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01/10 20:10
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call summary and Q&A reveal mixed results. While there are positive aspects like revenue growth and strategic initiatives, there are significant concerns: declining gross margins, profitability issues in Asia, and a weak outlook for the Americas. Despite share repurchases and dividends, the unclear management responses and potential impacts from tariffs and currency challenges weigh negatively. The company's market cap suggests moderate sensitivity to these factors, leading to an expected stock price decline of -2% to -8%.
Revenue (Q4 2025) $932 million, up 5% year-over-year; adjusted for currencies and last year’s extra week, growth would have been 14%.
Revenue (Full Year 2025) $3 billion, up 8% in US dollars and 10% in constant currency year-over-year.
Gross Margin (Q4 2025) 44.1%, down 130 basis points year-over-year; decline mainly driven by higher markdown pressure and unfavorable currency impact.
Adjusted SG&A (Q4 2025) $305 million, up 11% year-over-year; increase reflects the addition of rag & bone infrastructure and planned increased investments in marketing and advertising.
Adjusted Operating Profit (Q4 2025) $107 million, down from previous year; adjusted operating margin of 11.4%, down 320 basis points year-over-year due to lower gross margin.
Adjusted EPS (Q4 2025) $1.48, down from $2.01 in the previous year.
Adjusted Operating Profit (Full Year 2025) $180 million; adjusted operating margin of 6%.
Cash (End of Q4 2025) $188 million, down from $360 million year-over-year; significant cash consumption due to dividends, acquisition of rag & bone, and share repurchases.
Inventory (End of Q4 2025) $563 million, up 21% year-over-year; increase mainly due to the acquisition of rag & bone.
Receivables (End of Q4 2025) $391 million, up 24% year-over-year; growth driven by the acquisition of rag & bone and overall growth in Guess wholesale businesses.
Capital Expenditures (Full Year 2025) $86 million, up from $74 million year-over-year; mainly driven by investments in store remodels, new stores, and technology.
New Product Launch: Launched a new brand Guess Jeans globally to attract a younger customer, offering an entire collection inspired by rich archives, providing affordable yet sustainable denim.
Acquisition: Completed acquisition of rag & bone with WHP Global, marking the first brand acquisition in Guess' history.
Market Expansion: Signed a partnership agreement with Tata Group to represent Guess Jeans in India, closing the year with 22 new stores in the market.
Joint Venture: Entered into a joint-venture agreement with Chalhoub Group in the Middle East to directly manage the business.
Operational Efficiency: Partnered with GXO Global in the US to manage US distribution, driving operational efficiencies.
Store Closures: Plan to reduce North American store fleet by roughly 20 stores by the end of the year.
Strategic Shift: Internalized development and distribution of outerwear and dresses businesses, previously licensed to G3.
Leadership Changes: New appointments include Alberto Toni as CFO and Lorenzo Maria Di Vecchio as General Counsel.
Supply Chain Challenges: The Red Sea crisis disrupted the flow of goods and increased shipping costs and transit times.
Economic Factors: Globally, consumers have faced significant inflationary pressures, tempering demand for discretionary products.
Retail Traffic Declines: Traffic declines into retail stores have persisted, particularly in the US and Canadian markets, resulting in a 14% constant-currency comp decline.
Currency Impact: The strength of the US dollar has negatively impacted revenues and margins.
Market Challenges in Asia: The Guess Asia business experienced revenue declines in the upper teens, particularly in South Korea and China, where retail traffic remained challenging.
Tariff Issues: The company anticipates potential impacts from newly announced US tariffs, particularly affecting the 25% of business conducted in the US.
Profitability Concerns: The company expects to lose approximately $20 million from its Greater China business this year and plans to transition this business to a third party.
Store Closures: The company plans to reduce its North American store fleet by roughly 20 stores by the end of the year.
Acquisition of rag & bone: Completed acquisition of rag & bone with WHP Global, marking the first brand acquisition in Guess' history.
New Brand Launch: Launched Guess Jeans globally to attract younger customers with a sustainable denim collection.
Partnership with Tata Group: Signed a partnership agreement to represent Guess Jeans in India, expanding brand awareness and distribution.
Store Expansion in India: Closed the year with 22 new stores in India.
Renewed Handbag License: Renewed Guess handbag license with Signal until 2039, securing favorable terms.
Joint-Venture Agreement: Entered into a joint-venture agreement with Chalhoub Group for the Middle East.
Infrastructure Optimization: Internalized development and distribution of outerwear and dresses previously licensed to G3.
Distribution Management: Partnered with GXO Global to manage US distribution for operational efficiencies.
Store Closures: Plan to reduce North American store fleet by roughly 20 stores by year-end.
New Store Concept Development: Developing a new store concept to optimize product offerings and customer experience.
Revenue Growth Guidance: Expecting revenue growth in the range of 3.9% to 6.2% for fiscal year 2026.
Adjusted Operating Margin Guidance: Expecting adjusted operating margin between 4.5% and 5.4% for fiscal year 2026.
Adjusted EPS Guidance: Expecting adjusted earnings per share in the range of $1.32 to $1.76 for fiscal year 2026.
Free Cash Flow Guidance: Expecting free cash flow of about $55 million for fiscal year 2026.
First Quarter Revenue Growth Guidance: Expecting first quarter revenue growth in the range of 5.8% to 7.5%.
First Quarter EPS Guidance: Expecting adjusted loss per share between $0.74 and $0.65 for the first quarter.
Quarterly Cash Dividend: The Board has approved a regular quarterly cash dividend of $0.30 per share.
Share Repurchases: $61 million in share repurchases were executed during the year.
The earnings call presents a mixed picture with challenges outweighing positives. Financial performance shows revenue growth but also significant losses and declining margins. Product development and market strategy are promising with new partnerships and expansions, but competitive pressures and supply chain risks are concerning. The market strategy faces headwinds in Asia and declining store traffic. Financial health is strained by increased expenses and reduced cash position. Shareholder returns are stable with dividends and buybacks, but uncertainty in guidance and weak Q&A responses suggest a negative sentiment, likely leading to a -2% to -8% stock price decline.
The earnings call summary and Q&A reveal mixed results. While there are positive aspects like revenue growth and strategic initiatives, there are significant concerns: declining gross margins, profitability issues in Asia, and a weak outlook for the Americas. Despite share repurchases and dividends, the unclear management responses and potential impacts from tariffs and currency challenges weigh negatively. The company's market cap suggests moderate sensitivity to these factors, leading to an expected stock price decline of -2% to -8%.
The earnings call summary reveals mixed results: while Q4 revenue grew by 5%, adjusted EPS and operating profit fell short of expectations, with declining gross margins. The US dollar's strength and tariff issues pose risks, and the Greater China business is losing money. Despite positive developments like rag & bone's growth and share repurchases, the financial outlook is weak, with lower EPS guidance. The Q&A session highlighted concerns about the Americas business strategy and unclear management responses, further dampening sentiment. Given the company's small market cap, a negative stock price reaction of -2% to -8% is anticipated.
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