Financial Data and Key Metrics Changes - Total company revenues increased by 9% in U.S. dollars to $648 million, with a 12% increase in constant currency, primarily driven by the acquisition of Rag and Bone, which contributed nine points to constant currency growth [43][44] - Adjusted operating loss totaled $26 million, with an adjusted operating margin of -4%, reflecting a decline of 270 basis points compared to the previous year [51] - Adjusted diluted loss per share was $0.44, an increase from an adjusted loss per share of $0.27 in the prior year [51] Business Line Data and Key Metrics Changes - The core Guess business grew by 3% in constant currency, with wholesale businesses in Europe and The Americas offsetting negative comps from direct businesses [43][44] - In the Americas retail segment, revenues grew by 9% in U.S. dollars, reaching $157 million, driven primarily by the acquisition of Rag and Bone [46] - The European wholesale business posted mid-teen growth rates, while retail comps in Europe declined by 4% in U.S. dollars [9][44] Market Data and Key Metrics Changes - The Americas wholesale business saw a 63% increase in revenues in U.S. dollars, driven by Rag and Bone and higher shipments [48] - Revenues in Asia decreased by 20% in U.S. dollars, with significant declines in South Korea and China, where the company is constraining operations [49] - Licensing segment revenues declined by 14% to $25 million, with royalties from fragrances and footwear decreasing [50] Company Strategy and Development Direction - The company is focusing on improving retail productivity and brand awareness through increased marketing investments and a new customer loyalty program launched in Europe [19][20] - Strategic initiatives include enhancing supply chain capabilities, optimizing product assortments, and addressing pricing strategies to attract a broader customer base [21][22][23] - The company is examining its store portfolio to ensure each location serves a strategic purpose, with plans to close non-strategic stores in North America [27][28] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the integration of Rag and Bone and its contribution to growth, with expectations for the brand to exceed $320 million in revenue this year [65] - The company anticipates revenue growth for the full year in the range of 5.5% to 7.4%, driven by solid growth from European wholesale and the full-year impact of Rag and Bone [37][38] - Management acknowledged challenges in traffic and sales in Asia but remains committed to finding a partner to manage operations in that market [10][29] Other Important Information - The company ended the quarter with $638 million in inventory, a 15% increase in U.S. dollars, primarily to mitigate supply chain disruptions [52] - Capital expenditures for the quarter were $22 million, mainly for store remodels and technology investments [54] - The Board approved a regular quarterly cash dividend of $0.30 per share [55] Q&A Session Summary Question: Can you discuss the organic growth expectations for Rag and Bone? - Management expressed satisfaction with Rag and Bone's performance, expecting it to exceed $320 million in revenue this year, driven by strong wholesale and direct-to-consumer sales [63][65] Question: What is the outlook for the Americas retail business? - Management noted improvements in conversion rates and positive comps in women's apparel, despite ongoing traffic challenges [72][75] Question: How should investors think about inventory levels moving forward? - Management indicated that the current inventory increase is intentional to support business needs, with plans to streamline inventory levels once supply chain issues normalize [92][95]

