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GI

GUESS INC (GES)·Q1 2026 Earnings Summary

Executive Summary

  • Q1 FY26 revenue rose 9% to $647.8M, a constant-currency +12%, driven primarily by rag & bone integration and stronger wholesale shipments; adjusted diluted loss per share was $0.44 and GAAP diluted loss per share was $0.65, both ahead of internal expectations .
  • Both revenue and adjusted EPS beat Wall Street consensus: revenue $647.8M vs $631.4M estimate*, and adjusted EPS -$0.44 vs -$0.69 estimate*; gross margin compressed 200 bps to 39.9% on mix shift to wholesale and lower royalties .
  • Full-year FY26 guidance updated: revenue growth raised to +5.5%–+7.4% (from +3.9%–+6.2%), but GAAP EPS cut to $0.87–$1.11 (from $1.03–$1.37) and adjusted EPS narrowed to $1.32–$1.64 (from $1.32–$1.76); adjusted operating margin guided to 4.4%–5.1% .
  • Management highlighted tariff mitigation (expected FY26 impact < $10M) and retail productivity/marketing initiatives as key levers; Americas retail sequentially improved late in the quarter, while Asia (Greater China) remains a headwind .

What Went Well and What Went Wrong

What Went Well

  • Wholesale outperformance: Americas Wholesale +63% (+70% cc) and Europe wholesale “mid-teens” growth, supported by proactive inventory flows to offset Red Sea disruptions .
  • Rag & bone exceeded expectations across wholesale and DTC; management targets ~$320M+ FY26 revenue with store openings and new licensing categories (handbags performing well; watches, fragrances, eyewear in pipeline) .
  • Americas Retail showed sequential improvement late in Q1 with conversion up and women’s apparel +3%; management sees pricing and assortment changes driving further gains .

What Went Wrong

  • Gross margin pressure (-200 bps YoY to 39.9%) primarily from mix (lower royalties, higher wholesale share) and modest promo headwinds; SG&A rate increased 80 bps to 44% on rag & bone consolidation and JV conversion .
  • Asia weakness intensified: revenues -20% (cc -16%), comps -24% (cc -20%); Greater China restructuring to stem ~$20M annual loss, with pursuit of a local partner .
  • DTC softness persisted: Europe retail comps -4% (cc -3%) and Americas retail comps -11% (cc -9%); Americas Retail adjusted operating margin fell to -10.5% on deleverage and markdowns .

Financial Results

Consolidated P&L vs Prior Periods and Estimates

MetricQ3 FY25 (older)Q4 FY25Q1 FY26 (latest)Q1 FY26 Consensus*
Revenue ($USD Millions)$738.5 $932.3 $647.8 $631.4*
GAAP Diluted EPS ($)$(0.47) $1.16 $(0.65) —
Adjusted Diluted EPS ($)$0.34 $1.48 $(0.44) $(0.69)*
GAAP Operating Margin (%)5.7% 11.1% (5.1)% —
Adjusted Operating Margin (%)5.8% 11.4% (4.0)% —
Gross Margin (%)43.6% 44.1% 39.9% —

Note: *Values retrieved from S&P Global.

Segment Net Revenue and Operating Margins (Q1 FY26 vs Q1 FY25)

SegmentQ1 FY25 Revenue ($M)Q1 FY26 Revenue ($M)YoY %Q1 FY25 Op MarginQ1 FY26 Op Margin
Europe$283.9 $306.1 +8% (0.2)% (2.9)%
Americas Retail$144.2 $157.2 +9% (7.2)% (10.5)%
Americas Wholesale$62.1 $101.4 +63% 22.7% 19.9%
Asia$72.8 $58.1 (20%) 5.1% (3.1)%
Licensing$29.0 $25.0 (14%) 92.0% 92.1%
Total$591.9 $647.8 +9% (3.4)% (5.1)%

KPIs and Operating Metrics

KPIQ1 FY25Q4 FY25Q1 FY26
Gross Margin %41.9% 44.1% 39.9%
SG&A Rate %45.1% 32.8% 44.2%
Europe Retail Comp (cc)—+5% (3%)
Americas Retail Comp (cc)(11%) (11%) (9%)
Asia Retail Comp (cc)(11%) (11%) (20%)
Inventory ($M)$554.9 $562.6 $638.2
Cash & Equivalents ($M)$241.7 $187.7 $151.2
Free Cash Flow ($M)$(45.6) $29.8 (FY25) $(96.4)

Guidance Changes

MetricPeriodPrevious Guidance (Q4 FY25)Current Guidance (Q1 FY26)Change
Consolidated Revenue Growth (USD)FY26+3.9% to +6.2% +5.5% to +7.4% Raised
GAAP Operating MarginFY264.3% to 5.2% 3.9% to 4.6% Lowered
Adjusted Operating MarginFY264.5% to 5.4% 4.4% to 5.1% Lowered (range narrowed)
GAAP EPS ($)FY26$1.03 to $1.37 $0.87 to $1.11 Lowered
Adjusted EPS ($)FY26$1.32 to $1.76 $1.32 to $1.64 Lowered (high end)
Free Cash Flow ($M)FY26$55 (high-end) $55 (high-end) Maintained
Consolidated Revenue Growth (USD)Q2 FY26—+2.9% to +4.7% New
Adjusted EPS ($)Q2 FY26—$0.11 to $0.21 New
Tariff ImpactFY26—< $10M included New disclosure

