Guess? Q3 Earnings Lag Estimates, View Cut Amid External Challenges

Core Insights - Guess?, Inc. (GES) reported third-quarter fiscal 2025 results with both revenue and earnings falling short of Zacks Consensus Estimates, and earnings declined year over year [1][2][3] Financial Performance - Adjusted earnings per share (EPS) were 34 cents, missing the consensus estimate of 43 cents and representing a 31% decline year over year [3] - Net revenues reached $738.5 million, a 13% increase year over year, but below the consensus mark of $751 million; on a constant-currency basis, revenues rose 14% [5] - Gross margin decreased to 43.6% from 44.7% in the prior year, while selling, general and administrative (SG&A) expenses increased to 37.8% from 36% [6] Segment Performance - Americas Retail segment revenues increased by 12% in U.S. dollars and 14% at constant currency, but retail comparable sales declined by 14% in U.S. dollars and 12% at constant currency [8] - Americas Wholesale revenues surged by 79% on a reported basis and 83% at constant currency, although the operating margin decreased to 25.7% [9] - Europe segment revenues grew by 7% on a reported basis, with retail comparable sales increasing by 8% [10] - Asia revenues rose by 2%, but retail comparable sales fell by 17% [11] - Licensing revenues remained flat, with an operating margin of 91.8% [12] Financial Health - The company ended the quarter with cash and cash equivalents of $140.9 million and long-term debt of approximately $238.3 million [13] - Free cash flow for the nine months ended November 2, 2024, was negative $130.4 million, with expectations of $40 million for fiscal 2025 [13][14] Future Outlook - For fiscal 2025, GES expects revenues to be at or slightly below $3 billion, indicating growth of 7.1% to 8.1%, revised down from 9.5% to 11% [15] - Adjusted EPS is forecasted to be between $1.85 and $2, down from a previous range of $2.42 to $2.70 [16] - For the fourth quarter of fiscal 2025, revenue growth is anticipated in the range of 2.2% to 5.4%, with adjusted EPS expected between $1.37 and $1.52 [17]