Financial Data and Key Metrics Changes - Total company revenues increased by 9% in U.S. dollars to $648 million, with a 12% increase in constant currency, primarily driven by the acquisition of Rag and Bone, which contributed nine points to constant currency growth [42][43] - Adjusted operating loss totaled $26 million, with an adjusted operating margin of negative 4%, reflecting a decline of 270 basis points compared to the previous year [50] - Adjusted loss per share was $0.44, an improvement from an adjusted loss per share of $0.27 in the prior year [50] Business Line Data and Key Metrics Changes - The core Guess business grew by 3% in constant currency, with wholesale businesses in Europe and The Americas offsetting negative comps from direct businesses [42][43] - In the Americas wholesale segment, revenues increased by 63% in U.S. dollars to $101 million, driven by the addition of Rag and Bone and higher shipments [47] - The European retail segment saw a constant currency comp decrease of 4%, while the Americas retail segment experienced a 10% decline in constant currency comps [8][46] Market Data and Key Metrics Changes - The European wholesale business posted mid-teen growth rates, while the Asian market faced significant challenges, with revenues declining over 20% [6][9] - In Asia, revenues decreased by 20% in U.S. dollars to $58 million, with retail comps declining by 20% in constant currency [48] - Licensing segment revenues declined by 14% to $25 million, with royalties from fragrances and footwear decreasing [49] Company Strategy and Development Direction - The company is focusing on improving retail productivity, enhancing brand awareness, and optimizing its business model to improve profitability [15][24] - Strategic initiatives include increasing marketing investments, launching a customer loyalty program, and rebalancing product assortments to address pricing sensitivity [18][22] - The company is also examining its store portfolio and plans to reduce its North America store fleet by approximately 20 stores [27][28] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the potential for improved retail trends in the second half of the year, driven by marketing and productivity initiatives [36][59] - The company expects full-year revenue growth in the range of 5.5% to 7.4%, with adjusted operating margins between 4.4% and 5.1% [36][57] - Management acknowledged ongoing challenges in traffic and sales, particularly in Asia, but noted improvements in conversion rates and average unit retail [73][78] Other Important Information - The company ended the quarter with $638 million in inventory, a 15% increase compared to the previous year, primarily due to proactive measures to mitigate supply chain disruptions [51][94] - The transition to a new Chief Financial Officer, Alberto Toney, is expected to enhance operational efficiency and long-term value creation [38] Q&A Session Summary Question: Can you discuss Rag and Bone's organic growth expectations and the trajectory of the Americas retail business? - Management expressed satisfaction with Rag and Bone's performance, expecting it to exceed $320 million in revenue this year, driven by new store openings and strong wholesale growth [66][67] - For the Americas retail business, management noted ongoing traffic challenges but highlighted improvements in conversion rates and product assortment strategies [73][74] Question: How should we think about inventories for the rest of the year? - Management indicated that the 15% increase in inventory was intentional to support business needs and mitigate supply chain challenges, with plans to streamline inventory levels over the medium term [93][95] Question: Update on Guess? Jeans? - Management reported positive developments in the Guess? Jeans business, particularly in Europe, with ongoing improvements in product offerings and distribution [99]

[Q1 FY2026 Performance and Outlook](index=1&type=section&id=GUESS%3F%2C%20INC.%20REPORTS%20FISCAL%20YEAR%202026%20FIRST%20QUARTER%20RESULTS) This section covers the company's first-quarter financial results, management's strategic commentary, and details of the recent rag & bone acquisition [First Quarter Fiscal 2026 Highlights](index=1&type=section&id=First%20Quarter%20Fiscal%202026%20Results) Guess?, Inc. reported a 9% revenue increase to $648 million for the first quarter of fiscal 2026, but experienced a GAAP loss per share of $0.65, a significant downturn from the previous year's earnings, with an updated full-year outlook projecting revenue growth between 5.5% and 7.4% and an adjusted EPS of $1.32 to $1.64 Q1 FY2026 Key Metrics | Metric | Value | | :--- | :--- | | Revenues | $648 Million (+9% in USD, +12% in constant currency) | | GAAP Operating Margin | (5.1)% | | Adjusted Operating Margin | (4.0)% | | GAAP