Fourth Quarter Fiscal
2024 Results: Revenues Increased to $891 Million, Up 9% in
Both U.S. Dollars and Constant Currency Delivered Operating Margin
of 16.3%; Adjusted Operating Margin of 14.6% GAAP EPS of $1.71 and
Adjusted EPS of $2.01
Full Fiscal Year 2024
Results: Revenues Increased to $2.8 Billion, Up 3% in Both
U.S. Dollars and Constant Currency Delivered Operating Margin of
9.5%; Adjusted Operating Margin of 9.2% GAAP EPS of $3.09 and
Adjusted EPS of $3.14
Full Fiscal Year 2025
Outlook: Expects Revenue Increase between 11.5% and 13.5% in
U.S. Dollars GAAP and Adjusted Operating Margins between 7.4% and
8.4% and 7.5% and 8.5%, Respectively Expects GAAP EPS between $2.08
and $2.43 and Adjusted EPS between $2.56 and $3.00 Declares Special Dividend of $2.25 per Share and
Quarterly Dividend of $0.30 per Share
Guess?, Inc. (NYSE: GES) today reported financial results for
its fourth quarter and full fiscal year ended February 3, 2024.
Carlos Alberini, Chief Executive Officer, commented, “We are
very pleased with our fourth quarter results, which exceeded our
expectations for revenues, operating earnings and earnings per
share, and capped an outstanding year for our Company. We grew
revenues by 9% for the quarter and 3% for the year. We grew GAAP
earnings per share by 40% to $3.09 and adjusted earnings per share
by 15% to $3.14. Our disciplined approach in managing the business
enabled us to deliver $330 million of operating cash flow and $248
million of free cash flow and end the year with a cash position of
$360 million, well ahead of our expectations. As a result of this
strong performance, we are pleased to share that our Board has
declared a Special Dividend of $2.25 per share to be paid in May,
in line with our commitment to return capital directly to
shareholders.”
Paul Marciano, Co-Founder and Chief Creative Officer, commented,
“We saw strong brand momentum all over the world and are very
pleased with how our customers are responding to our collections
across all our product categories. Our results this past year are a
strong testament that our brand elevation strategy and the
transformation of our business are taking hold and creating strong
value. I want to take this opportunity to thank our teams for a job
well done this year. Regarding the future, we are very excited. We
have built a powerful global platform that will enable us to drive
the development and expansion of our Guess and Marciano businesses,
as well as rag & bone, which we are thrilled to be adding to
our portfolio through our first acquisition since Guess was created
43 years ago.”
Mr. Alberini concluded, “Looking forward, we are excited about
our plans for the new fiscal year. We believe we are at an
inflection point, and we expect to exceed $3 billion in revenues
for the first time in our Company’s history with a solid growth
plan for our core business, the integration of rag & bone into
our portfolio and the launch of Guess Jeans to capture the demand
from Generation Z consumers. Our business model is strong and
highly diversified, we have great products that are resonating well
with our customers, we are well positioned with a strong capital
structure and have a great team very capable and ready to execute
on our ambitions.”
Non-GAAP Information
This press release contains non-GAAP financial measures,
including certain adjusted results of operations and outlook
measures, constant currency information and free cash flow
measures. See the heading “Presentation of Non-GAAP Information”
for further information and the accompanying tables for a
reconciliation to the comparable GAAP financial measure.
Fourth Quarter Fiscal 2024
Results
For the fourth quarter of the fiscal year ended February 3, 2024
(“fiscal 2024”), the Company recorded GAAP net earnings of $115.3
million, a 20% increase from $95.8 million for the same prior-year
quarter. GAAP diluted net earnings per share (“EPS”) increased 20%
to $1.71 for the fourth quarter of fiscal 2024, compared to $1.42
for the same prior-year quarter. The Company estimates a positive
impact from its share buybacks of $0.06 and a negative impact from
currency of $0.01 on GAAP diluted EPS in the fourth quarter of
fiscal 2024 when compared to the same prior-year quarter. The
Company’s fourth quarter fiscal 2024 results included 14 weeks,
while the fourth quarter of the fiscal year ended January 28, 2023
(“fiscal 2023”) results included 13 weeks.
For the fourth quarter of fiscal 2024, the Company’s adjusted
net earnings were $110.8 million, a 13% increase from $98.2 million
for the same prior-year quarter. Adjusted diluted EPS increased 16%
to $2.01, compared to $1.74 for the same prior-year quarter. The
Company estimates a positive impact from its share buybacks of
$0.09 and a negative impact from currency of $0.01 on adjusted
diluted EPS in the fourth quarter of fiscal 2024 when compared to
the same prior-year quarter.
Net Revenue. Total net revenue for the fourth quarter of
fiscal 2024 increased 9% to $891.1 million from $817.8 million in
the same prior-year quarter. In constant currency, net revenue also
increased by 9%, driven by the favorable impact on revenue from the
additional week in the current quarter.
- Europe revenues increased 9% in U.S. dollars and 10% in
constant currency. Retail comparable sales (including e-commerce)
increased 6% in U.S. dollars and 7% in constant currency. The
inclusion of our e-commerce sales negatively impacted the retail
comparable sales percentage by 4% in U.S. dollars and 5% in
constant currency.
- Americas Retail revenues increased 1% in U.S. dollars and
remained flat in constant currency. Retail comparable sales
(including e-commerce) decreased 1% in U.S. dollars and 2% in
constant currency. The inclusion of our e-commerce sales had a
minimal impact on the retail comparable sales percentage in both
U.S. dollars and constant currency.
- Americas Wholesale revenues increased 44% in U.S. dollars and
39% in constant currency.
- Asia revenues increased 18% in U.S. dollars and 19% in constant
currency. Retail comparable sales (including e-commerce) decreased
2% in U.S. dollars and 1% in constant currency. The inclusion of
our e-commerce sales positively impacted the retail comparable
sales percentage by 4% in both U.S. dollars and constant
currency.
- Licensing revenues increased 15% in both U.S. dollars and
constant currency.
