margin contracted by 320 basis points to 42.5%, with currency headwinds contributing significantly [52] Company Strategy and Industry Competition - The company is focused on brand elevation and product transformation, with significant investments in quality and sustainability [17][21] - A digital transformation is underway, with new CRM solutions and clienteling apps being rolled out [22][23] - The company is managing supply chain challenges by ordering products earlier to meet customer demand [24][25] Management's Comments on Operating Environment and Future Outlook - Management expects softer consumer demand and inflationary pressures to continue impacting results [29][30] - The company anticipates a promotional environment during the holiday season due to high inventory levels in the sector [30][64] - For the fourth quarter, the company expects revenues to decline low to mid-single digits in U.S. dollars, with operating profit exceeding $100 million [31][65] Other Important Information - The company ended the quarter with $170 million in cash, significantly down from $391 million a year ago, impacted by share repurchases [56] - Inventories increased by 19% in U.S. dollars and 33% in constant currency, reflecting the strategy to order earlier [58] - The company announced a quarterly dividend of $0.225, representing an annual yield of over 4.5% [61] Q&A Session Summary Question: Demand for the brand and inventory turns - Management noted strong demand for both Guess and Marciano brands, with significant growth in wholesale and retail channels [72][73] - The company is carrying more inventory intentionally to mitigate supply chain issues, but inventory turns are expected to align with customer demand [79][80] Question: Impact of cotton prices and supply chain on operating margin - Management indicated that while cotton prices are dynamic, they have prepared well with contracts and data visibility to manage costs effectively [91][93] - Freight costs have decreased significantly compared to last year, contributing to improved margins moving forward [94] Question: Overall outlook for the next fiscal year - Management plans to provide a full outlook for fiscal year 2024 during the fourth quarter results in March [87]

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended July 30, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number: 1-11893 GUESS?, INC. (Exact name of registrant as specified in its charter) (State or other jurisdiction of incorporation or ...

Guess', Inc. (NYSE:GES) Q2 2023 Earnings Conference Call August 24, 2022 4:45 PM ET Company Participants Fabrice Benarouche - Vice President, Finance and IR Carlos Alberini - Chief Executive Officer Dennis Secor - Interim Chief Financial Officer Conference Call Participants Dana Telsey - Telsey Advisory Group Operator Good day, everyone, and welcome to the Guess Second Quarter Fiscal 2023 Earnings Conference Call. I would like to turn the call over to Fabrice Benarouche, Vice President of Finance and Invest ...

[PART I. FINANCIAL INFORMATION](index=3&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This section provides the unaudited condensed consolidated financial statements and management's discussion for Guess?, Inc. for the first quarter of fiscal 2023 [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements for Guess?, Inc. as of April 30, 2022, and for the three-month period then ended, including balance sheets, statements of income, comprehensive income, cash flows, and stockholders' equity, along with detailed notes explaining the basis of presentation and significant accounting policies [Condensed Consolidated Financial Statements](index=3&type=section&id=Condensed%20Consolidated%20Financial%20Statements) The company's total assets decreased to $2.25 billion as of April 30, 2022, from $2.56 billion as of January 29, 2022, primarily due to a reduction in cash and cash equivalents, while net revenue increased to $593.5 million from $520.0 million in the prior-year period, and net earnings attributable to Guess?, Inc. decreased to $8.0 million from $12.0 million Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | Apr 30, 2022 | Jan 29, 2022 | | :--- | :--- | :--- | | **Total Current Assets** | $1,023,382 | $1,284,094 | | Cash and cash equivalents | $147,897 | $415,565 | | Inventories | $483,927 | $462,295 | | **Total Assets** | **$2,250,006** | **$2,555,628** | | **Total Current Liabilities** | $758,491 | $817,874 | | **Total Liabilities** | **$1,808,913** | **$1,892,485** | | **Total Stockholders' Equity** | **$431,239** | **$653,643** | Condensed Consolidated Statement of Income Highlights (in thousands, except per share data) | Metric | Three Months Ended Apr 30, 2022 | Three Months Ended May 1, 2021 | | :--- | :--- | :--- | | Net revenue | $593,473 | $520,002 | | Gross profit | $247,149 | $211,558 | | Earnings from operations | $36,375 | $26,578 | | Net earnings attributable to Guess?, Inc. | $7,970 | $12,006 | | Diluted EPS | $0.12 | $0.18 | - Net cash used in operating activities was **$54.6 million** for the three months ended April 30, 2022, a slight increase from **$53.6 million** in the prior-year period. Net cash used in financing activities increased significantly to **$176.8 million**, primarily due to the purchase of an equity forward contract (**$105.0 million**) and treasury stock (**$81.7 million**)[16](index=16&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) The notes provide detailed explanations of the company's accounting policies and financial results, covering the ongoing business impact of COVID-19, adoption of new accounting guidance for convertible instruments, lease accounting, segment performance, borrowings, share-based compensation, and legal contingencies - The COVID-19 pandemic continued to negatively impact operations, especially in Asia, with temporary store closures and capacity restrictions. The company is also experiencing disruptions in the global supply chain, leading to product delays and higher costs[28](index=28&type=chunk)[29](index=29&type=chunk) - The company adopted new guidance for convertible instruments on January 30, 2022, which simplified the accounting for its 2.00% convertible senior notes, resulting in an increase to the notes' carrying amount and a cumulative adjustment to retained earnings[41](index=41&type=chunk)[55](index=55&type=chunk) Segment Revenue and Operating Earnings (in thousands) | Segment | Net Revenue (Q1'23) | Operating Earnings (Q1'23) | Net Revenue (Q1'22) | Operating Earnings (Q1'22) | | :--- | :--- | :--- | :--- | :--- | | Americas Retail | $166,485 | $14,266 | $155,535 | $20,274 | | Americas Wholesale | $68,357 | $17,397 | $45,430 | $11,555 | | Europe | $276,009 | $17,890 | $241,852 | $4,198 | | Asia | $56,222 | $(3,487) | $55,660 | $(1,808) | | Licensing | $26,400 | $24,444 | $21,525 | $19,431 | - On May 5, 2022, a European subsidiary entered into a new **€250 million** revolving credit facility, replacing previous short-term borrowing arrangements totaling **€120 million**[160](index=160&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=38&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the financial results for the first quarter of fiscal 2023, highlighting a 14.1% increase in net revenue to $593.5 million and a 36.9% increase in operating earnings to $36.4 million compared to the prior-year quarter, covering performance by business segment, foreign currency impact, strategic priorities, and a detailed review of liquidity and capital resources, including a significant $175.0 million accelerated share repurchase program [Executive Summary and Results of Operations](index=42&type=section&id=Executive%20Summary%20and%20Results%20of%20Operations) For Q1 FY2023, total net revenue rose 14.1% (20.6% in constant currency) to $593.5 million, driven by store reopenings and strong wholesale performance, with gross margin improving by 90 basis points to 41.6% and operating margin increasing by 100 basis points to 6.1%, though net earnings attributable to Guess?, Inc. declined 33.6% to $8.0 million, or $0.12 per diluted share, impacted by higher other expenses and a higher effective tax rate Q1 FY2023 vs. Q1 FY2022 Performance | Metric | Q1 FY2023 | Q1 FY2022 | % Change | | :--- | :--- | :--- | :--- | | Net Revenue | $593.5M | $520.0M | +14.1% | | Gross Margin | 41.6% | 40.7% | +90 bps | | Operating Margin | 6.1% | 5.1% | +100 bps | | Net Earnings (to Guess) | $8.0M | $12.0M | -33.6% | | Diluted EPS | $0.12 | $0.18 | -33.3% | - The Europe segment was a key driver of performance, with operating earnings increasing over **300% to $17.9 million**, benefiting from expense leverage on higher sales. Americas Wholesale also saw strong growth, with operating earnings up **50.6%**. In contrast, Americas Retail operating earnings declined **29.6%** due to higher store labor costs and markdowns[219](index=219&type=chunk) - On an adjusted