GES — Guess', Inc.

GES Q1 2026 Earnings Call Summary

1. Key Financial Results and Metrics:

• Total Revenue: Increased by 9% to $648 million (12% in constant currency).
• Adjusted Operating Loss: $26 million, with an adjusted operating margin of -4%, an improvement over expectations.
• Adjusted Loss Per Share: $0.44, compared to $0.27 in the prior year.
• Gross Margin: 39.9%, down 200 basis points year-over-year, primarily due to a shift in business mix and increased promotional activity.
• SG&A Expenses: Increased by 11% to $285 million, largely due to the integration of rag & bone.
• Inventory: Rose 15% to $638 million, driven by proactive inventory management amid supply chain challenges.

2. Strategic Updates and Business Highlights:

• Successful integration of rag & bone contributed significantly to revenue growth, with expectations to exceed $320 million in annual sales.
• Strong performance in U.S. and European wholesale businesses, with mid-teen growth rates in Europe.
• Initiatives to improve retail productivity include a new customer loyalty program, enhanced marketing strategies, and a focus on casual apparel.
• Plans to optimize the business model by rationalizing underperforming stores and categories, particularly in North America and Asia.
• Ongoing efforts to enhance brand awareness through social media and influencer collaborations.

3. Forward Guidance and Outlook:

• Full-year revenue growth is expected to be between 5.5% and 7.4%.
• Adjusted operating margin forecasted between 4.4% and 5.1%, with adjusted EPS projected between $1.32 and $1.64.
• Anticipated second-quarter revenue growth of 2.9% to 4.7%, with a focus on organic growth from rag & bone.
• Expected improvements in retail trends in the second half of the year due to marketing and productivity initiatives.

4. Bad News, Challenges, or Points of Concern:

• Decline in retail sales in Asia, particularly in Greater China, with revenues down over 20% and ongoing efforts to contract operations in the region.
• European retail performance slightly below expectations, with a 4% decline in same-store sales due to reduced store traffic.
• Licensing revenue faced a decline, particularly in fragrances and footwear.
• Ongoing supply chain challenges and tariff impacts are being monitored, though the company expects minimal long-term effects.

5. Notable Q&A Insights:

• Rag & bone's organic growth is expected to be robust, driven by new store openings and product category expansions.
• Americas Retail showed improvement in the latter part of the quarter, with positive trends in conversion rates despite traffic challenges.
• The company is focused on balancing inventory levels and improving cash flow, with expectations to streamline operations as supply chain issues normalize.
• Questions highlighted the need for continued focus on pricing strategies and product assortment to capture market share, particularly in the Americas.

Overall, GES reported a strong start to fiscal 2026, driven by strategic initiatives and the integration of rag & bone, while also addressing challenges in certain markets and product categories. The outlook remains cautiously optimistic, with plans for continued improvement in retail productivity and profitability.