Earnings from Operations. GAAP earnings from operations
for the fourth quarter of fiscal 2024 increased 39.9% to $144.8
million (including $0.6 million in non-cash impairment charges
taken on certain long-lived store related assets, $0.2 million net
losses on lease modifications and a $0.2 million unfavorable
currency translation impact), from $103.6 million (including $4.3
million in non-cash impairment charges taken on certain long-lived
store related assets and $0.6 million net gains on lease
modifications) in the same prior-year quarter. GAAP operating
margin in the fourth quarter of fiscal 2024 increased 3.6% to
16.3%, from 12.7% for the same prior-year quarter, driven primarily
by higher revenues and initial markups and lower expenses,
including a net positive impact from the settlement of a
previously-disclosed stockholder derivative lawsuit, partially
offset by the unfavorable impact of currency and higher markdowns.
The negative impact of currency on operating margin for the quarter
was approximately 50 basis points.
For the fourth quarter of fiscal 2024, adjusted earnings from
operations increased 21.1% to $130.2 million, from $107.5 million
in the same prior-year quarter. Adjusted operating margin increased
1.5% to 14.6%, from 13.1% for the same prior-year quarter, driven
primarily by higher revenues and initial markups, partially offset
by the unfavorable impact of currency, higher expenses and higher
markdowns.
- Operating margin for the Company’s Europe segment increased
2.0% to 18.0% in the fourth quarter of fiscal 2024, from 16.0% in
the same prior-year quarter, driven primarily by higher initial
markups and higher revenues, partially offset by the unfavorable
impact of currency and higher markdowns.
- Operating margin for the Company’s Americas Retail segment
decreased 0.4% to 15.0% in the fourth quarter of fiscal 2024, from
15.4% in the same prior-year quarter, driven primarily by the
unfavorable impact from negative retail comparable sales, partially
offset by the favorable impact of currency.
- Operating margin for the Company’s Americas Wholesale segment
increased 7.6% to 28.5% in the fourth quarter of fiscal 2024, from
20.9% in the same prior-year quarter, driven primarily by higher
product margin and revenues.
- Operating margin for the Company’s Asia segment increased 2.0%
to 4.8% in the fourth quarter of fiscal 2024, from 2.8% in the same
prior-year quarter, driven primarily by higher revenues, partially
offset by lower product margins and higher expenses.
- Operating margin for the Company’s Licensing segment increased
4.5% to 92.7% in the fourth quarter of fiscal 2024, from 88.2% in
the same prior-year quarter, mainly driven by the favorable impact
of lower expenses and higher royalties.
Loss on Extinguishment of Debt. In January 2024, the
Company issued approximately $64.8 million principal amount of
additional convertible senior notes due April 2028 (the “Additional
2028 Notes”) in exchange for approximately $67.1 million of its
outstanding convertible senior notes due April 2024 (the “2024
Notes”). The Additional 2028 Notes have the same terms, constitute
a single series with, and have the same CUSIP number as the
currently outstanding convertible senior notes due April 2028 (the
“Initial 2028 Notes”, and together with the Additional 2028 Notes,
the “2028 Notes”; collectively with the 2024 Notes, the “Notes”).
Immediately following the closing of these transactions,
approximately $48.1 million of the 2024 Notes remained outstanding
and classified within current liabilities. As a result of these
transactions, the Company recognized a $4.7 million loss on
extinguishment of debt during the fourth quarter of fiscal
2024.
Other income, net. Other income, net for the fourth
quarter of fiscal 2024 was $13.2 million compared to $0.9 million
for the same prior-year quarter. The change was primarily due to
lower net unrealized losses from foreign exchange currency
contracts compared to the same prior-year quarter and a realized
gain on sale of other assets.
Full Year Fiscal 2024
Results
For fiscal 2024, the Company recorded GAAP net earnings of
$198.2 million, a 32% increase from $149.6 million for fiscal 2023.
The results for fiscal 2024 included a net positive impact of $26.9
million from discrete tax adjustments related primarily to the
consolidation of certain business functions into Switzerland. GAAP
diluted EPS increased 42% to $3.09 for fiscal 2024, compared to
$2.18 during fiscal 2023. The Company estimates a positive impact
from its share buybacks of $0.19 and a negative impact from
currency of $0.02 on GAAP diluted EPS for fiscal 2024 when compared
to fiscal 2023. The Company’s fiscal 2024 results included 53
weeks, while fiscal 2023 results included 52 weeks.
For fiscal 2024, the Company recorded adjusted net earnings of
$174.0 million, an 8% increase from $161.1 million for fiscal 2023.
Adjusted diluted EPS increased 15% to $3.14, compared to $2.74 for
fiscal 2023. The Company estimates its share buybacks had a
positive impact of $0.23 and currency had a negative impact of
$0.04 on adjusted diluted EPS during fiscal 2024 when compared to
fiscal 2023.
Net Revenue. Total net revenue for fiscal 2024 increased
3% to $2.78 billion, from $2.69 billion in fiscal 2023. In constant
currency, net revenue also increased by 3%, driven by the favorable
impact on revenue from the additional week in the current year.
- Europe revenues increased 7% in both U.S. dollars and constant
currency. Retail comparable sales (including e-commerce) increased
9% in both U.S. dollars and constant currency. The inclusion of our
e-commerce sales negatively impacted the retail comparable sales
percentage by 2% in U.S. dollars and 3% in constant currency.
- Americas Retail revenues decreased 6% in U.S. dollars and 7% in
constant currency. Retail comparable sales (including e-commerce)
decreased 5% in U.S. dollars and 6% constant currency. The
inclusion of our e-commerce sales had a minimal impact on the
retail comparable sales percentage in both U.S. dollars and
constant currency.
- Americas Wholesale revenues decreased 3% in U.S. dollars and 6%
in constant currency.
- Asia revenues increased 16% in U.S. dollars and 18% in constant
currency. Retail comparable sales (including e-commerce) decreased
2% in U.S. dollars and increased 1% in constant currency. The
inclusion of our e-commerce sales positively impacted the retail
comparable sales percentage by 2% in both U.S. dollars and constant
currency.
- Licensing revenues increased 9% in both U.S. dollars and
constant currency.