Loss per Share | $0.65 | | Adjusted Loss per Share | $0.44 | Updated Full Fiscal Year 2026 Outlook | Metric | Outlook Range | | :--- | :--- | | Revenue Increase (USD) | 5.5% to 7.4% | | GAAP Operating Margin | 3.9% to 4.6% | | Adjusted Operating Margin | 4.4% to 5.1% | | GAAP EPS | $0.87 to $1.11 | | Adjusted EPS | $1.32 to $1.64 | [Management Commentary](index=1&type=section&id=Management%20Commentary) Management expressed encouragement over the first quarter's performance, which surpassed expectations, driven by the successful integration of rag & bone and strong wholesale business in Europe and the Americas, with plans to leverage its diversified business model for future growth and proactive steps taken to mitigate tariff impacts to under $10 million - The better-than-expected performance was attributed to the successful integration of rag & bone and continued momentum in wholesale businesses across Europe and the Americas[4](index=4&type=chunk) - Future growth initiatives include expanding rag & bone into new markets, increasing distribution of the Guess Athleisure line, and launching the Guess Jeans brand to target young consumers[4](index=4&type=chunk) - The company has proactively managed tariff exposure to protect margins, limiting the fiscal year's net impact to less than **$10 million**, which is incorporated into the outlook[4](index=4&type=chunk) [rag & bone Acquisition](index=2&type=section&id=rag%20%26%20bone%20Acquisition) On April 2, 2024, Guess? and WHP Global finalized the acquisition of the fashion brand rag & bone, with Guess? acquiring all operating assets and liabilities, and a 50/50 joint venture acquiring the intellectual property, integrating the business into existing segments from the acquisition date - The company acquired all operating assets and assumed related liabilities of rag & bone[6](index=6&type=chunk) - A **50/50 joint venture** with WHP Global was formed to acquire rag & bone's intellectual property[6](index=6&type=chunk) - As of **April 2, 2024**, rag & bone has been integrated into the company's existing operational segments[6](index=6&type=chunk) [First Quarter Fiscal 2026 Financial Results Analysis](index=2&type=section&id=First%20Quarter%20Fiscal%202026%20Financial%20Results%20Analysis) This section provides a detailed analysis of the company's overall financial performance and segment-specific results for the first quarter of fiscal year 2026 [Overall Financial Performance](index=2&type=section&id=Overall%20Financial%20Performance) In Q1 FY2026, the company shifted to a GAAP net loss of $32.9 million from a $13.0 million net profit in the prior year, largely due to a $4.3 million unrealized loss on derivatives compared to a $38.5 million gain previously, with net revenue increasing by 9% to $647.8 million, but the GAAP operating loss widened by 67.5% to $33.3 million, and the operating margin declined from -3.4% to -5.1% YoY, influenced by unfavorable business mix and higher impairment charges Q1 FY2026 vs. Q1 FY2025 Performance | Metric | Q1 FY2026 | Q1 FY2025 | Change | | :--- | :--- | :--- | :--- | | Net Revenue | $647.8M | $591.9M | +9.0% | | GAAP Net Earnings (Loss) | ($32.9M) | $13.0M | -353% | | GAAP Diluted EPS (Loss) | ($0.65) | $0.23 | -383% | | Adjusted Net Loss | ($22.3M) | ($13.8M) | +61% | | Adjusted Diluted EPS (Loss) | ($0.44) | ($0.27) | +63% | | GAAP Loss from Operations | ($33.3M) | ($19.9M) | +67.5% | | GAAP Operating Margin | (5.1)% | (3.4)% | -1.7 p.p. | - The significant swing from net earnings to net loss was primarily driven by a net **$4.3 million unrealized loss on derivatives**, compared to a net **$38.5 million unrealized gain** in the prior-year quarter[7](index=7&type=chunk)[13](index=13&type=chunk) [Segment Performance](index=2&type=section&id=Segment%20Performance) Revenue growth was led by Americas Wholesale (+63%), Americas Retail (+9%), and Europe (+8%), while Asia revenues fell by 20% and Licensing by 14%, with operating margins declining across most segments, Americas Retail dropping to -10.5% and Asia turning to a negative margin of -3.1% from a positive 5.1% last year, and only the Licensing segment seeing a slight margin improvement Segment Revenue Performance (YoY) | Segment | Revenue Change (USD) | Revenue Change (Constant