Sequential Improvement in Sales Trends
with Q1 Fiscal 2022 Revenues of $520 Million
- Increased 100% Compared to Q1 Fiscal 2021
- Decreased 3% Compared to Q1 Fiscal 2020
- Increased 90% in Constant Currency Compared to Q1 Fiscal
2021
- Decreased 5% in Constant Currency Compared to Q1 Fiscal
2020
Operating Margin Substantially
Exceeding Pre-Pandemic Levels: Q1 Fiscal 2022 Operating Margin of
5.1% and Adjusted Operating Margin of 5.0%
- Compared to Q1 Fiscal 2021 Operating Margin of Negative
62.4% and Adjusted Operating Margin of Negative 41.7%
- Compared to Q1 Fiscal 2020 Operating Margin of Negative 4.6%
and Adjusted Operating Margin of Negative 4.2%
Q1 Fiscal 2022 Earnings per Share
(“EPS”) Positive Compared to Losses in Past Two Fiscal Years; Q1
Fiscal 2022 GAAP EPS of $0.18 and Adjusted EPS of
$0.21
- Compared to Q1 Fiscal 2021 GAAP Loss per Share of $2.40 and
Adjusted Loss per Share of $1.81
- Compared to Q1 Fiscal 2020 GAAP Loss per Share of $0.27 and
Adjusted Loss per Share of $0.25
Guess?, Inc. (NYSE: GES) today reported financial results for
its first quarter ended May 1, 2021.
Carlos Alberini, Chief Executive Officer, commented, “We are
extremely pleased with our first quarter performance, which
significantly exceeded our expectations for revenues and
profitability across all channels. We couldn’t be more proud of our
teams around the world for their strong leadership, great teamwork
and enormous effort during the last 15 challenging months. We
delivered a 5.1% operating margin for the quarter, which, compared
to the first quarter of fiscal 2020, represented an expansion of
over 900 basis points. During the quarter, our revenues contracted
3%, our gross margin expanded by nearly 700 basis points and our
SG&A rate improved by over 200 basis points. This resulted in
earnings per share of $0.18, versus a loss per share of $0.27 in
fiscal 2020.”
Paul Marciano, Co-Founder and Chief Creative Officer, added, “We
firmly believe that this strong performance is a direct result of
the transformational work we have done at the Company. This
transformation touched every area of our business, including
initiatives to elevate our brand and our product, the acceleration
of our e-commerce business, the optimization of our global
footprint and brand portfolio, the reorganization of our team
globally and the execution of significant cost reductions
throughout our operation.”
Mr. Alberini concluded, “We remain focused on executing our
strategic business plan and now believe that in the current year we
will deliver approximately 300 basis points of operating margin
expansion versus fiscal 2020 and reach an operating margin
of about 8.6%.
Furthermore, we are well on track to achieve our long-term 10%
operating margin target but now a year earlier than we anticipated.
We believe that we are at an inflection point for our Company. We
have a powerful global brand with great momentum, and I am so
thankful that Paul and I have a strong team that is highly
committed and excited to take the Company to the next level of
growth, profitability and value creation.”
Adjusted Amounts
This press release contains certain non-GAAP, or adjusted,
financial measures. References to “adjusted” results exclude the
impact of (i) asset impairment charges, (ii) net (gains) losses on
lease modifications, (iii) certain professional service, legal fees
and related net credits, (iv) certain separation charges, (v)
non-cash debt discount amortization on our convertible senior
notes, (vi) the related income tax effects of the foregoing items
as well as the impact from changes in the income tax law on
deferred taxes in certain tax jurisdictions, net income tax
settlements and adjustments to specific uncertain income tax
positions and (vii) certain discrete income tax adjustments, in
each case where applicable. A reconciliation of reported GAAP
results to comparable non-GAAP results is provided in the
accompanying tables and discussed under the heading “Presentation
of Non-GAAP Information” below.