Earnings from Operations. GAAP earnings from operations
for fiscal 2024 increased by 6% to $263.3 million (including $6.9
million in non-cash impairment charges taken on certain long-lived
store related assets, $1.7 million net gains on lease modifications
and a $2.5 million unfavorable currency translation impact), from
$248.2 million (including $9.5 million in non-cash impairment
charges taken on certain long-lived store related assets and $2.3
million net gains on lease modifications) in fiscal 2023. GAAP
operating margin in fiscal 2024 increased 0.3% to 9.5%, from 9.2%
in fiscal 2023, driven primarily by higher initial markups and the
favorable impact of business mix and higher revenues, partially
offset by higher expenses, unfavorable currency impact and lower
government subsidies. The negative impact of currency on operating
margin for fiscal 2024 was approximately 100 basis points.
For fiscal 2024, adjusted earnings from operations decreased
3.0% to $255.0 million, from $262.9 million in fiscal 2023.
Adjusted operating margin decreased 0.6% to 9.2% for fiscal 2024,
from 9.8% in fiscal 2023, driven primarily by higher expenses,
including higher store costs and performance-based compensation,
unfavorable currency impact and lower government subsidies,
partially offset by higher initial markups and the favorable impact
of business mix and higher revenues.
- Operating margin for the Company’s Europe segment in fiscal
2024 remained relatively flat from fiscal 2023 at 11.6%, driven
primarily by higher initial markups and the favorable impact of
higher revenues, offset by the unfavorable impact of currency,
higher expenses and lower government subsidies compared to the
prior year.
- Operating margin for the Company’s Americas Retail segment
decreased 3.5% to 8.0% in fiscal 2024, from 11.5% in fiscal 2023,
driven primarily by the unfavorable impact from lower revenues,
higher expenses and higher markdowns.
- Operating margin for the Company’s Americas Wholesale segment
increased 4.8% to 27.2% in fiscal 2024, from 22.4% in fiscal 2023,
driven primarily by higher product margin, partially offset by
higher expenses.
- Operating margin for the Company’s Asia segment increased 4.9%
to 2.9% in fiscal 2024, from negative 2.0% in fiscal 2023, driven
primarily by the favorable impact of higher revenues, partially
offset by higher expenses.
- Operating margin for the Company’s Licensing segment increased
4.2% to 93.3% in fiscal 2024, from 89.1% in fiscal 2023, mainly due
to the favorable impact of lower expenses and higher
royalties.
Loss on Extinguishment of Debt. In April 2023, the
Company issued $275 million principal amount of Initial 2028 Notes
in privately negotiated exchange and subscription agreements with a
limited number of holders of its 2024 Notes and certain other
investors. As part of these April transactions, the Company
exchanged approximately $184.9 million of its 2024 Notes for
approximately $163.0 million of Initial 2028 Notes and
approximately $33.3 million in cash, and issued $112.0 million of
Initial 2028 Notes. Immediately following the closing of these
April transactions, approximately $115.0 million of the 2024 Notes
remained outstanding and classified within current liabilities. As
a result of these April transactions, the Company recognized a $7.7
million loss on extinguishment of debt during the first quarter of
fiscal 2024.
In January 2024, the Company issued approximately $64.8 million
principal amount of Additional 2028 Notes in exchange for
approximately $67.1 million of its outstanding 2024 Notes. The
Additional 2028 Notes have the same terms, constitute a single
series with, and have the same CUSIP number as the Initial 2028
Notes. Immediately following the closing of these January
transactions, approximately $48.1 million of the 2024 Notes
remained outstanding and classified within current liabilities. As
a result of these January transactions, the Company recognized a
$4.7 million loss on extinguishment of debt during the fourth
quarter of fiscal 2024.
Other expense, net. Other expense, net for fiscal 2024
was $5.1 million compared to $39.8 million in fiscal 2023. The
change was primarily due to lower net realized and unrealized
losses from foreign currency exposures and, to a lesser extent, net
unrealized gains compared to net unrealized losses on the Company’s
SERP-related assets and foreign exchange currency contracts
compared to fiscal 2023.
Outlook
The Company’s expectations for the first quarter and full fiscal
year 2025, which include projected rag & bone results
subsequent to the expected closing of the transaction in the first
quarter of fiscal 2025, are as follows:
Outlook for Total
Company1
First Quarter of Fiscal
2025
Fiscal 2025
Consolidated net revenue in U.S.
dollars
increase between 1.0% and
2.0%
increase between 11.5% and
13.5%
GAAP operating margin
(3.5)% to (3.0)%
7.4% to 8.4%
Adjusted operating margin
(2.8)% to (2.3)%
7.5% to 8.5%
GAAP diluted earnings (loss) per share
$(0.50) to $(0.46)
$2.08 to $2.43
Adjusted diluted earnings (loss) per
share
$(0.41) to $(0.37)
$2.56 to $3.00
________________________________________________________
See end of release for footnotes
A reconciliation of the Company’s outlook for GAAP operating
margin to adjusted operating margin and GAAP diluted earnings
(loss) per share to adjusted diluted earnings (loss) per share for
the first quarter and full fiscal year 2025 is as follows:
Reconciliation of GAAP Outlook
to Adjusted Outlook1
First Quarter of Fiscal
2025
Fiscal 2025
GAAP operating margin
(3.5)% to (3.0)%
7.4% to 8.4%
Transaction costs2
0.7%
0.1%
Adjusted operating margin
(2.8)% to (2.3)%
7.5% to 8.5%
GAAP diluted earnings (loss) per share
$(0.50) to $(0.46)
$2.08 to $2.43
Transaction costs2
0.08
0.05
Amortization of debt discount2
0.01
0.03
Convertible notes if-converted method2
—
0.40 to 0.49
Adjusted diluted earnings (loss) per
share
$(0.41) to $(0.37)
$2.56 to $3.00
________________________________________________________
See end of release for footnotes
The Company’s expectations of the high-end for the free cash
flow outlook for the full fiscal year 2025 are as follows (in
millions):
Free Cash Flow Outlook for
Total Company1
Fiscal 2025
Net cash provided by operating
activities
$260
Less: Purchases of property and
equipment
(90)
Less: Payments for property and equipment
under finance leases
(10)
Free cash flow
$160
________________________________________________________
See end of release for footnotes
Dividends
The Company’s Board of Directors has approved a special cash
dividend of $2.25 per share on the Company’s common stock and a
quarterly cash dividend of $0.30 per share on the Company’s common
stock. Both dividends will be payable on May 3, 2024 to
shareholders of record as of the close of business on April 17,
2024.
