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]

Market Overview - The U.S. stock market experienced one of its worst trading days recently, with major indexes closing at session lows due to newly imposed tariffs on trading partners, leading to increased market uncertainty [1][2] - The Dow Jones Industrial Average fell by 1,679 points, a decrease of 3.98%, while the S&P 500 dropped 274 points, or 4.84%. The Nasdaq saw a significant loss of 1,050 points, down 5.97%, and the Russell 2000 fell by 134 points, a decline of 6.59% [2] Economic Indicators - The final S&P U.S. Services PMI for March was reported at 54.4, slightly above estimates and 10 basis points higher than the previous month. The ISM Services index remained above the 50% threshold at 50.8%, although it was lower than the expected 52.9% and the prior month's 53.5% [3][4] - Analysts anticipate a potential drop in the ISM Services index in the upcoming month, given its proximity to the 50-level [4] Company Performance - Specialty retailer Guess? reported fiscal Q4 earnings of $1.48 per share, exceeding Zacks consensus estimates by 7 cents, with revenues of $932 million surpassing the anticipated $899 million [5] - The company has adjusted its full-fiscal year guidance to reflect growth of 3.9%-6.2%, with EPS guidance revised to a range of $1.32-$1.76 per share, down from a previous expectation of $2.02 per share [6] - Despite an 11% sell-off prior to the earnings report, Guess? shares showed only a slight decline in late trading [6] Labor Market Expectations - The upcoming nonfarm payroll report is expected to show the addition of 135,000 to 140,000 jobs, with the unemployment rate remaining steady at 4.1% [7] - Wage growth is anticipated to remain stable both month-over-month and year-over-year, indicating a healthy labor market despite mild job losses reflected in weekly jobless claims [8]

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 added 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 guest stores experienced a 14% comp decline, while e-commerce in the region also faced challenges [15][56] Company Strategy and Development Direction - The company aims to strengthen brand awareness and customer engagement, focusing on improving retail store and e-commerce productivity [22][51] - Plans include optimizing the business model, enhancing product offerings, and expanding into new markets such as India and the Middle East [22][43] - The company is exploring the integration of its infrastructures across different regions to improve cost structure and profitability [36] Management's Comments on Operating Environment and Future Outlook - Management acknowledged challenges such as inflationary pressures, traffic declines in retail stores, and the impact of the U.S. dollar on revenues and margins [10][70] - For fiscal year 2026, the company expects revenue growth between 3.9% and 6.2%, with adjusted operating margins between 4.5% and 5.4% [47][79] - Management remains optimistic about growth opportunities, particularly with the Rag & Bone brand and the new Guess Jeans initiative [44][120] Other Important Information - The company plans to close approximately 20 non-strategic stores in North America by the end of the year [39][76] - A new Chief Financial Officer, Alberto Toni, will join the company in June, bringing extensive experience [24] - The company ended the quarter with $563 million in inventory, a 21% increase, largely due to the Rag & Bone acquisition [66] 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 opportunities exist for Guess Jeans? - Management noted strong initial performance in Europe and plans for expansion in the U.S. and Japan, emphasizing the brand's alignment with younger consumers [120][129]

Revenue Performance - Revenues for Q4 FY 2025 increased to $932 million, up 5% in U.S. dollars and 9% in constant currency[2] - Full fiscal year 2025 revenues reached $3.0 billion, an 8% increase in U.S. dollars and a 10% increase in constant currency[20] - The Company's outlook for consolidated net revenue in fiscal 2026 is expected to increase between 3.9% and 6.2%[28] - Total net revenue for the three months ended February 1, 2025, was $932,252,000, representing a 5% increase from $891,050,000 in the prior year[57] - Total net revenue for the fiscal year ended February 1, 2025, reached $3,067,059 thousand, an 8% increase from $2,776,530 thousand in the previous fiscal year[60] Earnings and Profitability - GAAP EPS for Q4 FY 2025 was $1.16, a 32% decrease from $1.71 in the prior year[9] - Adjusted EPS for Q4 FY 2025 was $1.48, down 26% from $2.01 in the same prior-year quarter[10] - GAAP diluted EPS for fiscal 2026 is projected to be between $1.03 and $1.37, while adjusted diluted EPS is expected to range from $1.32 to $1.76[28] - Adjusted net earnings per diluted share for the three months ended February 1, 2025, were $1.48, compared to $2.01 for the same period last year[50] - Reported GAAP net earnings attributable to Guess?, Inc. for the three months ended February 1, 2025, were $81,399,000, a decrease of 29% compared to $115,270,000 for the same period last year[52] Operating Margins - GAAP operating margin for FY 2025 decreased to 5.8%, down from 9.5% in FY 2024[21] - The operating margin for the Company's Europe segment decreased by 2.1% to 9.5% in fiscal 2025, down from 11.6% in fiscal 2024, mainly due to higher expenses and unfavorable currency impacts[26] - The Americas Retail segment's operating margin fell by 7.0% to 1.0% in fiscal 2025, compared to 8.0% in fiscal 2024, driven by negative retail comparable sales and increased expenses[26] Expenses and Costs - Selling, general and administrative expenses increased to $1,134,643 thousand, representing 37.9% of net revenue for the fiscal year ended February 1, 2025, up from 34.4% in the previous year[49] - Adjusted selling, general and administrative expenses for the fiscal year ended February 1, 2025, were $1,121,044,000, up from $967,546,000 in the prior year, marking an increase of 15.8%[52] - Other expense, net for fiscal 2025 was $73.4 million, a significant increase from $5.1 million in fiscal 2024, primarily due to a net unrealized loss of $60.7 million related to derivatives[25] Cash Flow and Capital Management - The Company anticipates free cash flow of $55 million for fiscal 2026, with net cash provided by operating activities at $125 million[32] - Free cash flow for the fiscal year ended February 1, 2025, was $29,761 thousand, down from $248,422 thousand in the previous year[67] - The Company repurchased approximately 2.6 million shares for $60.3 million during fiscal 2025, leaving a capacity of $139.8 million under the share repurchase program[34] Store Operations and Acquisitions - The Company operates 1,070 retail stores directly and has partners operating an additional 527 stores worldwide as of February 1, 2025[41] - The company operated a total of 1,597 stores as of February 1, 2025, an increase from 1,553 stores as of February 3, 2024[69] - The acquisition of rag & bone contributed to revenue growth and was a significant milestone for the company[5] - The Company acquired all operating assets and a 50% interest in the intellectual property assets of rag & bone on April 2, 2024, enhancing its market presence[41] Tax and Other Financial Metrics - The effective income tax rate for the fiscal year ended February 1, 2025, was 12.0%, compared to 10.8% in the previous year[49] - The adjusted effective income tax rate for the fiscal year ended February 1, 2025, was 24.0%, compared to 22.2% in the previous year[52] - Total assets increased to $2,766,678 thousand as of February 1, 2025, from $2,590,021 thousand a year earlier[62] - Long-term debt and finance lease obligations rose to $150,668 thousand from $28,210 thousand year-over-year[62]