First Quarter Fiscal 2022
Results
For the first quarter of fiscal 2022, the Company recorded GAAP
net earnings of $12.0 million, a 107.6% increase from a GAAP net
loss of $157.7 million for the first quarter of fiscal 2021. GAAP
diluted EPS increased 107.5% to $0.18 for the first quarter of
fiscal 2022, compared to a GAAP diluted loss per share of $2.40 for
the same prior-year quarter. The Company estimates a positive
impact from its share buybacks and currency of $0.01 and $0.09,
respectively, on GAAP diluted EPS in the first quarter of fiscal
2022.
For the first quarter of fiscal 2022, the Company’s adjusted net
earnings were $13.9 million, a 111.7% increase from the Company’s
adjusted net loss $118.9 million for the first quarter of fiscal
2021. Adjusted diluted EPS increased 111.6% to $0.21, compared to
the adjusted diluted loss per share of $1.81 for the same
prior-year quarter. The Company estimates its share buybacks and
currency had a positive impact of $0.01 and $0.09, respectively, on
adjusted diluted EPS in the first quarter of fiscal 2022.
Net Revenue. Total net revenue for the first quarter of
fiscal 2022 increased 99.8% to $520.0 million, from $260.3 million
in the same prior-year quarter. In constant currency, net revenue
increased by 90.3%.
- Americas Retail revenues increased 108.5% in U.S. dollars and
105.9% in constant currency. Retail comp sales including e-commerce
increased 6% in U.S. dollars and 5% in constant currency.
- Americas Wholesale revenues increased 75.6% in U.S. dollars and
71.0% in constant currency.
- Europe revenues increased 127.1% in U.S. dollars and 110.0% in
constant currency. Retail comp sales including e-commerce increased
44% in U.S. dollars and 32% in constant currency.
- Asia revenues increased 37.8% in U.S. dollars and 29.3% in
constant currency. Retail comp sales including e-commerce increased
32% in U.S. dollars and 23% in constant currency.
- Licensing revenues increased 66.4% in U.S. dollars.
Earnings (Loss) from Operations. GAAP earnings from
operations for the first quarter of fiscal 2022 increased 116.4% to
$26.6 million (including $2.1 million net gains on lease
modifications, $0.4 million in non-cash impairment charges taken on
certain long-lived store related assets and a $0.7 million
unfavorable currency translation impact), from a GAAP loss from
operations of $162.5 million in the same prior-year quarter. GAAP
operating margin in the first quarter increased 67.5% to 5.1%, from
negative 62.4% in the same prior-year quarter, driven primarily by
overall leveraging of expenses. The negative impact of currency on
operating margin for the quarter was approximately 40 basis
points.
For the first quarter of fiscal 2022, adjusted earnings from
operations increased 123.9% to $26.0 million, from an adjusted
operating loss of $108.6 million in the same prior-year quarter.
Adjusted operating margin increased 46.7% to 5.0%, from negative
41.7% in the same prior-year quarter, driven primarily by overall
leveraging of expenses.
- Operating margin for the Company’s Americas Retail segment
increased 62.2% to 13.0% in the first quarter of fiscal 2022,
compared to negative 49.2% in the same prior-year quarter, driven
primarily by leveraging of expenses as well as lower
markdowns.
- Operating margin for the Company’s Americas Wholesale segment
increased 19.1% to 25.4% in the first quarter of fiscal 2022,
compared to 6.3% in the same prior-year quarter, due mainly to
lower markdowns and leveraging of expenses.
- Operating margin for the Company’s Europe segment increased
43.4% to 1.7% in the first quarter of fiscal 2022, from negative
41.7% in the same prior-year quarter, driven primarily by overall
leveraging of expenses.
- Operating margin for the Company’s Asia segment increased 53.2%
to negative 3.2% in the first quarter of fiscal 2022, compared to
negative 56.4% in the same prior-year quarter, as the prior year’s
quarter included significant inventory reserves and the current
quarter benefited from leveraging of expenses.
- Operating margin for the Company’s Licensing segment increased
12.3% to 90.3% in the first quarter of fiscal 2022, compared to
78.0% in the same prior-year quarter, mainly due to leveraging of
expenses.
Other expense, net, was $2.7 million for the first quarter of
fiscal 2022, compared to $19.6 million in the same prior-year
quarter. The change was driven primarily by market volatility which
resulted in lower net unrealized losses on the translation of
foreign currency balances compared to higher net unrealized losses
in the quarter ended May 2, 2020.