Share Repurchases
During April 2023, in connection with the exchange and
subscription offering related to the 2024 Notes and the 2028 Notes,
the Company repurchased approximately 2.2 million shares of its
common stock for $42.5 million through broker-assisted market
transactions, pursuant to the Company’s 2021 Share Repurchase
Program, leaving a capacity of $19.7 million under its previously
announced share repurchase program. During January 2024, in
connection with the additional exchange and subscription offering
related to the 2024 Notes and the 2028 Notes, the Company
repurchased approximately 0.9 million shares of its common stock
for $21.1 million through broker-assisted market transactions under
its 2021 Share Repurchase Program. The Board of Directors expanded
its repurchase authorization by $1.4 million to cover the January
2024 repurchase transactions. As of February 3, 2024, the Company
had no remaining authority under the 2021 Share Repurchase Program
to purchase its common stock.
Presentation of Non-GAAP
Information
The financial information presented in this release includes
non-GAAP financial measures, such as adjusted results and outlook,
constant currency financial information and free cash flows. The
adjusted measures exclude the impact of certain professional
service and legal fees and related (credits) costs, transaction
costs in connection with the Company’s acquisition of rag &
bone, asset impairment charges, net (gains) losses on lease
modifications, loss on extinguishment of debt, non-cash
amortization of debt discount of the Company’s convertible senior
notes, fair value remeasurement of derivatives related to the
Additional 2028 Notes and convertible note hedge transactions, the
related income tax effects of the foregoing items and the impact
from certain discrete income tax adjustments related primarily to
the consolidation of certain business functions into Switzerland
and, to a lesser extent, adjustments from an intra-entity transfer
of intellectual property rights from certain U.S. entities to a
wholly-owned Swiss subsidiary and the impact from changes in the
income tax law in certain tax jurisdictions, in each case where
applicable. The weighted average diluted shares outstanding used
for adjusted diluted EPS excludes the dilutive impact of the Notes,
based on the bond hedge contracts in place. These non-GAAP measures
are provided in addition to, and not as alternatives for, the
Company’s reported GAAP results and outlook.
The Company has excluded these items from its adjusted financial
measures primarily because it believes these items are not
indicative of the underlying performance of its business and the
adjusted financial information provided is useful for investors to
evaluate the comparability of the Company’s operating results and
its future outlook (when reviewed in conjunction with the Company’s
GAAP financial statements and GAAP future outlook). A
reconciliation of reported GAAP results and outlook to comparable
non-GAAP results and outlook is provided in the accompanying
tables.
This release includes certain constant currency financial
information. Foreign currency exchange rate fluctuations affect the
amount reported from translating the Company’s foreign revenue,
expenses and balance sheet amounts into U.S. dollars. These rate
fluctuations can have a significant effect on reported operating
results under GAAP. The Company provides constant currency
information to enhance the visibility of underlying business
trends, excluding the effects of changes in foreign currency
translation rates. To calculate net revenue and earnings (loss)
from operations on a constant currency basis, actual or forecasted
results for the current-year period are translated into U.S.
dollars at the average exchange rates in effect during the
comparable period of the prior year. The constant currency
calculations do not adjust for the impact of revaluing specific
transactions denominated in a currency different from the
functional currency of that entity when exchange rates fluctuate.
However, in calculating the estimated impact of currency on our
earnings (loss) per share for our actual or forecasted results, the
Company estimates gross margin (including the impact of
merchandise-related hedges) and expenses using the appropriate
prior-year rates, translates the estimated foreign earnings at the
comparable prior-year rates, and considers the year-over-year
earnings impact of gains or losses arising from balance sheet
remeasurement and foreign currency contracts not designated as
merchandise hedges. The constant currency information presented may
not be comparable to similarly titled measures reported by other
companies.
The Company includes information regarding its free cash flows
in this release. The Company calculates free cash flows as cash
flows from operating activities less (i) purchases of property and
equipment and (ii) payments for property and equipment under
finance leases. Free cash flows are not intended to be an
alternative to cash flows from operating activities as a measure of
liquidity, but rather to provide additional visibility to investors
regarding how much cash is generated for discretionary and
non-discretionary items after deducting purchases of property and
equipment and payments for property and equipment under finance
leases. Free cash flow information presented may not be comparable
to similarly titled measures reported by other companies. A
reconciliation of reported and expected GAAP cash flows from
operating activities to the comparable non-GAAP free cash flow
measure is provided in the accompanying tables.
Investor Conference Call
The Company will hold a conference call at 4:45 pm (ET) on March
20, 2024 to discuss the news announced in this press release. A
live webcast of the conference call will be accessible at
www.guess.com via the “Investor Relations” link. The webcast will
be archived on the website for 30 days.
About Guess?
Guess?, Inc. designs, markets, distributes and licenses a
lifestyle collection of contemporary apparel, denim, handbags,
watches, eyewear, footwear and other related consumer products.
Guess? products are distributed through branded Guess? stores as
well as better department and specialty stores around the world. As
of February 3, 2024, the Company directly operated 1,002 retail
stores in Europe, the Americas and Asia. The Company’s partners and
distributors operated 551 additional retail stores worldwide. As of
February 3, 2024, the Company and its partners and distributors
operated in approximately 100 countries worldwide. For more
information about the Company, please visit www.guess.com.
