Guess?, Inc. (GES) Announces Fiscal Year 2025 Fourth Quarter Earnings Results

Guess’, Inc. (GES) today announced its financial results for the latest quarter, revealing a mixed performance. The company reported quarterly revenue of $932.3 million, surpassing expectations and marking a positive revenue beat with a difference of $24.5 million over the estimated $907.8 million. However, Guess’ faced a setback in earnings, posting a quarterly diluted earnings per share of $1.16, which fell short of the anticipated $1.37, resulting in an earnings miss. Despite the earnings miss, the revenue beat highlights the company’s robust sales performance during the period.

Key Highlights:

• Guess?, Inc. reported a 5% increase in fourth-quarter revenue to $932 million, with a 9% increase in constant currency.
• Full fiscal year 2025 revenues reached $3.0 billion, marking an 8% increase in U.S. dollars and 10% in constant currency.
• The company expects fiscal year 2026 revenue growth between 3.9% and 6.2% in U.S. dollars.
• Guess? plans to optimize its business and portfolio, aiming to unlock approximately $30 million in operating profit by fiscal year 2027.
• The acquisition of rag & bone was completed, integrating it into Guess?'s existing segments.
• The company plans to streamline its North American operations by exiting non-strategic locations and reducing costs.
• The Americas Wholesale segment saw a significant 63% increase in net revenue for both the three months and fiscal year ended February 1, 2025.
• Adjusted net earnings per common share for the fiscal year were $3.14, compared to $3.67 in the previous year.

Summary:

Guess?, Inc. reported robust financial results for the fourth quarter and full fiscal year 2025, with a notable 5% increase in revenue to $932 million in the fourth quarter and total revenues reaching $3.0 billion for the year. This growth was significantly driven by the acquisition of rag & bone and strong performance in the Americas Wholesale segment, which saw a 63% increase in net revenue. Despite challenges in the Asia segment, the company achieved a GAAP operating margin of 11.1% and an adjusted operating margin of 11.4% for the fourth quarter. CEO Carlos Alberini emphasized the successful integration of rag & bone and the strategic focus on enhancing direct-to-consumer sales productivity and improving profitability through business optimization.

Looking forward, Guess? is optimistic about its growth prospects, projecting revenue growth between 3.9% and 6.2% for fiscal year 2026. The company plans to execute business and portfolio optimization strategies to unlock approximately $30 million in operating profit by fiscal year 2027. This includes streamlining North American operations by exiting non-strategic locations and potentially transitioning its Greater China operations to a local partner. Co-Founder Paul Marciano highlighted the company’s strong global platform and commitment to maximizing its potential in the coming years, despite a decrease in adjusted net earnings per common share from $3.67 to $3.14.

Guess’, Inc. (GES) has experienced a tumultuous year in terms of stock price, with a staggering 57.74% decline over the past year. Despite a recent 12.01% uptick in the past month, the stock has faced significant challenges, evidenced by a 39.35% drop over the last six months and a 17.60% decrease in the past three months. This volatility might be concerning for investors, but the company’s fundamentals offer a more nuanced picture. With a price-to-earnings ratio of 6.91, Guess’ appears undervalued compared to the broader market, suggesting potential for future growth. The company’s earnings per share (EPS) have grown at a modest 6.36% over the past two years, while revenue has increased by 5.20% in the same period. Notably, Guess’ free cash flow has surged by an impressive 260.27%, indicating strong cash generation capabilities. However, the net profit margin remains relatively thin at 2.63%, and the return on invested capital is modest at 7.06%, suggesting that while the company is generating cash, it may need to improve its profitability metrics to sustain long-term growth.

Guess?, Inc. designs, markets, distributes, and licenses lifestyle collections of apparel and accessories for men, women, and children. It operates through five segments: Americas Retail, Americas Wholesale, Europe, Asia, and Licensing. The company’s clothing collection includes jeans, pants, skirts, dresses, shorts, blouses, shirts, jackets, activewear, knitwear, and intimate apparel. It also grants licenses to design, manufacture, and distribute various products that complement its apparel lines, such as eyewear, watches, handbags, footwear, kids’ and infants’ apparel, outerwear, fragrance, jewelry, and other fashion accessories, as well as to wholesale partners to operate and sell products through licensed retail stores. The company markets its products under the GUESS, GUESS?, GUESS U.S.A., GUESS Jeans, GUESS? and Triangle Design, MARCIANO, Question Mark and Triangle Design, a stylized G and a stylized M, GUESS Kids, Baby GUESS, YES, G by GUESS, GUESS by MARCIANO, and Gc brand names. It sells its products through direct-to-consumer, wholesale, and licensing distribution channels. As of January 29, 2022, the company directly operated 1,068 retail stores in the Americas, Europe, and Asia. Its partner’s distributors operated an additional 563 retail stores worldwide. The company also offers its products through its retail websites. Guess?, Inc. was founded in 1981 and is headquartered in Los Angeles, California.