Outlook
Given the current circumstances regarding the coronavirus (or
“COVID-19”) crisis and its uncertain impact on our operations, we
are not providing detailed guidance for the second quarter or the
full fiscal year ending January 29, 2022. We expect revenues in the
second quarter of fiscal 2022 to be down mid-single digits versus the second
quarter of fiscal 2020 as pandemic-related shutdowns and traffic
declines are partially offset by continued momentum in our global
e-commerce business. For the full fiscal year 2022, assuming no
COVID-related shutdowns past the second quarter, we expect revenues
to be down mid-single
digits versus fiscal 2020 and operating margin to reach
approximately 8.6 %. The
expectations for the full year also assume a return to a normal
cadence of product development and shipments for our European
wholesale business. These comparisons are versus the pre-pandemic
periods from two fiscal years prior in order to provide a more
normalized comparison.
COVID-19 First Quarter Business
Update
The COVID-19 pandemic is continuing to impact the Company’s
businesses. During the first quarter of fiscal 2022, the Company
experienced lower net revenue compared to the first quarter of
fiscal 2020 as it remained challenged by lower demand, temporary
store closures and capacity restrictions. In light of the current
environment, we continue to strategically manage expenses in order
to protect profitability.
In late fiscal 2021, the Company incurred a new round of
government-mandated temporary store closures, mostly in Europe. The
number of temporarily closed stores ebbed and flowed during the
first quarter of fiscal 2022 based on local conditions. The overall
impact resulted in stores being closed for less than 20% of the
total days during the first quarter of fiscal 2022, primarily in
Europe and Canada. As of May 1, 2021, 80% of our stores were open,
with the majority of closed stores located primarily in Europe and
Canada. As of May 19, 2021, nearly 95% of our stores were open.
Dividend
The Company’s Board of Directors has approved a quarterly cash
dividend of $0.1125 per share on the Company’s common stock. The
dividend will be payable on June 25, 2021 to shareholders of record
as of the close of business on June 9, 2021.
Presentation of Non-GAAP
Information
The financial information presented in this release includes
non-GAAP financial measures, such as adjusted results, constant
currency financial information and free cash flows. For the three
months ended May 1, 2021 and May 2, 2020, the adjusted results
exclude the impact of certain professional service, legal fees and
related net credits, certain separation charges, asset impairment
charges, net (gains) losses on lease modifications, non-cash
amortization of debt discount on the Company’s convertible senior
notes, the related income tax impacts of these adjustments as well
as certain discrete income tax adjustments, where applicable. These
non-GAAP measures are provided in addition to, and not as
alternatives for, the Company’s reported GAAP results.
The Company has excluded these items from its adjusted financial
measures primarily because it believes these items are not
indicative of the underlying performance of its business and the
adjusted financial information provided is useful for investors to
evaluate the comparability of the Company’s operating results and
its future outlook (when reviewed in conjunction with the Company’s
GAAP financial statements). A reconciliation of reported GAAP
results to comparable non-GAAP results is provided in the
accompanying tables.
This release also includes certain constant currency financial
information. Foreign currency exchange rate fluctuations affect the
amount reported from translating the Company’s foreign revenue,
expenses and balance sheet amounts into U.S. dollars. These rate
fluctuations can have a significant effect on reported operating
results under GAAP. The Company provides constant currency
information to enhance the visibility of underlying business
trends, excluding the effects of changes in foreign currency
translation rates. To calculate net revenue and earnings (loss)
from operations on a constant currency basis, actual or forecasted
results for the current-year period are translated into U.S.
dollars at the average exchange rates in effect during the
comparable period of the prior year. The constant currency
calculations do not adjust for the impact of revaluing specific
transactions denominated in a currency that is different from the
functional currency of that entity when exchange rates fluctuate.