Forward-Looking
Statements
Except for historical information contained herein, certain
matters discussed in this press release or the related conference
call and webcast, including statements concerning the Company’s
expectations, goals, future prospects, and current business
strategies and strategic initiatives; statements concerning the
Company’s planned acquisition of rag & bone; statements
concerning the impacts of the ongoing conflicts in Ukraine and Gaza
and other events impacting the markets in which we operate;
statements concerning the Company’s future outlook, including with
respect to the first quarter and full year of fiscal 2025; and
statements expressing optimism or pessimism about future operating
results and growth opportunities are forward-looking statements
that are made pursuant to the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995. All statements other than
statements of historical fact are forward-looking statements.
Forward-looking statements, which are frequently indicated by terms
such as “expect,” “could,” “will,” “should,” “goal,” “strategy,”
“believe,” “estimate,” “continue,” “outlook,” “plan,” “create,”
“see,” and similar terms, are only expectations, and involve known
and unknown risks and uncertainties, which may cause actual results
in future periods to differ materially from what is currently
anticipated.
Factors which may cause actual results in future periods to
differ materially from current expectations include, among others:
our ability to maintain our brand image and reputation; changes in
consumer confidence or discretionary consumer spending; sanctions
and export controls targeting Russia and other impacts related to
the war in Ukraine; impacts related to the Israel-Hamas war;
impacts related to public health crises; risks relating to our
indebtedness; changes to estimates related to impairments,
inventory and other reserves; changes in the competitive
marketplace and in our commercial relationships; our ability to
anticipate and adapt to changing consumer preferences and trends;
our ability to manage our inventory commensurate with customer
demand; the high concentration of our Americas Wholesale business;
risks related to the costs and timely delivery of merchandise to
our distribution facilities, stores and wholesale customers,
including risks related to the current Red Sea supply chain crisis;
unexpected or unseasonable weather conditions, catastrophic events
or natural disasters; our ability to effectively operate our
various retail concepts; our ability to successfully and/or timely
implement our growth strategies and other strategic initiatives;
our ability to complete or integrate planned acquisitions or
alliances; uncertainties regarding our ability to realize
operational efficiencies and other anticipated synergies, expansion
plans and other benefits from the rag & bone acquisition in the
timeframe expected or at all; our ability to successfully enhance
our global omni-channel capabilities; our ability to expand
internationally and operate in regions where we have less
experience; risks relating to our convertible senior notes,
including our ability to settle the liabilities in cash;
disruptions at our distribution facilities, including potential
challenges related to the conversion of our self-operated U.S.
distribution center to a third-party provider; our ability to
attract and retain management and other key personnel; obligations
or changes in estimates arising from new or existing litigation,
income tax and other regulatory proceedings; errors in our
assumptions, estimates and judgments related to tax matters;
changes in U.S. or foreign income tax or tariff policy, including
changes to tariffs on imports into the U.S.; accounting adjustments
to our unaudited financial statements; future non-cash asset
impairments, including goodwill, right-of-use lease assets and/or
other store asset impairments; violations of, or changes to,
domestic or international laws and regulations; risks associated
with the acts or omissions of our licensees and third party
vendors, including a failure to comply with our vendor code of
conduct or other policies; risks associated with cyber-security
incidents and other cyber-security risks; risks associated with our
ability to properly collect, use, manage and secure consumer and
employee data; risks associated with our vendors’ ability to
maintain the strength and security of information systems; changes
in economic, political, social and other conditions affecting our
foreign operations and sourcing, including the impact of currency
fluctuations, global income tax rates and economic and market
conditions in the various countries in which we operate; impacts of
inflation and further inflationary pressures; fluctuations in
quarterly performance; slowing in-person customer traffic;
increases in labor costs; increases in wages; risks relating to
activist investor activity; and the significant voting power of our
founders.
In addition to these factors, the economic, technological,
managerial, and other risks identified in the Company’s most recent
annual report on Form 10-K and other filings with the Securities
and Exchange Commission, including but not limited to the risk
factors discussed therein, could cause actual results to differ
materially from current expectations. The Company undertakes no
obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events
or otherwise.
Guess?, Inc. and
Subsidiaries
Condensed Consolidated
Statements of Income
(amounts in thousands, except per
share data)
Three Months Ended
Fiscal Year Ended
February 3, 2024
January 28, 2023
February 3, 2024
January 28, 2023
Product sales
$
862,746
96.8
%
$
793,262
97.0
%
$
2,663,282
95.9
%
$
2,583,913
96.2
%
Net royalties
28,304
3.2
%
24,522
3.0
%
113,248
4.1
%
103,437
3.8
%
Net revenue
891,050
100.0
%
817,784
100.0
%
2,776,530
100.0
%
2,687,350
100.0
%
Cost of product sales
486,068
54.6
%
456,058
55.8
%
1,553,950
56.0
%
1,538,603
57.3
%
Gross profit
404,982
45.4
%
361,726
44.2
%
1,222,580
44.0
%
1,148,747
42.7
%
Selling, general and administrative
expenses
259,330
29.1
%
254,496
31.1
%
954,078
34.4
%
893,297
33.2
%
Asset impairment charges
594
0.0
%
4,292
0.5
%
6,887
0.2
%
9,544
0.4
%
Net (gains) losses on lease
modifications
232
0.0
%
(613
)
(0.1
%)
(1,662
)
(0.1
%)
(2,267
)
(0.1
%)
Earnings from operations
144,826
16.3
%
103,551
12.7
%
263,277
9.5
%
248,173
9.2
%
Other income (expense):
Interest expense
(5,933
)
(0.7
%)
(3,449
)
(0.5
%)
(21,816
)
(0.8
%)
(13,190
)
(0.5
%)
Interest income
3,543
0.4
%
1,256
0.2
%
12,100
0.4
%
2,885
0.1
%
Loss on extinguishment of debt
(4,655
)
(0.5
%)
—
—
%
(12,351
)
(0.4
%)
—
—
%
Other, net
13,152
1.4
%
894
0.1
%
(5,075
)
(0.2
%)
(39,822
)
(1.4
%)
Earnings before income tax expense
150,933
16.9
%
102,252
12.5
%
236,135
8.5
%
198,046
7.4
%
Income tax expense
30,788
3.4
%
3,759
0.5
%
25,418
0.9
%
36,502
1.4
%
Net earnings
120,145
13.5
%
98,493
12.0
%
210,717
7.6
%
161,544
6.0
%
Net earnings attributable to
noncontrolling interests
4,875
0.6
%
2,650
0.3
%
12,518
0.5
%
11,934
0.4
%
Net earnings attributable to Guess?,
Inc.