basis, excluding items like impairment charges and certain legal fees, adjusted diluted EPS was **$0.24** for the quarter, compared to **$0.21** in the prior-year period[194](index=194&type=chunk)[195](index=195&type=chunk)[237](index=237&type=chunk) [Liquidity and Capital Resources](index=53&type=section&id=Liquidity%20and%20Capital%20Resources) The company's cash and cash equivalents decreased to $147.9 million from $415.6 million at the start of the fiscal year, largely due to financing activities, including a $175.0 million accelerated share repurchase (ASR) agreement and $13.7 million in dividends, while net cash used in operating activities was $54.6 million, reflecting higher inventory levels intended to mitigate supply chain disruptions, with the company believing it has sufficient liquidity for the next 12 months from cash flow, existing cash, and credit facilities - Cash and cash equivalents stood at **$147.9 million** as of April 30, 2022, with the majority held outside the U.S. The company determined that approximately **$12.7 million** of foreign earnings are no longer indefinitely reinvested[200](index=200&type=chunk)[247](index=247&type=chunk) - Financing activities used **$176.8 million** in cash, primarily driven by a **$175.0 million** payment for the 2022 ASR Contract and other open market share repurchases totaling **$11.7 million**[187](index=187&type=chunk)[255](index=255&type=chunk) - Inventory increased **19.5%** year-over-year to **$483.9 million** (**30.7%** in constant currency), a strategic move to mitigate supply chain disruptions by accelerating product orders[258](index=258&type=chunk) - A regular quarterly cash dividend of **$0.225 per share** was announced on May 25, 2022[260](index=260&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=57&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is exposed to market risks, primarily from foreign currency exchange rate fluctuations and interest rate changes, with over two-thirds of Q1 sales in non-U.S. dollar currencies, and uses derivative instruments, such as forward contracts and interest rate swaps, to hedge some of these risks, while a strengthening U.S. dollar negatively impacted stockholders' equity by $17.9 million in the quarter due to translation adjustments - The company's primary exchange rate risk relates to operations in Europe, Canada, South Korea, China, Hong Kong, and Mexico. Net foreign currency transaction losses included in net earnings were **$10.6 million** for the quarter, up from **$4.1 million** in the prior-year period[272](index=272&type=chunk)[277](index=277&type=chunk) - As of April 30, 2022, the company held forward contracts of **US$149.0 million** for its European operations to hedge forecasted merchandise purchases. These are designated as cash flow hedges[279](index=279&type=chunk) - The company is also exposed to interest rate risk on its floating-rate debt. It uses interest rate swap agreements to effectively convert this debt to a fixed-rate basis, including for its Mortgage Debt[286](index=286&type=chunk)[290](index=290&type=chunk) [Item 4. Controls and Procedures](index=60&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and interim CFO, evaluated the company's disclosure controls and procedures and concluded they were effective as of April 30, 2022, with no material changes in internal control over financial reporting during the first quarter of fiscal 2023 - The principal executive officer and principal financial officer concluded that the company's disclosure controls and procedures were effective as of the end of the quarterly period[292](index=292&type=chunk) - No changes in internal control over financial reporting occurred during the quarter that materially affected, or are reasonably likely to materially affect, these controls[293](index=293&type=chunk) [PART II. OTHER INFORMATION](index=61&type=section&id=PART%20II.%20OTHER%20INFORMATION) This section covers legal proceedings, updated risk factors, equity security sales, and other corporate information for Guess?, Inc. [Item 1. Legal Proceedings](index=61&type=section&id=Item%201.%20Legal%20Proceedings) This section refers to Note 13 of the financial statements for information on legal proceedings, including an ongoing customs tax dispute with the Italian Customs Agency and several legal actions involving allegations against the company's Chief Creative Officer, Paul Marciano - The company is involved in various legal proceedings. For detailed information, the report refers to Note 13 in Part I, Item 1[295](index=295&type=chunk) [Item 1A. Risk Factors](index=61&type=section&id=Item%201A.