However, in calculating the estimated impact of currency on our
earnings (loss) per share for our actual or forecasted results, the
Company estimates gross margin (including the impact of
merchandise-related hedges) and expenses using the appropriate
prior-year rates, translates the estimated foreign earnings at the
comparable prior-year rates, and excludes the year-over-year
earnings impact of gains or losses arising from balance sheet
remeasurement and foreign currency contracts not designated as
merchandise hedges. The constant currency information presented may
not be comparable to similarly titled measures reported by other
companies.
The Company also includes information regarding its free cash
flows in this release. The Company calculates free cash flows as
cash flows from operating activities less (i) purchases of property
and equipment and (ii) payments for property and equipment under
finance leases. Free cash flows are not intended to be an
alternative to cash flows from operating activities as a measure of
liquidity, but rather to provide additional visibility to investors
regarding how much cash is generated for discretionary and
non-discretionary items after deducting purchases of property and
equipment and payments for property and equipment under finance
leases. Free cash flow information presented may not be comparable
to similarly titled measures reported by other companies. A
reconciliation of reported GAAP cash flows from operating
activities to the comparable non-GAAP free cash flow measure is
provided in the accompanying tables.
Investor Conference Call
The Company will hold a conference call at 4:45 pm (ET) on May
27, 2021 to discuss the news announced in this press release. A
live webcast of the conference call will be accessible at
www.guess.com via the “Investor
Relations” link. The webcast will be archived on the website for 30
days.
About Guess?
Guess?, Inc. designs, markets, distributes and licenses a
lifestyle collection of contemporary apparel, denim, handbags,
watches, eyewear, footwear and other related consumer products.
Guess? products are distributed through branded Guess? stores as
well as better department and specialty stores around the world. As
of May 1, 2021, the Company directly operated 1,041 retail stores
in the Americas, Europe and Asia. The Company’s partners and
distributors operated 539 additional retail stores worldwide. As of
May 1, 2021, the Company and its partners and distributors operated
in approximately 100 countries worldwide. For more information
about the Company, please visit www.guess.com.
Forward-Looking
Statements
Except for historical information contained herein, certain
matters discussed in this press release or the related conference
call and webcast, including statements concerning the potential
actions and impacts related to the COVID-19 pandemic; statements
concerning the Company’s future outlook including with respect to
the second quarter and full year of fiscal 2022; statements
concerning the Company’s expectations, goals, future prospects,
global cost reduction opportunities, longer-term operating margin
expectations and profitability efforts, capital allocation plans,
cash needs and current business strategies and strategic
initiatives; and statements expressing optimism or pessimism about
future operating results, growth opportunities, earnings, and
operating margins are forward-looking statements that are made
pursuant to the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. Forward-looking statements, which
are frequently indicated by terms such as “expect,” “could,”
“will,” “should,” “goal,” “strategy,” “believe,” “estimate,”
“continue,” “outlook,” “plan,” “create,” “see,” and similar terms,
are only expectations, and involve known and unknown risks and
uncertainties, which may cause actual results in future periods to
differ materially from what is currently anticipated. Factors which
may cause actual results in future periods to differ materially
from current expectations include, among others: our ability to
maintain our brand image and reputation; domestic and international
economic or political conditions, including economic and other
events that could negatively impact consumer confidence and
discretionary consumer spending; the continuation or worsening of
impacts related to the COVID-19 pandemic, including business,
financial, human capital, litigation and other impacts to the
Company and its partners; our ability to successfully negotiate
rent relief or other lease-related terms with our landlords; our
ability to maintain adequate levels of liquidity; changes to
estimates related to impairments, inventory and other reserves,
including the impact of the CARES Act, which were made using the
best information available at the time; changes in the competitive
marketplace and in our commercial relationships; our ability to
anticipate and adapt to changing consumer preferences and trends;
our ability to manage our inventory commensurate with customer
