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Guess?, Inc. GES reported fourth-quarter fiscal 2025 results, wherein the top and bottom lines beat the Zacks Consensus Estimate. While net sales increased, earnings decreased from the year-ago period. Sales growth was primarily driven by the acquisition of rag & bone (concluded in April 2024), alongside modest gains in GES’ core operations.
The company is optimistic about growth opportunities across its core Guess brand, the newly launched Guess Jeans line and the acquisition of rag & bone. GES plans to improve overall profitability by sharpening its global direct-to-consumer strategy and streamlining business portfolio. These strategic moves are expected to contribute to a $30 million boost in operating profit by fiscal 2027.
GES’ Quarterly Performance: Key Metrics & Insights
GES posted adjusted quarterly earnings of $1.48 per share, surpassing the Zacks Consensus Estimate of $1.41. However, the bottom line declined 26.4% from $2.01 reported in the prior-year period.
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Guess?, Inc. Price, Consensus and EPS Surprise
Guess?, Inc. price-consensus-eps-surprise-chart | Guess?, Inc. Quote
Net revenues were $932.3 million, rising 4.6% year over year and surpassing the consensus mark of $899 million. On a constant-currency (cc) basis, net revenues rose 9%. The strong performance was driven by the rag & bone acquisition and positive momentum in the wholesale businesses across Europe and the Americas, and higher licensing revenues. All operating segments contributed to revenue growth, with the exception of the Asia segment, which saw a decline.
Gross margin contracted to 44.1% from 45.4% reported in the year-ago quarter. As a percentage of sales, SG&A expenses increased to 32.8% from 29.1% in the prior-year quarter.
Adjusted earnings from operations were $106.5 million, down 18.2% from $130.2 million reported in the year-ago quarter. The adjusted operating margin was 11.4%, down from 14.6% reported in the same quarter last year. This downtick was mainly caused by increased expenses, higher advertising and store-related costs, as well as the impact of newly acquired businesses. These pressures were partially offset by lower performance-based compensation.
Decoding GES’ Segmental Performance
Revenues in the Americas Retail segment rose 4% in U.S. dollars and 6% at cc. However, retail comparable sales, including e-commerce, declined 14% in U.S. dollars and 11% at cc. The operating margin in the segment was 8.9%, down 6.1% year over year. This decline was caused by the adverse effects of negative comparable sales, higher expenses and increased markdowns.
Americas Wholesale revenues soared 63% on a reported basis and 69% at cc. The segment’s operating margin fell to 12.8%, down 15.7% year over year due to the impact of newly acquired businesses and lower product margin.
The Europe segment’s revenues increased 2% on a reported basis and 7% at cc. Retail comp sales (including e-commerce) remained relatively flat on a reported basis and increased 5% at cc. The segmental operating margin was 15.4%, down 2.6% year over year, due to higher expenses and the impact of newly acquired businesses. This was partially offset by lower markdowns.
Asia revenues decreased 15% on a reported basis and 11% at cc. Retail comp sales (including e-commerce) dropped 16% and 11% on a reported basis and at cc, respectively. The operating margin in the segment was 1.3%, down 3.5% year over year. This downside was primarily due to lower product margins and reduced revenues.
Licensing revenues increased 18% on a reported basis and at cc. Segmental operating margin was 94.8% compared with 92.7% in the year-ago quarter, mainly driven by lower expenses.