• Revenue: Increased 13% to $739 million.

• Gross Margin: 43.6%, consistent with expectations.

• Adjusted Operating Profit: $43 million with a margin of 5.8%.

• Adjusted Earnings Per Share (EPS): $0.34.

• European Revenue: Grew 7% to $368 million.

• Americas Wholesale Revenue: Increased 79% to $99 million.

• Asia Revenue: Increased 2% to $65 million.

• Inventory: $676 million, up 20% from last year.

• Cash: $141 million at the end of the quarter.

• Full-Year Revenue Outlook: Expected at or slightly below $3 billion, growing between 7% and 8%.

• Full-Year Adjusted EPS Outlook: Revised to a range of $1.85 to $2.00.

• Warning! GuruFocus has detected 5 Warning Sign with GES.

Release Date: November 26, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Guess? Inc (NYSE:GES) reported a 13% increase in revenues for the third quarter, reaching $739 million, driven primarily by the addition of rag & bone.

• The company delivered earnings at the high end of expectations due to improved expense management.

• European wholesale business showed a mid-single-digit sales increase, with some earlier-than-planned deliveries.

• The company experienced strong performance in the Americas wholesale business, with sales increasing by approximately 25%.

• Guess? Inc (NYSE:GES) managed expenses well during the quarter, with significant investments in marketing and advertising to build brand awareness.

Negative Points

• Revenue growth was slightly lower than expected due to a stronger US dollar.

• The core Guess business in Asia and America's retail business did not meet expectations, with store traffic under pressure.

• The company faced challenges in the European retail segment, performing at the lower end of expectations.

• Freight costs and currency fluctuations negatively impacted the company's financial outlook.

• Adjusted operating margin declined by 310 basis points to 5.8% due to lower gross margin and higher SG&A expenses.

Q & A Highlights

Q: Can you provide more details on the Q4 revenue growth expectations, particularly the impact of Europe wholesale shipments and long-term operating margin opportunities? A: Carlos Alberini, CEO, explained that Q3 was in line with expectations except for currency impacts. Early shipments in Europe contributed $10 million to Q3, affecting Q4 but included in the revised outlook. The company aims for a double-digit operating margin, achievable despite current challenges. Investments in rag & bone are expected to contribute positively over time. Dennis Secor, Interim CFO, added that Q4 growth will be driven by European wholesale and retail, with challenges in North America and Asia retail.