Earnings Call Themes & Trends

TopicQ-2 (Q3 FY25)Q-1 (Q4 FY25)Current Period (Q1 FY26)Trend
Supply chain (Red Sea)Proactive mitigation noted; wholesale strong; earlier buys Ongoing conversion of US DC; logistics footprint complex “Buying earlier” protected partners; enabled larger shipments Improving execution; WC investment up
Rag & bone integrationAcquisition drove wholesale growth Significant contributor to Q4 growth Outperformed expectations across wholesale and DTC; licensing expansion Positive momentum
Americas RetailComps down double-digit; margin deleverage Comps -14%; margin 8.9% with markdowns Sequential improvement; conversion up; women’s +3% Stabilizing with initiatives
Europe RetailComps +8% (Q3) Flat USD / +5% cc comps Comps -4% (cc -3%); traffic headwinds Softening
Asia / Greater ChinaMixed; comps down; small growth Revenues -15%; comps -16% Revenues -20%; exit/partner strategy underway Deteriorating; restructuring
Tariffs & macroNot prominentFY26 outlook contemplated FY26 impact < $10M; sourcing out of China, reworked pricing Mitigated
Marketing/loyalty/AI——Europe loyalty pilots (+36% revenue among loyalty customers); AI-powered insights; social media revamp New initiatives launched

Management Commentary

  • “Revenue grew 9% in U.S. dollars and 12% in constant currency, reflecting the successful integration of rag & bone and continued momentum in our wholesale businesses across Europe and the Americas.” — Carlos Alberini .
  • “We shared on our last call that we are mitigating the supply chain risk caused by the Red Sea crisis by bringing in products early. We are not buying more; we are buying earlier.” — Carlos Alberini .
  • “We expect that the year-over-year impact of tariffs on our margins this year will be less than $10 million… fully incorporated in the outlook.” — Carlos Alberini .
  • “Improving retail productivity for us is the highest priority… loyalty pilots in Europe saw ~36% revenue increases among loyalty customers.” — Carlos Alberini .
  • CFO transition: Alberto Toni appointed CFO to lead global finance, with Dennis Secor supporting through September 2025 .

Q&A Highlights

  • Rag & bone trajectory: Management targets ~$320M+ FY26 revenue, expansion in Europe and outlets, plus new licensed categories; Q1 wholesale/DTC exceeded expectations .
  • Americas Retail path: Sequential improvement with conversion gains and women’s apparel +3%; assortment/pricing adjustments and store-level clustering flexibility underway .
  • Inventory strategy: ~15% YoY increase driven by early shipments to mitigate Red Sea; ~$50M WC investment to protect share; plan to normalize as conditions ease .
  • Guess Jeans: Wholesale-led rollout in Europe, building product lines for younger consumer, leveraging social/influencers; new stores planned (LA Melrose, Tokyo) .

Estimates Context

  • Q1 FY26 results vs consensus: Revenue $647.8M vs $631.4M estimate* — bold beat; Adjusted EPS -$0.44 vs -$0.69 estimate* — bold beat .
  • Q2 FY26 directional context: Company guided adjusted EPS $0.11–$0.21 and revenue growth +2.9%–+4.7%; consensus ahead of the call was ~$0.16 EPS* and ~$760.8M revenue*, broadly within the guided ranges [GetEstimates].
  • Implications: Lower gross margin trajectory and DTC softness likely cap margin expansion near-term; sell-side may lift revenue estimates (rag & bone/wholesale) while trimming FY EPS on mix and Asia restructuring .

Note: *Values retrieved from S&P Global.

Key Takeaways for Investors

  • Wholesale and rag & bone are offsetting DTC softness; expect revenue momentum but mixed margin profile as mix tilts to wholesale and royalties decline .
  • Retail productivity initiatives (assortment, clustering, loyalty, social/AI) are showing early signs in North America/Europe; watch for sequential comp improvement into 2H .
  • Asia/Greater China exit/partnering is a necessary reset; near-term drag but ~$30M operating profit unlock (with NA store footprint rationalization) starting in FY27 .
  • FY26 guidance raises revenue but lowers EPS/margins; currency tailwind in Q4 and portfolio optimization could help; monitor conversion/markdown cadence .
  • Cash/FCF: Q1 FCF negative on early inventory buys; full-year FCF target $55M implies WC release in 2H; liquidity remains ample (~$0.5B) .
  • Dividend sustained ($0.30/qtr) amid transition; CFO change signals renewed focus on global cost and infrastructure optimization .
  • Trading lens: Beat vs estimates and raised revenue growth are positives; stock likely sensitive to signs of retail comp stabilization, Asia restructuring milestones, and gross margin mix dynamics .