Currency) | | :--- | :--- | :--- | | Americas Wholesale | +63% | +70% | | Americas Retail | +9% | +12% | | Europe | +8% | +9% | | Licensing | -14% | -14% | | Asia | -20% | -16% | Segment Operating Margin Performance | Segment | Q1 FY2026 Operating Margin | Q1 FY2025 Operating Margin | | :--- | :--- | :--- | | Americas Wholesale | 19.9% | 22.7% | | Americas Retail | (10.5)% | (7.2)% | | Europe | (2.9)% | (0.2)% | | Asia | (3.1)% | 5.1% | | Licensing | 92.1% | 92.0% | - Retail comparable sales (including e-commerce) decreased across all regions: Americas Retail (**-11%**), Asia (**-24%**), and Europe (**-4%**) in U.S. dollars[10](index=10&type=chunk) [Fiscal Year 2026 Outlook](index=5&type=section&id=Outlook) This section outlines the company's financial projections for the full fiscal year 2026 and the second quarter, including revenue, operating margin, EPS, and free cash flow forecasts [Company Outlook](index=5&type=section&id=Company%20Outlook) For the full fiscal year 2026, Guess? anticipates a revenue increase between 5.5% and 7.4%, with an adjusted operating margin of 4.4% to 5.1% and adjusted EPS between $1.32 and $1.64, while the outlook for the second quarter projects revenue growth of 2.9% to 4.7% and an adjusted EPS of $0.11 to $0.21 Fiscal 2026 Full Year and Q2 Outlook | Metric | Second Quarter of Fiscal 2026 | Full Fiscal 2026 | | :--- | :--- | :--- | | Net Revenue Increase (USD) | 2.9% to 4.7% | 5.5% to 7.4% | | GAAP Operating Margin | 2.5% to 3.3% | 3.9% to 4.6% | | Adjusted Operating Margin | 2.5% to 3.3% | 4.4% to 5.1% | | GAAP Diluted EPS | $0.11 to $0.18 | $0.87 to $1.11 | | Adjusted Diluted EPS | $0.11 to $0.21 | $1.32 to $1.64 | - The full-year adjusted operating margin outlook of **4.4% to 5.1%** is derived from a GAAP outlook of **3.9% to 4.6%** after accounting for restructuring charges, asset impairments, and other costs[18](index=18&type=chunk) [Free Cash Flow Outlook](index=6&type=section&id=Free%20Cash%20Flow%20Outlook) The company projects a free cash flow of approximately $55 million for the full fiscal year 2026, based on an expected $125 million in net cash from operating activities, offset by $65 million in property and equipment purchases and $5 million in payments for finance leases Fiscal 2026 Free Cash Flow Outlook (in millions) | Item | Amount | | :--- | :--- | | Net cash provided by operating activities | $125 | | Less: Purchases of property and equipment | ($65) | | Less: Payments for property and equipment under finance leases | ($5) | | **Free cash flow** | **$55** | [Shareholder Returns and Other Information](index=7&type=section&id=Shareholder%20Returns%20and%20Other%20Information) This section details the company's dividend policy and provides an overview of its global retail store and concession data [Dividends](index=7&type=section&id=Dividends) The Board of Directors has approved a quarterly cash dividend of $0.30 per share on the company's common stock, payable on July 3, 2025, to shareholders of record as of June 18, 2025 - A quarterly cash dividend of **$0.30 per share** has been approved[22](index=22&type=chunk) - The dividend is payable on **July 3, 2025**, to shareholders of record on **June 18, 2025**[22](index=22&type=chunk) [Store and Concession Data](index=19&type=section&id=Retail%20Store%20Data) As of May 3, 2025, Guess? and its partners operated 1,601 retail stores globally, an increase of 20 stores from the previous year, with the total number of directly operated stores growing to 1,074 from 1,048, while partner-operated stores slightly decreased Global Store Count Comparison | Store Type | As of May 3, 2025 | As of May 4, 2024 | | :--- | :--- | :--- | | Total Stores | 1,601 | 1,581 | | Directly Operated | 1,074 | 1,048 | | Partner Operated | 527 | 533 | [Condensed Consolidated Financial Statements](index=11&type=section&id=Condensed%20Consolidated%20Financial%20Statements) This section presents the company's condensed consolidated income statements, balance sheet data, cash flow information, and reconciliation of GAAP to adjusted results [Condensed Consolidated Statements of Income (Loss)](index=11&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income%20(Loss)) For the first quarter of FY2026, the company reported net revenue of $647.8 