Guess Inc Reports Second Quarter Fiscal 2025 Financial Results

Intellectia.AI2024-08-29

Illustration by Intellectia.AI

Guess?, Inc. Reports Second Quarter Fiscal 2025 Financial Results

Guess?, Inc. (NYSE:GES) reported financial results for the second quarter of fiscal year 2025, which ended on August 3, 2024.

Key Financial Metrics

Metric	Q2 FY2025	Q2 FY2025 (Adjusted)	Q2 FY2024	YoY Change	Wall Street Estimates
Total Revenue ($M)	733	n/a	664.5	+10.3%	729.96
GAAP Net Loss ($M)	-10.6	n/a	39.0	n/a	n/a
GAAP EPS	-0.28	n/a	0.59	n/a	n/a
Adjusted Net Earnings ($M)	n/a	23.0	39.7	-42.1%	n/a
Adjusted EPS	n/a	0.42	0.72	-41.7%	0.43

Interpretation: Guess? exceeded Wall Street's revenue expectations with a total revenue of $733 million, marking a 10.3% year-over-year increase. However, the company reported a GAAP net loss of $10.6 million and an EPS of -$0.28. Adjusted net earnings declined by 42.1% to $23 million, with an adjusted EPS of $0.42, slightly missing the consensus EPS estimate. This decline in earnings was primarily due to higher marketing expenses and the adjustment related to the rag & bone acquisition.

Segment Revenue Performance

Segment	Q2 FY2025 Revenue ($M)	Change YoY (%)	Q2 FY2025 Operating Margin (%)	Change YoY (pp)
Europe	n/a	+5%	9.8	-3.1
Americas Retail	n/a	+8%	1.5	-7.6
Americas Wholesale	n/a	+93%	18.9	-6.4
Asia	n/a	-8%	-2.3	-1.4
Licensing	n/a	+4%	93.3	-0.8

Interpretation: The Americas Wholesale segment experienced a significant boost with a 93% increase year-over-year, offsetting declines in the Asia segment where revenue fell by 8%. Europe's strong performance was tempered by higher expenses and a negative impact from currency fluctuations. Despite positive top-line growth globally, operating margins contracted across all segments, highlighting pressure from increased expenses and integrating newly acquired businesses.

Key Developments and Operational Highlights

The acquisition of fashion brand rag & bone was completed on April 2, 2024.
Significant increase in marketing investments aimed at supporting international brand expansion.
GAAP operating margin declined to 6.5%, while adjusted operating margin stood at 5.2%.

Comments from Company Officers

Carlos Alberini, CEO: "Our second quarter revenue grew by 10%, in line with our expectations. This growth was driven significantly by the rag & bone acquisition and strong performances in our Europe and Americas Wholesale segments. Increased marketing investments to support brand expansion affected our bottom-line, but we remain focused on cost management and strategic investments."

Paul Marciano, Co-Founder and CCO: "The rag & bone acquisition has been exciting, and we have started to collaborate effectively with Andrew Rosen and the team. Our strategy includes adding product categories and accelerating store openings domestically and internationally."

Dividends and Share Repurchase Program

Declared a quarterly cash dividend of $0.30 per share, payable on September 27, 2024.
Repurchased $50 million worth of shares in Q2 FY2025, leaving $139.8 million under the current share repurchase program.

Forward Guidance

Reduced full fiscal year 2025 revenue outlook, now expecting an increase between 9.5% and 11.0%.
Adjusted EPS guidance lowered to between $2.42 and $2.70.

Stock Price Movement

Following the earnings release, Guess?, Inc.'s stock declined by 4.6%.

Overall, Guess?, Inc. delivered strong revenue growth fueled by acquisitions and robust wholesale performance, but profitability was constrained due to higher expenses and a subdued consumer environment. The forward guidance reflects cautious optimism tempered by external economic factors.

The report has been organized into a clear and structured format suitable for investors.