$
115,270
12.9
%
$
95,843
11.7
%
$
198,199
7.1
%
$
149,610
5.6
%
Net earnings per common share attributable
to common stockholders:
Basic
$
2.15
$
1.75
$
3.67
$
2.62
Diluted
$
1.71
$
1.42
$
3.09
$
2.18
Weighted average common shares outstanding
attributable to common stockholders:
Basic
52,990
54,036
53,329
56,484
Diluted
68,600
67,887
69,782
70,087
Effective income tax rate
20.4
%
3.7
%
10.8
%
18.4
%
Adjusted selling, general and
administrative expenses3:
$
274,759
30.8
%
$
254,197
31.1
%
$
967,546
34.8
%
$
885,813
33.0
%
Adjusted earnings from operations3:
$
130,223
14.6
%
$
107,529
13.1
%
$
255,034
9.2
%
$
262,934
9.8
%
Adjusted net earnings attributable to
Guess?, Inc.3:
$
110,805
12.4
%
$
98,200
12.0
%
$
174,036
6.3
%
$
161,056
6.0
%
Adjusted weighted average common shares
outstanding attributable to common stockholders:
Adjusted Diluted3,4
54,580
55,923
54,661
58,123
Adjusted net earnings per common share
attributable to common stockholders:
Adjusted Diluted3,4
$
2.01
$
1.74
$
3.14
$
2.74
Adjusted effective income tax rate3:
17.5
%
5.1
%
22.2
%
18.7
%
________________________________________________________
See end of release for footnotes
Guess?, Inc. and
Subsidiaries
Reconciliation of GAAP Results
to Adjusted Results
(dollars in thousands)
The reconciliations of (i) reported GAAP selling, general and
administrative expenses to adjusted selling, general and
administrative expenses, (ii) reported GAAP earnings from
operations to adjusted earnings from operations, (iii) reported
GAAP net earnings attributable to Guess?, Inc. to adjusted net
earnings attributable to Guess?, Inc., (iv) reported GAAP income
tax expense to adjusted income tax expense, and (v) reported GAAP
diluted EPS to adjusted diluted EPS are as follows:
Three Months Ended
Fiscal Year Ended
February 3, 2024
January 28, 2023
February 3, 2024
January 28, 2023
Reported GAAP selling, general and
administrative expenses
$
259,330
$
254,496
$
954,078
$
893,297
Certain professional service and legal
fees and related credits (costs)5
15,994
(299
)
14,033
(7,484
)
Transaction costs6
(565
)
—
(565
)
—
Adjusted selling, general and
administrative expenses3
$
274,759
$
254,197
$
967,546
$
885,813
Reported GAAP earnings from operations
$
144,826
$
103,551
$
263,277
$
248,173
Certain professional service and legal
fees and related (credits) costs5
(15,994
)
299
(14,033
)
7,484
Transaction costs6
565
—
565
—
Asset impairment charges7
594
4,292
6,887
9,544
Net (gains) losses on lease
modifications8
232
(613
)
(1,662
)
(2,267
)
Adjusted earnings from
operations3
$
130,223
$
107,529
$
255,034
$
262,934
Reported GAAP net earnings attributable to
Guess?, Inc.
$
115,270
$
95,843
$
198,199
$
149,610
Certain professional service and legal
fees and related (credits) costs5
(15,994
)
299
(14,033
)
7,484
Transaction costs6
565
—
565
—
Asset impairment charges7
594
4,292
6,887
9,544
Net (gains) losses on lease
modifications8
232
(613
)
(1,662
)
(2,267
)
Loss on extinguishment of debt9
4,655
—
12,351
—
Amortization of debt discount10
271
—
622
—
Fair value remeasurement of
derivatives11
(998
)
—
(998
)
—
Discrete income tax adjustments12
3,815
(492
)
(26,854
)
132
Income tax impact from adjustments13
2,395
(1,129
)
(1,041
)
(3,447
)
Total adjustments affecting net earnings
attributable to Guess?, Inc.
(4,465
)
2,357
(24,163
)
11,446
Adjusted net earnings attributable to
Guess?, Inc.3
$
110,805
$
98,200
$
174,036
$
161,056
Reported GAAP income tax expense
$
30,788
$
3,759
$
25,418
$
36,502
Discrete income tax adjustments12
(3,815
)
492
26,854
(132
)
Income tax impact from adjustments13
(2,395
)
1,129
1,041
3,447
Adjusted income tax expense3
$
24,578
$
5,380
$
53,313
$
39,817
Adjusted effective income tax
rate3
17.5
%
5.1
%
22.2
%
18.7
%
Reported GAAP diluted EPS
$
1.71
$
1.42
$
3.09
$
2.18
Convertible notes if-converted method4
0.36
0.29
0.39
0.40
Certain professional service and legal
fees and related (credits) costs5,14
(0.18
)
0.00
(0.15
)
0.08
Transaction costs6,14
0.01
—
0.01
—
Asset impairment charges7,14
0.01
0.05
0.07
0.11
Net (gains) losses on lease
modifications8,14
0.00
(0.01
)
(0.02
)
(0.03
)
Loss on extinguishment of debt9,14
0.05
—
0.13
—
Amortization of debt discount10,14
0.00
—
0.01
—
Fair value remeasurement of
derivatives11,14
(0.01
)
—
(0.01
)
—
Discrete income tax adjustments12
0.06
(0.01
)
(0.38
)
0.00
Adjusted diluted EPS3,4
$
2.01
$
1.74
$
3.14
$
2.74
________________________________________________________
See end of release for footnotes
Guess?, Inc. and
Subsidiaries
Consolidated Segment
Data
(dollars in thousands)
Three Months Ended
Fiscal Year Ended
February 3, 2024
January 28, 2023
% change
February 3, 2024
January 28, 2023
% change
Net revenue:
Europe
$
484,623
$
444,320
9
%
$
1,475,604
$
1,380,790
7
%
Americas Retail
245,924
244,357
1
%
710,908
758,100
(6
%)
Americas Wholesale
49,542
34,475
44
%
199,903
206,208
(3
%)
Asia
82,657
70,110
18
%
276,867
238,815
16
%
Licensing
28,304
24,522
15
%
113,248
103,437
9
%
Total net revenue
$
891,050
$
817,784
9
%
$
2,776,530
$
2,687,350
3
%
Earnings (loss) from operations:
Europe
$
87,382
$
70,979
23
%
$
171,726
$
159,629
8
%
Americas Retail
36,769
37,632
(2
%)
56,829
87,184
(35
%)
Americas Wholesale
14,139
7,198
96
%
54,403
46,266
18
%
Asia
3,970
1,981
100
%
7,897
(4,811
)
(264
%)
Licensing
26,230
21,618
21
%
105,649
92,117
15
%