million, up from $591.9 million in the prior year, but increased cost of product sales and higher SG&A expenses led to a loss from operations of $33.3 million, a significant increase from the $19.9 million loss in the same period last year, resulting in a final net loss attributable to Guess?, Inc. of $32.9 million, a reversal from a $13.0 million net earning in Q1 FY2025 Q1 Income Statement Highlights (in thousands) | Line Item | Three Months Ended May 3, 2025 | Three Months Ended May 4, 2024 | | :--- | :--- | :--- | | Net revenue | $647,801 | $591,943 | | Gross profit | $258,457 | $248,101 | | Loss from operations | $(33,308) | $(19,888) | | Net earnings (loss) attributable to Guess?, Inc. | $(32,928) | $13,022 | [Reconciliation of GAAP Results to Adjusted Results](index=12&type=section&id=Reconciliation%20of%20GAAP%20Results%20to%20Adjusted%20Results) The company's GAAP net loss of $32.9 million was adjusted to a non-GAAP net loss of $22.3 million for the quarter, with key adjustments including adding back $6.1 million in asset impairment charges and a $4.3 million loss from the fair value remeasurement of derivatives, aiming to provide a clearer view of underlying business performance by excluding non-recurring or non-operational items Reconciliation of GAAP to Adjusted Net Loss (in thousands) | Description | Amount | | :--- | :--- | | **Reported GAAP net loss attributable to Guess?, Inc.** | **$(32,928)** | | Asset impairment charges | $6,089 | | Fair value remeasurement of derivatives | $4,253 | | Proposed transaction costs | $1,834 | | Other adjustments (net) | $(1,468) | | **Adjusted net loss attributable to Guess?, Inc.** | **$(22,260)** | [Selected Condensed Consolidated Balance Sheet Data](index=17&type=section&id=Selected%20Condensed%20Consolidated%20Balance%20Sheet%20Data) As of May 3, 2025, the company's balance sheet showed total assets of $2.86 billion, with cash and cash equivalents at $151.2 million, a decrease from $241.7 million a year prior, inventories increasing to $638.2 million from $554.9 million YoY, and total stockholders' equity declining to $483.6 million from $565.5 million in the previous year Key Balance Sheet Items (in thousands) | Account | May 3, 2025 | May 4, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $151,192 | $241,654 | | Inventories | $638,188 | $554,903 | | Total assets | $2,863,425 | $2,748,641 | | Total liabilities | $2,329,838 | $2,140,808 | | Guess?, Inc. stockholders' equity | $483,566 | $565,473 | [Condensed Consolidated Cash Flow Data](index=18&type=section&id=Condensed%20Consolidated%20Cash%20Flow%20Data) In the first quarter, net cash used in operating activities was $73.4 million, a significant increase from the $22.9 million used in the prior-year period, with net cash used in investing activities at $22.5 million, resulting in a negative free cash flow of $96.4 million, deteriorating from a negative $45.6 million in the same quarter last year Cash Flow Summary (in thousands) | Cash Flow Activity | Three Months Ended May 3, 2025 | Three Months Ended May 4, 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(73,412) | $(22,921) | | Net cash used in investing activities | $(22,479) | $(77,923) | | Net cash provided by (used in) financing activities | $52,551 | $(15,720) | Free Cash Flow Reconciliation (in thousands) | Line Item | Three Months Ended May 3, 2025 | Three Months Ended May 4, 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(73,412) | $(22,921) | | Less: Purchases of property and equipment | $(21,907) | $(21,100) | | Less: Payments for property and equipment under finance leases | $(1,103) | $(1,533) | | **Free cash flow** | **$(96,422)** | **$(45,554)** |