%20Risk%20Factors) The company states there have been no material changes to its risk factors as disclosed in its Annual Report on Form 10-K, with the exception of a new risk factor concerning the potential impact of sanctions and export controls targeting Russia due to the invasion of Ukraine - A new risk factor has been added regarding the potential adverse effects of sanctions and export controls targeting Russia following its invasion of Ukraine. The company operates in Russia through wholesale, retail, and a joint venture, with sales from Russia and Ukraine representing slightly less than **3%** of fiscal 2022 revenues[297](index=297&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=62&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During the first quarter of fiscal 2023, the company repurchased 3,789,576 shares of its common stock at an aggregate cost of $81.7 million, including an initial delivery of 3.3 million shares under a $175.0 million Accelerated Share Repurchase (ASR) agreement initiated in March 2022, with $62.3 million remaining available for repurchase under the authorized program as of April 30, 2022 Issuer Purchases of Equity Securities (Q1 FY2023) | Period | Total Shares Purchased | Average Price Paid per Share ($) | Publicly Announced Program | | :--- | :--- | :--- | :--- | | Jan 30 - Feb 26 | 0 | N/A | 0 | | Feb 27 - Apr 2 | 3,531,646 | $21.49 | 3,531,646 | | Apr 3 - Apr 30 | 257,930 | $22.60 | 257,930 | | **Total** | **3,789,576** | **$21.57** | **3,789,576** | - On March 18, 2022, the company entered into a **$175.0 million** Accelerated Share Repurchase (ASR) contract, receiving an initial **3.3 million** shares. The final number of shares will be determined based on the volume-weighted average stock price during the repurchase period, expected to end in July 2022[298](index=298&type=chunk) [Item 5. Other Information](index=63&type=section&id=Item%205.%20Other%20Information) On April 22, 2022, stockholders approved an amendment and restatement of the Guess?, Inc. 2004 Equity Incentive Plan, increasing the number of available shares by 680,000, modifying the share counting ratio for full-value awards, extending the plan's term to 2032, and making non-employee directors eligible for awards - The 2004 Equity Incentive Plan was amended to increase the aggregate number of shares available for grants by **680,000** and extend the plan's term through March 26, 2032[301](index=301&type=chunk) [Item 6. Exhibits](index=64&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including corporate governance documents, new credit facility agreements, amended equity incentive plans, and certifications by the CEO and CFO as required by the Sarbanes-Oxley Act - A list of exhibits filed with the report is provided, including certifications from the CEO and CFO pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002[303](index=303&type=chunk)

Guess', Inc. (NYSE:GES) Q1 2023 Earnings Conference Call May 25, 2022 4:45 PM ET Corporate Participants Fabrice Benarouche - VP, Finance and IR Carlos Alberini - Chief Executive Officer Dennis Secor - Interim Chief Financial Officer Conference Call Participants Susan Anderson - B. Riley, FBR Corey Tarlowe - Jefferies Dana Telsey - Telsey Advisory Group Janice Kloppenburg - JJK Research Associates Operator Good day, everyone, and welcome to the Guess First Quarter Fiscal 2023 Earnings Conference Call. I woul ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ☒ Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the Fiscal Year Ended January 29, 2022 OR ☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from to Commission File Number 1-11893 GUESS?, INC. (Exact name of registrant as specified in its charter) Delaware 95-3679695 (State or other jurisdiction of inc ...

Guess', Inc. (NYSE:GES) Q4 2021 Earnings Conference Call March 16, 2022 4:45 PM ET Company Participants Fabrice Benarouche - VP, Finance and IR Carlos Alberini - CEO Katie Anderson - CFO Conference Call Participants Corey Tarlowe - Jefferies Dana Telsey - Telsey Advisory Group Susan Anderson - B. Riley, FBR Omar Saad - Evercore ISI Operator Good day, everyone, and welcome to the Guess Fourth Quarter Fiscal 2022 Earnings Conference Call. I would like to turn the call over to Fabrice Benarouche, Vice Presiden ...