demand; risks related to the timing and costs of delivering
merchandise to our stores and our wholesale customers; unexpected
or unseasonable weather conditions; our ability to effectively
operate our various retail concepts, including securing, renewing,
modifying or terminating leases for store locations; our ability to
successfully and/or timely implement our growth strategies and
other strategic initiatives; our ability to successfully implement
or update information technology systems, including enhancing our
global omni-channel capabilities; our ability to expand
internationally and operate in regions where we have less
experience, including through joint ventures; risks related to our
convertible senior notes issued in April 2019, including our
ability to settle the liability in cash; our ability to
successfully or timely implement plans for cost reductions; our
ability to effectively and efficiently manage the volume and costs
associated with our European distribution centers without incurring
shipment delays; our ability to attract and retain key personnel;
obligations or changes in estimates arising from new or existing
litigation, income tax and other regulatory proceedings; risks
related to the complexity of the Tax Reform, future clarifications
and legislative amendments thereto, as well as our ability to
accurately interpret and predict its impact on our cash flows and
financial condition; the risk of economic uncertainty associated
with the United Kingdom’s departure from the European Union
(“Brexit”) or any other similar referendums that may be held; the
occurrence of unforeseen epidemics, such as the COVID-19 pandemic;
other catastrophic events; changes in U.S. or foreign income tax or
tariff policy, including changes to tariffs on imports into the
U.S.; accounting adjustments to our unaudited financial statements
identified during the completion of our annual independent audit of
financial statements and financial controls or from subsequent
events arising after issuance of this release; risk of future
non-cash asset impairments, including goodwill, right-of-use lease
assets and/or other store asset impairments; restructuring charges;
our ability to adapt to new regulatory compliance and disclosure
obligations; risks associated with our foreign operations, such as
violations of laws prohibiting improper payments and the burdens of
complying with a variety of foreign laws and regulations (including
global data privacy regulations); risks associated with the acts or
omissions of our third party vendors, including a failure to comply
with our vendor code of conduct or other policies; risks associated
with cyber-attacks and other cyber security risks; risks associated
with our ability to properly collect, use, manage and secure
consumer and employee data; risks associated with our vendors’
ability to maintain the strength and security of information
technology systems; and changes in economic, political, social and
other conditions affecting our foreign operations and sourcing,
including the impact of currency fluctuations, global income tax
rates and economic and market conditions in the various countries
in which we operate. In addition to these factors, the economic,
technological, managerial, and other risks identified in the
Company’s most recent annual report on Form 10-K and other filings
with the Securities and Exchange Commission, including but not
limited to the risk factors discussed therein, could cause actual
results to differ materially from current expectations. The current
global economic climate, length and severity of the COVID-19
pandemic, and uncertainty surrounding potential changes in U.S.
policies and regulations may amplify many of these risks. The
Company undertakes no obligation to publicly update or revise any
forward-looking statements, whether as a result of new information,
future events or otherwise.
Guess?, Inc. and
Subsidiaries
Condensed Consolidated
Statements of Income (Loss)
(amounts in thousands, except per
share data)
Three Months Ended
May 1, 2021
May 2, 2020
$
%
$
%
Product sales
$
498,477
95.9
%
$
247,317
95.0
%
Net royalties
21,525
4.1
%
12,934
5.0
%
Net revenue
520,002
100.0
%
260,251
100.0
%
Cost of product sales
308,444
59.3
%
226,022
86.8
%
Gross profit
211,558
40.7
%
34,229
13.2
%
Selling, general and administrative
expenses
186,684
35.9
%
143,288
55.0
%
Asset impairment charges
441
0.1
%
52,972
20.4
%
Net (gains) losses on lease
modifications
(2,145
)
(0.4
%)
456
0.2
%
Earnings (loss) from operations
26,578
5.1
%
(162,487
)
(62.4
%)
Other income (expense):
Interest expense
(5,926
)
(1.1
%)
(5,462
)
(2.1
%)
Interest income
374
0.1
%
610
0.2
%
Other expense, net
(2,701
)
(0.6
%)
(19,580
)
(7.5
%)
Earnings (loss) before income tax expense
(benefit)
18,325
3.5
%
(186,919
)
(71.8
%)
Income tax expense (benefit)
5,455
1.1
%
(26,381
)
(10.1
%)
Net earnings (loss)
12,870
2.4
%
(160,538
)
(61.7
%)
Net earnings (loss) attributable to
noncontrolling interests
864
0.1
%
(2,872
)
(1.1
%)
Net earnings (loss) attributable to
Guess?, Inc.