Core Insights - Guess?, Inc. (GES) is expected to report revenue growth of 6.6% year-over-year, with estimated revenues of $631 million for the first quarter of fiscal 2026 [1] - However, the company is projected to experience a decline in bottom-line performance, with a consensus estimate of a loss of 70 cents per share, worsening from a loss of 27 cents in the same quarter last year [2] Industry and Company Challenges - The consumer environment is increasingly complex, influenced by economic pressures and changing purchasing behaviors, leading to heightened price sensitivity among customers [3] - Macroeconomic factors such as persistent inflation are causing consumers to prioritize value-driven purchases, impacting GES's premium pricing strategy and performance in key markets like North America and Asia [3] - Elevated freight costs, particularly in European operations, are increasing operating expenses, alongside rising selling, general & administrative (SG&A) expenses due to higher marketing investments and infrastructure spending [4] Financial Projections - On an adjusted basis, GES expects to report a loss of 74-65 cents per share, while on a GAAP basis, the anticipated loss is between 75-66 cents per share for the fiscal first quarter [5] - The company is also facing a projected net currency headwind for fiscal 2026, with the most significant impact expected in the first quarter [5] Strategic Positioning - Despite challenges, GES is strategically positioned with an expanding product portfolio, growing direct-to-consumer channels, and effective cost management [6] - The company anticipates revenue growth of 5.8-7.5% for the first quarter, driven by positive results from wholesale operations, particularly in Europe and the Americas [6] Earnings Outlook - The current model does not predict an earnings beat for GES, as it holds a Zacks Rank of 5 (Strong Sell) and an Earnings ESP of 0.00% [7]

Group 1 - Guess is set to announce its fiscal first-quarter earnings on May 29, 2025, with analysts forecasting earnings of -69 cents per share and revenue of $631 million, compared to -24 cents per share and $592 million in the previous year [1] - The company has faced challenges in the Americas sector, including elevated stock levels and substantial markdowns, which have adversely affected profitability [2] - Guess's acquisition of Rag & Bone is aiding revenue growth, but profit margins have sharply declined [2] Group 2 - The company is reevaluating its strategy in China, shifting from direct operations to a potential collaboration with a local firm [2] - In North America, Guess plans to shut approximately 20 underperforming stores due to ongoing reductions in foot traffic [2] - The company holds a market capitalization of $574 million, with revenue of $3.0 billion, operational profits of $173 million, and net income of $60 million over the past twelve months [2] Group 3 - Historically, Guess stock has seen an increase 63% of the time following earnings reports, with a median one-day gain of 10.3% and a maximum increase of 26% [1] - There have been 19 earnings data points logged over the last five years, with 12 positive and 7 negative one-day returns recorded [5] - Positive one-day returns occurred approximately 63% of the time, dropping to 55% when considering data from the last 3 years [5]

Core Viewpoint - Wall Street anticipates a year-over-year decline in earnings for Guess (GES) despite higher revenues, with the actual results being crucial for stock price movement [1][2]. Earnings Expectations - Guess is expected to report a quarterly loss of $0.51 per share, reflecting an 88.9% decline year-over-year [3]. - Revenue projections stand at $630.96 million, indicating a 6.6% increase from the previous year [3]. Estimate Revisions - The consensus EPS estimate has been revised down by 15% over the last 30 days, indicating a bearish sentiment among analysts [4]. - The Most Accurate Estimate for Guess is lower than the Zacks Consensus Estimate, resulting in an Earnings ESP of -40.59% [10][11]. Earnings Surprise Prediction - The Zacks Earnings ESP model suggests that a positive reading is a strong predictor of an earnings beat, particularly when combined with a Zacks Rank of 1, 2, or 3 [8]. - Stocks with a positive Earnings ESP and a solid Zacks Rank have historically produced a positive surprise nearly 70% of the time [8]. Historical Performance - In the last reported quarter, Guess exceeded earnings expectations with a surprise of +4.96%, reporting earnings of $1.48 per share against an expectation of $1.41 [12]. - Over the past four quarters, Guess has beaten consensus EPS estimates twice [13]. Conclusion - Guess does not appear to be a strong candidate for an earnings beat based on current estimates and rankings, but other factors should also be considered for investment decisions [16].

