Guess?, Inc. (NYSE: GES) Q1 2026 Earnings Call | 06/05/2025

Key Financial Results and Observations:

• 
  Revenue Growth: Total revenue increased by 9% in U.S. dollars and 12% in constant currency. This growth was primarily driven by the acquisition of Rag & Bone and strong performance in European and American wholesale businesses.
• Regional Performance:
  • Europe: Wholesale business showed mid-teen growth, while retail experienced a 4% constant currency comp decrease due to lower store traffic.
  • Americas: Wholesale grew significantly, but retail comps declined by 10% in constant currency, although there was some improvement later in the quarter.
  • Asia: Revenues declined by over 20%, with weakness concentrated in the greater China market. The company is seeking a partner to manage its business in this region.
  • Licensing: Royalties declined slightly.
• Gross Margin: Gross margin was 39.9%, lower than the previous year, mainly due to business mix (lower royalty income, higher wholesale contribution) and currency headwinds.
• SG&A Expenses: Increased by 11%, primarily due to the integration of Rag & Bone.
• Operating Loss: Adjusted operating loss was $26 million.
• Loss per Share: Adjusted loss per share was $0.44.
• Inventory: Increased by 15% in U.S. dollars, largely in Europe to mitigate supply chain disruptions.
• Strategic Initiatives:
  • Retail Productivity: Focus on re-engaging customers and driving traffic through increased marketing investment, a new customer loyalty program in Europe, improved customer insights using AI, better balancing of product buys, rebalancing product assortment to include more opening price point products, and a more flexible store clustering model.
  • Rationalizing Business Model: Examining store portfolio, underperforming businesses (like the China market), unprofitable customer relationships, and unproductive SKUs.
  • Infrastructure Optimization: Re-engineering the business to create a unified global platform, including consolidating support structures and logistics networks.
• Outlook:
  • Full-year revenue growth is expected to be between 5.5% and 7.4%.
  • Adjusted operating margin is projected to be between 4.4% and 5.1%.
  • Adjusted EPS is expected to be between $1.32 and $1.64.
  • The outlook incorporates an estimated $10 million impact from tariffs.
  • The company expects to see improvements in retail trends in the second half of the year.

In summary, Guess's first quarter showed mixed results, with strong wholesale performance offset by weakness in retail, particularly in Europe and Asia. The company is actively addressing challenges by implementing strategic initiatives to improve retail productivity, rationalize its business model, and optimize its infrastructure.

Key Financial Results and Observations:

• Revenue Growth: Total revenue increased by 9% in U.S. dollars and 12% in constant currency. This growth was primarily driven by the acquisition of Rag & Bone and strong performance in European and American wholesale businesses.
• Regional Performance:
  • Europe: Wholesale business showed mid-teen growth, while retail experienced a 4% constant currency comp decrease due to lower store traffic.
  • Americas: Wholesale grew significantly, but retail comps declined by 10% in constant currency, although there was some improvement later in the quarter.
  • Asia: Revenues declined by over 20%, with weakness concentrated in the greater China market. The company is seeking a partner to manage its business in this region.
  • Licensing: Royalties declined slightly.
• Gross Margin: Gross margin was 39.9%, lower than the previous year, mainly due to business mix (lower royalty income, higher wholesale contribution) and currency headwinds.
• SG&A Expenses: Increased by 11%, primarily due to the integration of Rag & Bone.
• Operating Loss: Adjusted operating loss was $26 million.
• Loss per Share: Adjusted loss per share was $0.44.
• Inventory: Increased by 15% in U.S. dollars, largely in Europe to mitigate supply chain disruptions.
• Strategic Initiatives:
  • Retail Productivity: Focus on re-engaging customers and driving traffic through increased marketing investment, a new customer loyalty program in Europe, improved customer insights using AI, better balancing of product buys, rebalancing product assortment to include more opening price point products, and a more flexible store clustering model.
  • Rationalizing Business Model: Examining store portfolio, underperforming businesses (like the China market), unprofitable customer relationships, and unproductive SKUs.
  • Infrastructure Optimization: Re-engineering the business to create a unified global platform, including consolidating support structures and logistics networks.
• Outlook:
  • Full-year revenue growth is expected to be between 5.5% and 7.4%.
  • Adjusted operating margin is projected to be between 4.4% and 5.1%.
  • Adjusted EPS is expected to be between $1.32 and $1.64.
  • The outlook incorporates an estimated $10 million impact from tariffs.
  • The company expects to see improvements in retail trends in the second half of the year.

In summary, Guess's first quarter showed mixed results, with strong wholesale performance offset by weakness in retail, particularly in Europe and Asia. The company is actively addressing challenges by implementing strategic initiatives to improve retail productivity, rationalize its business model, and optimize its infrastructure.