$
12,006
2.3
%
$
(157,666
)
(60.6
%)
Net earnings (loss) per common share
attributable to common stockholders:
Basic
$
0.19
$
(2.40
)
Diluted
$
0.18
$
(2.40
)
Weighted average common shares outstanding
attributable to common stockholders:
Basic
64,035
65,715
Diluted
65,940
65,715
Effective income tax rate
29.8
%
14.1
%
Adjusted selling, general and
administrative expenses1:
$
185,606
35.7
%
$
142,825
54.9
%
Adjusted earnings (loss) from
operations1:
$
25,952
5.0
%
$
(108,596
)
(41.7
%)
Adjusted net earnings (loss) attributable
to Guess?, Inc.1:
$
13,873
2.7
%
$
(118,913
)
(45.7
%)
Adjusted diluted earnings (loss) per
common share attributable to common stockholders1:
$
0.21
$
(1.81
)
Adjusted effective income tax rate1:
28.0
%
6.6
%
______________________________________________________________________
1.
The adjusted results for the three months
ended May 1, 2021 and May 2, 2020 reflect the exclusion of certain
professional service, legal fees and related net credits, certain
separation charges, asset impairment charges, net (gains) losses on
lease modifications, non-cash amortization of debt discount on the
Company’s convertible senior notes, the related income tax impacts
of these adjustments as well as certain discrete income tax
adjustments, where applicable. A complete reconciliation of actual
results to adjusted results is presented in the table entitled
“Reconciliation of GAAP Results to Adjusted Results.”
Guess?, Inc. and Subsidiaries
Reconciliation of GAAP Results to Adjusted
Results
(dollars in thousands)
The reconciliations of reported GAAP selling, general and
administrative expenses to adjusted selling, general and
administrative expenses, reported GAAP earnings (loss) from
operations to adjusted earnings (loss) from operations, reported
GAAP net earnings (loss) attributable to Guess?, Inc. to adjusted
net earnings (loss) attributable to Guess?, Inc. and reported GAAP
income tax expense (benefit) to adjusted income tax expense
(benefit) for the three months ended May 1, 2021 and May 2, 2020
follows:
Three Months Ended
May 1, 2021
May 2, 2020
Reported GAAP selling, general and
administrative expenses
$
186,684
$
143,288
Certain professional service, legal fees
and related net credits1
(1,078
)
(290
)
Separation charges2
—
(173
)
Adjusted selling, general and
administrative expenses
$
185,606
$
142,825
Reported GAAP earnings (loss) from
operations
$
26,578
$
(162,487
)
Certain professional service, legal fees
and related net credits1
1,078
290
Separation charges2
—
173
Asset impairment charges3
441
52,972
Net (gains) losses on lease
modifications4
(2,145
)
456
Adjusted earnings (loss) from
operations
$
25,952
$
(108,596
)
Reported GAAP net earnings (loss)
attributable to Guess?, Inc.
$
12,006
$
(157,666
)
Certain professional service, legal fees
and related net credits1
1,078
290
Separation charges2
—
173
Asset impairment charges3
441
52,972
Net (gains) losses on lease
modifications4
(2,145
)
456
Amortization of debt discount5
2,781
2,599
Discrete tax adjustments6
147
(7,891
)
Income tax impact from adjustments7
(435
)
(9,846
)
Total adjustments affecting net earnings
(loss) attributable to Guess?, Inc.
1,867
38,753
Adjusted net earnings (loss)
attributable to Guess?, Inc.
$
13,873
$
(118,913
)
Reported GAAP income tax expense
(benefit)
$
5,455
$
(26,381
)
Discrete tax adjustments6
(147
)
7,891
Income tax impact from adjustments7
435
9,846
Adjusted income tax expense
(benefit)
$
5,743
$
(8,644
)
Adjusted effective income tax
rate
28.0
%
6.6
%
______________________________________________________________________
1.
During the three months ended May 1, 2021
and May 2, 2020, the Company recorded certain professional service,
legal fees and related net credits, which it otherwise would not
have incurred as part of its business operations.
2.