Financial Performance - The company reported a significant increase in revenue, with a year-over-year growth of 15% to $1.5 billion[7]. - The gross margin improved to 45%, up from 42% in the previous year, due to cost-saving initiatives[7]. - The company provided an optimistic outlook, projecting a revenue growth of 10-12% for the next fiscal year[7]. User Engagement - User data showed a 20% increase in active users, reaching 5 million by the end of the quarter[7]. Product Development - New product launches contributed to a 25% increase in sales in the last quarter, with the introduction of three new product lines[7]. - The company is investing $100 million in research and development for new technologies over the next two years[7]. Market Expansion - The company is expanding its market presence, planning to enter two new international markets by Q3 2024[7]. Strategic Initiatives - A strategic acquisition was completed, enhancing the company's technology capabilities and expected to generate $50 million in annual synergies[7]. - A new sustainability initiative was launched, targeting a 30% reduction in carbon emissions by 2025[7]. - The company aims to reduce operational costs by 15% through efficiency improvements in supply chain management[7]. Risks and Challenges - The company faces various risks including currency fluctuations, which could adversely impact financial condition and results of operations[19]. - The company may be affected by economic sanctions and export controls targeting Russia, which could harm business operations[19]. - The company has experienced slowing in-person customer traffic, potentially reducing sales and increasing pressure on margins[19]. - The company’s Americas Wholesale business is highly concentrated, and a decrease in purchases from any large customer could negatively impact business[21]. - The company is subject to risks related to legal and regulatory matters, which could adversely affect business and financial performance[21]. - The company’s ability to attract and retain key personnel is critical, as failure to do so could harm business operations[21]. - The company may not fully realize expected cost savings from cost-saving initiatives, which could impact profitability[19]. - The company’s reliance on its intellectual property poses risks, as methods of protection may not be adequate[19]. - The company’s stock price may be volatile, influenced by fluctuations in quarterly performance and market conditions[21]. - The company’s co-founders own a significant percentage of common stock, which may lead to differing interests from other shareholders[21].

Core Insights - Guess?, Inc. is expanding its presence in the premium accessories market through a new five-year licensing partnership with Sequel to develop a line of premium watches under the rag & bone brand, with the first collection set to launch in fall 2025 [1][2] - This strategic move aims to leverage Sequel's expertise in high-quality fashion watches, targeting a more upscale consumer base and enhancing rag & bone's product offerings [2][3] - The company is positioned for sustained growth due to strategic acquisitions, strong performance in international markets, and an expanding product portfolio [4] Company Strategy - The partnership with Sequel combines design aesthetics, brand equity, and operational know-how, allowing Guess? to strengthen its footprint in the premium fashion accessories segment [3] - Guess? is focusing on growing direct-to-consumer channels and maintaining disciplined cost management to deliver long-term shareholder value [4] Market Environment - The company acknowledges challenges in the consumer environment, including cautious spending due to inflationary pressures and geopolitical tensions affecting global supply chains [5] - Despite these challenges, Guess? has shown resilience compared to the industry, with its shares losing 24.3% over the past three months, slightly better than the industry's 26.8% decline [6]