[PART I. FINANCIAL INFORMATION](index=3&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This section presents the company's unaudited condensed consolidated financial statements and related disclosures for the period ended October 30, 2021 [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This item presents the company's unaudited condensed consolidated financial statements, including balance sheets, income statements, and cash flow statements [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section provides a snapshot of the company's financial position, detailing assets, liabilities, and equity as of specific dates Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | Oct 30, 2021 (in thousands) | Jan 30, 2021 (in thousands) | | :--- | :--- | :--- | | **Total Current Assets** | $1,271,250 | $1,232,524 | | **Total Assets** | **$2,562,441** | **$2,465,868** | | **Total Current Liabilities** | $804,638 | $762,539 | | **Total Liabilities** | $1,898,985 | $1,896,368 | | **Total Stockholders' Equity** | **$653,705** | **$565,580** | [Condensed Consolidated Statements of Income (Loss)](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income%20(Loss)) This section outlines the company's financial performance over specific periods, detailing revenues, expenses, and net earnings Q3 Financial Performance (in thousands, except per share data) | Metric | Three Months Ended Oct 30, 2021 (in thousands) | Three Months Ended Oct 31, 2020 (in thousands) | | :--- | :--- | :--- | | Net Revenue | $643,070 | $569,284 | | Gross Profit | $293,604 | $239,520 | | Earnings from Operations | $65,671 | $44,467 | | Net Earnings Attributable to Guess?, Inc. | $29,880 | $26,376 | | Diluted EPS | $0.45 | $0.41 | Nine Months Financial Performance (in thousands, except per share data) | Metric | Nine Months Ended Oct 30, 2021 (in thousands) | Nine Months Ended Oct 31, 2020 (in thousands) | | :--- | :--- | :--- | | Net Revenue | $1,791,696 | $1,228,074 | | Gross Profit | $799,248 | $420,777 | | Earnings (Loss) from Operations | $179,637 | $(132,369) | | Net Earnings (Loss) Attributable to Guess?, Inc. | $102,948 | $(151,648) | | Diluted EPS | $1.55 | $(2.35) | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section details the cash inflows and outflows from operating, investing, and financing activities over specific periods Cash Flow Summary (in thousands) | Cash Flow Activity | Nine Months Ended Oct 30, 2021 (in thousands) | Nine Months Ended Oct 31, 2020 (in thousands) | | :--- | :--- | :--- | | Net cash provided by operating activities | $4,581 | $98,351 | | Net cash used in investing activities | $(40,375) | $(14,578) | | Net cash used in financing activities | $(28,494) | $(4,548) | | **Net change in cash, cash equivalents and restricted cash** | **$(78,056)** | **$80,657** | [Notes to Condensed Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations of accounting policies, significant transactions, and other relevant financial information supporting the consolidated statements - The COVID-19 pandemic continues to **negatively impact the business** through lower traffic, capacity restrictions, and **global supply chain disruptions** leading to product delays and higher freight costs[24](index=24&type=chunk)[25](index=25&type=chunk) - During Q3 2021, the company completed an intra-entity transfer of intellectual property rights from a U.S. entity to a Swiss subsidiary, resulting in a U.S. taxable gain and a U.S. income tax payment of **$80.4 million** in the quarter[63](index=63&type=chunk)[66](index=66&type=chunk) - On November 23, 2021, the company announced an **increase** in its regular quarterly cash dividend from $0.1125 to **$0.225 per share**[55](index=55&type=chunk)[156](index=156&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=41&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management provides an analysis of the company's financial condition, operational results, and liquidity, highlighting key performance drivers and strategic priorities [Executive Summary](index=45&type=section&id=Executive%20Summary) This section provides a high-level overview of the company's financial performance and strategic direction for the reported period Q3 FY2022 Performance vs. Prior Periods | Metric | Q3 FY2022 | vs. Q3 FY2021 | vs. Q3 FY2020 (Pre-COVID) | | :--- | :--- | :--- | :--- | | Net Revenue | $643.1M | +13.0% | +4.4% | | Earnings from Operations | $65.7M | +47.7% | +190.0% | | Operating Margin | 10.2% | +2.4% | +6.5% | | Diluted EPS | $0.45 | +9.8% | +150.0% | - The company's **strategic priorities** include: brand relevancy, product excellence, customer centricity, global footprint, and enhancing functional capabilities in areas like logistics and sourcing[174](index=174&type=chunk)[175](index=175&type=chunk)[176](index=176&type=chunk)[177](index=177&type=chunk) [Results of Operations](index=48&type=section&id=Results%20of%20Operations) This section details the company's revenue, gross profit, and operating earnings performance across various segments for