During the three months ended May 2, 2020,
the Company recorded $0.2 million in separation-related charges
mainly related to certain cash severance payments, partially offset
by adjustments to non-cash stock-based compensation expense related
to our former Chief Executive Officer resulting from changes in
expected performance conditions of certain previously granted stock
awards that were no longer subject to service vesting requirements
after his departure.
3.
During the three months ended May 1, 2021
and May 2, 2020, the Company recognized asset impairment charges
related primarily to impairment of operating lease right-of-use
assets and property and equipment related to certain retail
locations resulting from lower revenue and future cash flow
projections from the ongoing effects of the COVID-19 pandemic.
4.
During the three months ended May 1, 2021
and May 2, 2020, the Company recorded net (gains) losses on lease
modifications related primarily to the early termination of certain
lease agreements.
5.
The Company issued $300 million principal
amount of 2.00% convertible senior notes due 2024 (the “Notes”) in
a private offering. The Company has separated the Notes into
liability (debt) and equity (conversion option) components. The
debt discount, which represents an amount equal to the fair value
of the equity component, is amortized as non-cash interest expense
over the term of the Notes.
6.
During the three months ended May 1, 2021
and May 2, 2020, the discrete income tax adjustments related
primarily to the impacts from cumulative valuation allowances and
the income tax benefits from an income tax rate change due to net
operating loss carrybacks.
7.
The income tax effect of certain
professional service, legal fees and related net credits,
separation charges, asset impairment charges, net (gains) losses on
lease modifications and the amortization of debt discount was based
on the Company’s assessment of deductibility using the statutory
income tax rate (inclusive of the impact of valuation allowances)
of the tax jurisdiction in which the charges were incurred.
Guess?, Inc. and
Subsidiaries
Consolidated Segment
Data
(dollars in thousands)
Three Months Ended
May 1, 2021
May 2, 2020
% change
Net revenue:
Americas Retail
$
155,535
$
74,584
109
%
Americas Wholesale
45,430
25,875
76
%
Europe
241,852
106,473
127
%
Asia
55,660
40,385
38
%
Licensing
21,525
12,934
66
%
Total net revenue
$
520,002
$
260,251
100
%
Earnings (loss) from operations:
Americas Retail
$
20,274
$
(36,673
)
(155
%)
Americas Wholesale
11,555
1,624
612
%
Europe
4,198
(44,406
)
(109
%)
Asia
(1,808
)
(22,777
)
(92
%)
Licensing
19,431
10,094
93
%
Total segment earnings (loss) from
operations
53,650
(92,138
)
(158
%)
Corporate overhead
(28,776
)
(16,921
)
70
%
Asset impairment charges
(441
)
(52,972
)
(99
%)
Net (gains) losses on lease
modifications
2,145
(456
)
(570
%)
Total earnings (loss) from operations
$
26,578
$
(162,487
)
(116
%)
Operating margins:
Americas Retail
13.0
%
(49.2
%)
Americas Wholesale
25.4
%
6.3
%
Europe
1.7
%
(41.7
%)
Asia
(3.2
%)
(56.4
%)
Licensing
90.3
%
78.0
%
GAAP operating margin for total
Company
5.1
%
(62.4
%)
Certain professional service, legal fees
and related net credits
0.2
%
0.1
%
Separation charges
0.0
%
0.0
%
Asset impairment charges
0.1
%
20.4
%
Net gains (losses) on lease
modifications
(0.4
%)
0.2
%
Adjusted operating margin for total
Company
5.0
%
(41.7
%)
Guess?, Inc. and
Subsidiaries
Constant Currency Financial
Measures
(dollars in thousands)
Three Months Ended
May 1, 2021
May 2, 2020
% change
As Reported
Foreign Currency
Impact
Constant Currency
As Reported
As Reported
Constant Currency
Net revenue:
Americas Retail
$
155,535
$
(1,989
)
$
153,546
$
74,584
109
%
106
%
