Guess?, Inc. ((GES)) has held its Q4 earnings call. Read on for the main highlights of the call.
The recent earnings call for Guess?, Inc. presented a balanced sentiment, showcasing notable achievements alongside significant challenges. The company reported revenue growth, strategic acquisitions, and strong performance in Europe and licensing. However, these positives were countered by difficulties in the Americas and Asia, declines in operating margins, and planned store closures.
Revenue Growth
Guess?, Inc. reported a 5% increase in revenues for the fourth quarter, reaching $932 million. When adjusted for currency fluctuations and the extra week in the previous year, this growth would have been an impressive 14%. This indicates a robust underlying performance despite external challenges.
rag & bone Acquisition
A significant contributor to Guess’s revenue growth was the acquisition of rag & bone, which accounted for 9 points of the 14% adjusted revenue growth in Q4. This strategic move highlights Guess’s focus on expanding its brand portfolio and enhancing its market presence.
Europe Wholesale Growth
Despite facing currency headwinds, Guess’s Europe wholesale segment grew by mid-single digits. The fall-winter collection order book closed with a 7% growth, underscoring the brand’s strong foothold and appeal in the European market.
Licensing Business Performance
The licensing business exceeded expectations, achieving an 18% growth in Q4. This segment’s strong performance reflects the brand’s successful partnerships and its ability to leverage its brand equity across different product categories.
New Initiatives in India
Guess signed a partnership with Tata Group, marking a significant expansion in India with 22 new stores by the end of the year. This initiative is part of Guess’s strategy to tap into emerging markets and drive international growth.
Americas Retail Decline
The Americas retail business did not meet revenue expectations, with a 14% constant-currency comp decline in the US and Canada. This decline highlights the challenges Guess faces in maintaining its market share in a competitive retail environment.
Challenges in Asia
Guess’s performance in Asia was at the lower end of expectations, with a revenue decline in the upper teens, particularly in South Korea and China. This underscores the need for strategic adjustments to better capture opportunities in these key markets.
Operating Margin Decline
The company reported an adjusted operating margin of 11.4% in Q4, which was below expectations. This decline is attributed to various factors, including increased costs and operational challenges.
Gross Margin Decrease
Guess’s gross margin fell to 44.1%, impacted by higher markdown pressure and unfavorable currency effects. This decrease highlights the ongoing pressures on profitability in the current economic climate.
North American Store Closures
Guess plans to reduce its North American store fleet by approximately 20 stores by year-end. This decision reflects the company’s strategy to optimize its retail footprint and focus on more profitable locations.
Forward-Looking Guidance
Looking ahead, Guess anticipates a revenue growth range of 3.9% to 6.2% for fiscal 2026, with an adjusted operating margin between 4.5% and 5.4%, and adjusted EPS between $1.32 and $1.76. The company expects continued growth from its acquisition of rag & bone and is focused on strategic initiatives to enhance profitability and return on invested capital.
In summary, Guess?, Inc.’s earnings call presented a mixed outlook, with strong performances in certain areas offset by challenges in others. The company is taking strategic steps to address these issues, with a focus on growth and profitability in the coming fiscal year.