the reported period Q3 FY2022 Net Revenue by Segment (in thousands) | Segment | Q3 FY2022 (in thousands) | Q3 FY2021 (in thousands) | % Change | | :--- | :--- | :--- | :--- | | Americas Retail | $169,617 | $130,328 | 30.1% | | Americas Wholesale | $58,999 | $35,971 | 64.0% | | Europe | $330,736 | $321,574 | 2.8% | | Asia | $57,137 | $61,978 | (7.8%) | | Licensing | $26,581 | $19,433 | 36.8% | | **Total** | **$643,070** | **$569,284** | **13.0%** | Q3 FY2022 Earnings from Operations by Segment (in thousands) | Segment | Q3 FY2022 (in thousands) | Q3 FY2021 (in thousands) | % Change | | :--- | :--- | :--- | :--- | | Americas Retail | $24,070 | $473 | 4,988.8% | | Americas Wholesale | $17,316 | $8,247 | 110.0% | | Europe | $44,509 | $51,476 | (13.5%) | | Asia | $(2,399) | $1,415 | (269.5%) | | Licensing | $24,402 | $18,228 | 33.9% | [Liquidity and Capital Resources](index=60&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the company's cash position, cash flow activities, debt, and capital allocation strategies, including share repurchases and dividends - Net cash from operating activities **decreased by $93.8 million** year-over-year, mainly due to unfavorable working capital changes and a large U.S. income tax payment of **$80.4 million** related to an IP transfer[278](index=278&type=chunk) - A **new $200 million share repurchase program** was authorized on August 23, 2021, replacing the previous program[290](index=290&type=chunk) - The quarterly cash dividend was **increased** from $0.1125 to **$0.225 per share**, effective for the payment on December 24, 2021[288](index=288&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=64&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This item details the company's exposure to market risks, including foreign currency and interest rate fluctuations, and its strategies for managing these risks - The company's primary exchange rate risk relates to operations in Europe, Canada, South Korea, China, Hong Kong, and Mexico, as **over two-thirds of product sales** are in **non-U.S. dollar currencies**[298](index=298&type=chunk) - To mitigate currency risk, the company uses forward contracts, holding **US$136.0 million in forward contracts** as of October 30, 2021, to hedge forecasted merchandise purchases for its European operations[305](index=305&type=chunk) - The company is exposed to **interest rate risk** on its floating-rate debt and uses **interest rate swap agreements** to effectively convert it to a fixed-rate basis[311](index=311&type=chunk) [Item 4. Controls and Procedures](index=67&type=section&id=Item%204.%20Controls%20and%20Procedures) Management assessed the effectiveness of the company's disclosure controls and procedures, concluding they were effective with no material changes in internal control - The principal executive officer and principal financial officer concluded that the company's disclosure controls and procedures were **effective** as of October 30, 2021[317](index=317&type=chunk) [PART II. OTHER INFORMATION](index=68&type=section&id=PART%20II.%20OTHER%20INFORMATION) This section provides additional information not covered in the financial statements, including legal proceedings, risk factors, and equity security sales [Item 1. Legal Proceedings](index=68&type=section&id=Item%201.%20Legal%20Proceedings) This item details the company's ongoing legal matters, including a customs tax dispute and legal actions against an executive and the company - The company is involved in an **ongoing customs tax dispute** with the Italian Customs Agency (ICA) regarding audits from 2010-2012, with various appeals pending at the Supreme Court[108](index=108&type=chunk) - **Several legal actions** have been filed against executive Paul Marciano and the company by former models alleging **improper treatment**, which the company and Mr. Marciano dispute and intend to contest vigorously[109](index=109&type=chunk)[110](index=110&type=chunk)[111](index=111&type=chunk) [Item 1A. Risk Factors](index=68&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the fiscal year ended January 30, 2021 - **No material changes** were reported in the Risk Factors from the company's most recent Annual Report on Form 10-K[321](index=321&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=68&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This item reports on equity security transactions, noting no share repurchases during the quarter but the authorization of a new $200 million program - **No shares were repurchased** under the company's publicly announced plans during the third quarter of fiscal 2022[322](index=322&type=chunk) - On August 23, 2021, the Board authorized a **new $200 million share repurchase program**, which had its full capacity remaining as of October 30, 2021[322](index=322&type=chunk) [Item 6. Exhibits](index=69&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including the company's Restated Certificate of Incorporation, Bylaws, and certifications from the CEO and CFO as required by the Sarbanes-Oxley Act