Americas Wholesale
45,430
(1,191
)
44,239
25,875
76
%
71
%
Europe
241,852
(18,212
)
223,640
106,473
127
%
110
%
Asia
55,660
(3,444
)
52,216
40,385
38
%
29
%
Licensing
21,525
—
21,525
12,934
66
%
66
%
Total net revenue
$
520,002
$
(24,836
)
$
495,166
$
260,251
100
%
90
%
Guess?, Inc. and
Subsidiaries
Selected Condensed
Consolidated Balance Sheet Data
(in thousands)
May 1, 2021
January 30,
2021
May 2, 2020
ASSETS
Cash and cash equivalents
$
395,128
$
469,110
$
419,415
Receivables, net
306,297
314,147
239,532
Inventories
404,851
389,144
392,490
Other current assets
67,907
60,123
58,961
Property and equipment, net
211,354
216,196
244,681
Restricted cash
233
235
213
Operating lease right-of-use assets
738,544
764,804
778,030
Other assets
253,695
252,109
213,430
Total assets
$
2,378,009
$
2,465,868
$
2,346,752
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current portion of borrowings and finance
lease obligations
$
17,917
$
38,710
$
160,501
Current operating lease liabilities
224,676
222,800
226,967
Other current liabilities
434,082
501,029
334,756
Long-term debt and finance lease
obligations
86,724
68,554
94,804
Convertible senior notes, net
261,609
258,614
250,176
Long-term operating lease liabilities
632,574
662,657
659,947
Other long-term liabilities
139,285
144,004
128,878
Redeemable and nonredeemable
noncontrolling interests
26,947
25,837
19,069
Guess?, Inc. stockholders’ equity
554,195
543,663
471,654
Total liabilities and stockholders’
equity
$
2,378,009
$
2,465,868
$
2,346,752
Guess?, Inc. and
Subsidiaries
Condensed Consolidated Cash
Flow Data
(in thousands)
Three Months Ended
May 1, 2021
May 2, 2020
Net cash used in operating activities
$
(53,643
)
$
(61,553
)
Net cash used in investing activities
(7,788
)
(5,716
)
Net cash provided by (used in) financing
activities
(9,719
)
210,083
Effect of exchange rates on cash, cash
equivalents and restricted cash
(2,834
)
(8,014
)
Net change in cash, cash equivalents and
restricted cash
(73,984
)
134,800
Cash, cash equivalents and restricted cash
at the beginning of the year
469,345
284,828
Cash, cash equivalents and restricted cash
at the end of the period
$
395,361
$
419,628
Supplemental information:
Depreciation and amortization
$
14,188
$
17,024
Total lease costs (excluding finance lease
cost)
$
68,485
$
77,500
Guess?, Inc. and
Subsidiaries
Reconciliation of Net Cash
Provided By Operating Activities to Free Cash Flow
(in thousands)
Three Months Ended
May 1, 2021
May 2, 2020
Net cash used in operating activities
$
(53,643)
$
(61,553)
Less: Purchases of property and
equipment
(9,139)
(5,973)
Less: Payments for property and equipment
under finance leases
(1,791)
(921)
Free cash flow
$
(64,573)
$
(68,447)
Guess?, Inc. and
Subsidiaries
Retail Store Data
Global Store and Concession
Count
As of May 1, 2021
Stores
Concessions
Region
Total
Directly Operated
Partner Operated
Total
Directly Operated
Partner Operated
United States
246
244
2
1
—
1
Canada
74
74
—
—
—
—
Central and South America
105
70
35
29
29
—
Total Americas
425
388
37
30
29
1
Europe and the Middle East
728
511
217
45
45
—
Asia and the Pacific
427
142
285
287
92
195
Total
1,580
1,041
539
362
166
196
As of May 2, 2020
Stores
Concessions
Region
Total
Directly Operated
Partner Operated
Total
Directly Operated
Partner Operated
United States
280
278
2
1
—
1
Canada
80
80
—
—
—
—
Central and South America
111
73
38
27
27
—
Total Americas
471
431
40
28
27
1
Europe and the Middle East
744
517
227
38
38
—
Asia and the Pacific
466
193
273
318
114
204
Total
1,681
1,141
540
384
179
205
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210527005829/en/
Guess?, Inc. Fabrice Benarouche VP, Finance and Investor
Relations (213) 765-5578
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