Total segment earnings from operations
168,490
139,408
21
%
396,504
380,385
4
%
Corporate overhead
(22,838
)
(32,178
)
(29
%)
(128,002
)
(124,935
)
2
%
Asset impairment charges
(594
)
(4,292
)
(86
%)
(6,887
)
(9,544
)
(28
%)
Net gains (losses) on lease
modifications
(232
)
613
(138
%)
1,662
2,267
(27
%)
Total earnings from operations
$
144,826
$
103,551
40
%
$
263,277
$
248,173
6
%
Operating margins:
Europe
18.0
%
16.0
%
11.6
%
11.6
%
Americas Retail
15.0
%
15.4
%
8.0
%
11.5
%
Americas Wholesale
28.5
%
20.9
%
27.2
%
22.4
%
Asia
4.8
%
2.8
%
2.9
%
(2.0
%)
Licensing
92.7
%
88.2
%
93.3
%
89.1
%
GAAP operating margin for total
Company
16.3
%
12.7
%
9.5
%
9.2
%
Certain professional service and legal
fees and related (credits) costs3,5
(1.8
%)
0.0
%
(0.4
%)
0.3
%
Transaction costs3,6
0.1
%
—
%
0.0
%
—
%
Asset impairment charges3,7
0.0
%
0.5
%
0.2
%
0.4
%
Net (gains) losses on lease
modifications3,8
0.0
%
(0.1
%)
(0.1
%)
(0.1
%)
Adjusted operating margin for total
Company3
14.6
%
13.1
%
9.2
%
9.8
%
________________________________________________________
See end of release for footnotes
Guess?, Inc. and
Subsidiaries
Constant Currency Financial
Measures
(dollars in thousands)
As Reported
Foreign Currency
Impact
Constant Currency
As Reported
As Reported
Constant Currency
February 3, 2024
January 28, 2023
Three Months Ended
% change
Net revenue:
Europe
$
484,623
$
2,311
$
486,934
$
444,320
9
%
10
%
Americas Retail
245,924
(2,401
)
243,523
244,357
1
%
(0
%)
Americas Wholesale
49,542
(1,680
)
47,862
34,475
44
%
39
%
Asia
82,657
1,108
83,765
70,110
18
%
19
%
Licensing
28,304
—
28,304
24,522
15
%
15
%
Total net revenue
$
891,050
$
(662
)
$
890,388
$
817,784
9
%
9
%
Fiscal Year Ended
Net revenue:
Europe
$
1,475,604
$
3,022
$
1,478,626
$
1,380,790
7
%
7
%
Americas Retail
710,908
(3,322
)
707,586
758,100
(6
%)
(7
%)
Americas Wholesale
199,903
(6,434
)
193,469
206,208
(3
%)
(6
%)
Asia
276,867
5,634
282,501
238,815
16
%
18
%
Licensing
113,248
—
113,248
103,437
9
%
9
%
Total net revenue
$
2,776,530
$
(1,100
)
$
2,775,430
$
2,687,350
3
%
3
%
Guess?, Inc. and
Subsidiaries
Selected Condensed
Consolidated Balance Sheet Data
(in thousands)
February 3,
2024
January 28,
2023
ASSETS
Cash and cash equivalents
$
360,285
$
275,765
Receivables, net
314,769
341,939
Inventories
466,297
510,899
Other current assets
84,122
83,102
Property and equipment, net
246,648
240,355
Operating lease right-of-use assets
667,031
636,148
Other assets
450,869
337,240
Total assets
$
2,590,021
$
2,425,448
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current portion of borrowings and finance
lease obligations
$
40,781
$
40,380
Current operating lease liabilities
166,451
170,192
Current portion of convertible senior
notes due 2024, net
48,048
—
Other current liabilities
536,277
552,480
Long-term debt and finance lease
obligations
28,210
95,921
Convertible senior notes due 2024, net
—
298,931
Convertible senior notes due 2028, net
336,717
—
Long-term operating lease liabilities
542,392
528,236
Other long-term liabilities
155,829
157,403
Redeemable and nonredeemable
noncontrolling interests
50,376
47,792
Guess?, Inc. stockholders’ equity
684,940
534,113
Total liabilities and stockholders’
equity
$
2,590,021
$
2,425,448
Guess?, Inc. and
Subsidiaries
Condensed Consolidated Cash
Flow Data
(in thousands)
Fiscal Year Ended
February 3, 2024
January 28, 2023
Net cash provided by operating
activities
$
330,381
$
169,188
Net cash used in investing activities
(75,145
)
(89,868
)
Net cash used in financing activities
(168,837
)
(217,190
)
Effect of exchange rates on cash and cash
equivalents
(1,879
)
(1,930
)
Net change in cash and cash
equivalents
84,520
(139,800
)
Cash and cash equivalents at the beginning
of the year
275,765
415,565
Cash and cash equivalents at the end of
the year
$
360,285
$
275,765
Supplemental information:
Depreciation and amortization
$
61,349
$
61,467
Total lease costs (excluding finance lease
cost)
$
318,978
$
300,488
Guess?, Inc. and
Subsidiaries
Reconciliation of Net Cash
Provided By Operating Activities to Free Cash Flow
(in thousands)
Fiscal Year Ended
February 3, 2024
January 28, 2023
Net cash provided by operating
activities
$
330,381
$
169,188
Less: Purchases of property and
equipment
(74,207
)
(89,503
)
Less: Payments for property and equipment
under finance leases
(7,752
)
(7,503
)
Free cash flow
$
248,422
$
72,182
Guess?, Inc. and
Subsidiaries
Retail Store Data
Global Store and Concession
Count
Stores
Concessions
Region
Total
Directly Operated
Partner Operated
Total
Directly Operated
Partner Operated
As of February 3, 2024
United States
231
231
—
—
—
—
Canada
53
53
—
—
—
—
Central and South America
101
72
29
29
29
—
Total Americas
385
356
29
29
29
—
Europe and the Middle East
770
543
227
57
57
—
Asia and the Pacific
398
103
295
247
134
113
Total
1,553
1,002
551
333
220
113
As of January 28, 2023
United States
240
240
—
—
—
—
Canada
62
62
—
—
—
—
Central and South America
103
69
34
29
29
—
Total Americas
405
371
34
29
29
—
Europe and the Middle East
794
560
234
54
54
—
Asia and the Pacific
409
115
294
250
129
121
Total
1,608
1,046
562
333
212
121
Guess?, Inc. and
Subsidiaries
Footnotes to Condensed
Consolidated Financial Data
Footnote:
1
The Company’s outlook for the first
quarter and full fiscal year 2025 assumes that foreign currency
exchange rates remain at recently prevailing rates.