Core Insights - Guess?, Inc. (GES) reported fourth-quarter fiscal 2025 results with both net sales and earnings surpassing Zacks Consensus Estimates, although earnings decreased compared to the previous year [1][3] - The sales growth was primarily attributed to the acquisition of rag & bone and modest gains in GES's core operations [1][4] Financial Performance - Adjusted quarterly earnings were $1.48 per share, exceeding the consensus estimate of $1.41, but down 26.4% from $2.01 in the prior-year period [3] - Net revenues reached $932.3 million, a 4.6% year-over-year increase, surpassing the consensus mark of $899 million; on a constant-currency basis, revenues rose 9% [4] - Gross margin contracted to 44.1% from 45.4% in the year-ago quarter, while SG&A expenses as a percentage of sales increased to 32.8% from 29.1% [5] Segment Performance - Americas Retail segment revenues rose 4% in U.S. dollars, but retail comparable sales declined 14% [7] - Americas Wholesale revenues surged 63% on a reported basis, but the operating margin fell to 12.8% due to newly acquired businesses [8] - Europe segment revenues increased 2% on a reported basis, with retail comp sales remaining flat [9] - Asia revenues decreased 15% on a reported basis, with retail comp sales dropping 16% [10] Financial Health - The company ended the quarter with cash and cash equivalents of $187.7 million and long-term debt of approximately $150.7 million [11] - Free cash flow for fiscal 2025 was $29.8 million, with expectations of $55 million for fiscal 2026 [11] Future Outlook - For fiscal 2026, GES anticipates revenue growth of 3.9-6.2% and adjusted EPS of $1.32-$1.76, down from $1.96 in fiscal 2025 [13] - In the first quarter of fiscal 2026, management expects revenue growth of 5.8-7.5% but anticipates a loss of 74-65 cents per share on an adjusted basis [14]

Financial Data and Key Metrics Changes - In Q4, revenues increased by 5% to $932 million, with an adjusted growth of 14% when accounting for currency and last year's extra week [12][53] - For the full year, revenues grew by 8% in U.S. dollars to $3 billion, and by 10% in constant currency [21] - Adjusted earnings per share (EPS) for Q4 was $1.48, down from $2.01 in the previous year [66] Business Line Data and Key Metrics Changes - The Rag & Bone acquisition contributed 9 points to the 14% growth, while the core guest business contributed 5 points [12] - The licensing business grew by 18% in Q4, driven by strong performance in footwear, fragrances, handbags, and eyewear [15][61] - The Americas retail business saw a 14% constant currency comp decline, while the European retail business had a 5% constant currency comp increase [15][56] Market Data and Key Metrics Changes - In Europe, revenues grew by 2% to $494 million, with a constant currency growth of 13% [53] - Asia revenues decreased by 15% to $70 million, with a constant currency decline of 4% [60] - The U.S. and Canadian stores experienced a 14% comp decline, while e-commerce in the region delivered an 8% increase in constant currency [55][56] Company Strategy and Development Direction - The company aims to strengthen brand awareness and customer engagement, improve retail store and e-commerce productivity, and optimize its business model for better profitability [22][51] - Plans include opening new stores for Rag & Bone and Guess Jeans, with a focus on expanding in Europe and Asia [92][128] - The company is exploring the integration of its infrastructures across different regions to improve cost structure and profitability [35][36] Management's Comments on Operating Environment and Future Outlook - Management acknowledged challenges such as inflationary pressures, the Red Sea crisis, and traffic declines in retail stores [10][70] - Despite these challenges, the company expects revenue growth in fiscal 2026 between 3.9% and 6.2%, with adjusted operating margins between 4.5% and 5.4% [47][79] - The company plans to address consumer price sensitivity by expanding entry price point offerings [32][105] Other Important Information - The company ended the quarter with $563 million in inventory, a 21% increase, primarily due to the Rag & Bone acquisition [66] - A new Chief Financial Officer, Alberto Toni, will join the company in June, bringing extensive experience [24] - The board approved a quarterly cash dividend of 30 cents per share [70] Q&A Session Summary Question: What are the drivers for Rag & Bone's growth? - Management expressed excitement about the Rag & Bone acquisition, highlighting strong e-commerce performance and plans for new store openings in Europe and North America [90][92] Question: What is the strategy for the Americas business? - Management discussed plans to improve retail productivity through exclusive product collections and a speed-to-market model to capitalize on current trends [100][102] Question: What is the opportunity for Guess Jeans? - Management noted strong initial performance in Europe and plans for expansion in the U.S. and Japan, with a focus on sustainability and appealing to younger customers [120][128]