Guess(GES) - 2025 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported a revenue growth of 13%, reaching $739 million, slightly below expectations due to a stronger US dollar [6][32] - Adjusted earnings per share (EPS) for the quarter was$ 0.34, compared to $0.49 in the same quarter last year [42] - Total company gross margin was 43.6%, which is 110 basis points lower than the previous year [39] Business Line Data and Key Metrics Changes - The core Guess business saw low single-digit revenue growth, while the Americas wholesale business increased by approximately 79% due to the addition of Rag & Bone [34][36] - European wholesale revenue grew by 7% in US dollars, with retail comps increasing by 8% [34] - The licensing segment's revenues were flat, despite internalizing outerwear [38] Market Data and Key Metrics Changes - In Europe, retail comps increased by 5% in constant currency, while in Asia, retail comps decreased by 16% [35][38] - The Americas retail business experienced a 14% constant currency comp decline, with an operating loss margin of 4.3% [36] - The company faced challenges in North America and Asia, with traffic headwinds impacting sales [48] Company Strategy and Development Direction - The company is focused on leveraging its platform to support the expansion of multiple brands, including Rag & Bone and Guess Jeans [17][29] - There is an emphasis on enhancing marketing capabilities and customer engagement to improve brand relevance [24][25] - The company is reevaluating pricing strategies in response to consumer sentiment and competitive pressures [9][23] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the impact of a stronger US dollar and inflation on consumer behavior, leading to adjustments in revenue expectations for the fourth quarter [15][50] - The company is optimistic about long-term growth opportunities, particularly with Rag & Bone and the Guess Jeans brand [31][62] - Management highlighted the importance of adapting to market conditions and consumer preferences to reclaim brand strength in North America [30][78] Other Important Information - The company increased marketing and advertising investments by approximately 85% compared to the previous year [12] - Inventory levels rose by 20% year-over-year, influenced by the acquisition of Rag & Bone [43] - The company expects full-year revenues to be slightly below$ 3 billion, with growth between 7% and 8% [15][51] Q&A Session Summary Question: Insights on Q4 revenue growth and operating margin opportunities - Management noted that early shipments in Europe contributed about $10 million to Q3 revenue, which would impact Q4 [58] - They expressed confidence in achieving double-digit operating margins in the long term despite current challenges [62] Question: Shift to a universal product offering and its impact - Management confirmed the success of the global product line in Europe but acknowledged challenges in the US market [75][76] - They emphasized ongoing efforts to elevate the brand and improve customer engagement through targeted marketing [79][80] Question: Response to potential tariff increases - The company is actively reducing dependency on China and exploring alternative sourcing options to mitigate tariff impacts [86]