2
Amounts for the first quarter and full
fiscal 2025 outlook exclude (i) transaction costs in connection
with the acquisition of rag & bone, (ii) the amortization of
the debt discount related to the 2028 Notes and (iii) the dilutive
impact of the Notes for adjusted diluted shares and corresponding
interest expenses at initial stock prices below $46.88 for the 2024
Notes and $41.80 for the 2028 Notes, based on the bond hedge
contracts in place that will deliver shares to offset dilution. The
Company excludes the impact anticipated to be recorded and the
diluted impact anticipated in those periods as such amounts are
reasonably estimated. The Company has not assumed any potential
share dilution due to the related warrants.
3
The adjusted results exclude certain
professional service and legal fees and related (credits) costs,
transaction costs in connection with the acquisition of rag &
bone, asset impairment charges, net (gains) losses on lease
modifications, loss on extinguishment of debt, amortization of debt
discount, fair value remeasurement of derivatives, the related
income tax impacts of these adjustments, as well as certain
discrete income tax adjustments, where applicable. The weighted
average diluted shares outstanding used for adjusted diluted EPS
excludes the dilutive impact of the Notes, based on the bond hedge
contracts in place. A reconciliation of actual results to adjusted
results is presented in the “Reconciliation of GAAP Results to
Adjusted Results.”
4
The Company excludes the dilutive impact
of the Notes at stock prices below $44.15 for the 2024 Notes and
below $41.37 for the 2028 Notes, based on the bond hedge contracts
in place that will deliver shares to offset dilution. At stock
prices in excess of $44.15 for the 2024 Notes and $41.37 for the
2028 Notes, the Company would have an obligation to deliver
additional shares in excess of the dilution protection provided by
the bond hedges.
5
Adjustments represent certain professional
service and legal fees and related (credits) costs which the
Company otherwise would not have incurred as part of its business
operations. Amounts include a net benefit of approximately $16.6
million recorded during the fourth quarter of fiscal 2024 as a
result of the settlement of the Company’s previously-disclosed
stockholder derivative lawsuit brought by the Employees Retirement
System of Rhode Island.
6
Adjustments represent transaction costs in
connection with the acquisition of rag & bone which the Company
otherwise would not have incurred as part of its business
operations.
7
Adjustments represent asset impairment
charges related primarily to impairment of property and equipment
related to certain retail locations resulting from
under-performance and expected store closures.
8
Adjustments represent net (gains) losses
on lease modifications related primarily to the early termination
of certain lease agreements.
9
Adjustments represent loss on
extinguishment of debt from a portion of the exchanged 2024 Notes
in April 2023 and January 2024.
10
In April 2023 and January 2024, the
Company issued $275 million and $65 million principal amount of
3.75% convertible senior notes due 2028 in private offerings,
respectively. The debt discount resulted from: (1) the modification
accounting for a portion of the exchanged 2024 Notes in April 2023,
and (2) recognized embedded derivative liability for the issuance
of Additional 2028 Notes in January 2024. The debt discount will be
amortized as non-cash interest expense over the term of the 2028
Notes.
11
Adjustments represent changes in fair
value of the equity-linked derivatives associated with the 2028
Notes.
12
Adjustments represent discrete income tax
items related primarily to a benefit recognized during the third
quarter of fiscal 2024 related to the consolidation of certain
business functions into Switzerland and, to a lesser extent,
adjustments from an intra-entity transfer of intellectual property
rights from certain U.S. entities to a wholly-owned Swiss
subsidiary and the impact from changes in the income tax law in
certain tax jurisdictions.
13
The income tax effect of certain
professional service and legal fees and related (credits) costs,
transaction costs in connection with the acquisition of rag &
bone, asset impairment charges, net (gains) losses on lease
modifications, loss on extinguishment of debt, amortization of debt
discount and fair value remeasurement of derivatives was based on
the Company’s assessment of deductibility using the statutory
income tax rate (inclusive of the impact of valuation allowances)
of the tax jurisdiction in which the charges were incurred.
14
Adjustments include the related income tax
effect based on the Company’s assessment of deductibility using the
statutory income tax rate (inclusive of the impact of valuation
allowances) of the tax jurisdiction in which the charges were
incurred.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240318931652/en/
Guess?, Inc. Fabrice Benarouche Senior Vice President Finance,
Investor Relations and Chief Accounting Officer (213) 765-5578
Grafico Azioni Guess (NYSE:GES)
Storico
Da Gen 2025 a Feb 2025
Grafico Azioni Guess (NYSE:GES)
Storico
Da Feb 2024 a Feb 2025
