Q2 2025 Earnings Summary
Reported on Aug 28, 2024 (After Market Close)
Pre-Earnings Price$20.22Last close (Aug 28, 2024)
Post-Earnings Price$20.10Open (Aug 29, 2024)
Price Change
$-0.12(-0.59%)
- Strong European performance: Guess? has achieved positive same-store sales growth in Europe for several quarters, offsetting traffic weakness with significant increases in average unit retail (AUR) and better conversion rates. Their European wholesale business remains robust, gaining market share due to reliability and timely delivery. Growth is further driven by new product lines like athleisure and the introduction of Guess? Jeans, which is expected to contribute a 10% growth in spring/summer 2025 orders.
- Growth potential with Rag & Bone acquisition: The acquisition of Rag & Bone brings a complementary brand with significantly higher prices and healthy margins. Rag & Bone has been disciplined in maintaining its premium brand image without significant discounting. Guess? plans to leverage its global platform to optimize Rag & Bone's business, expand its distribution—especially in Europe where the brand has little presence—and capitalize on synergies in multichannel distribution. They believe Rag & Bone can grow fast and become a very large business.
- Focus on long-term growth and investment: Guess? is actively investing in marketing to increase brand awareness globally, more than doubling marketing spend in Q2, and plans to continue this investment throughout the year. They are targeting significant growth opportunities in emerging markets like India, which is growing aggressively, and the Middle East, working with strong partners to expand their presence. Despite near-term challenges, Guess? is committed to protecting marketing investments to capture long-term growth, supported by a strong balance sheet with $600 million of available liquidity to fund these initiatives.
- Guess? is facing ongoing challenges in its Americas retail business, with declining customer traffic in both the U.S. and Canada leading to negative same-store sales. The company has been unable to offset this decline with other key performance indicators like conversion rates or average transaction value. ( )
- Supply chain disruptions due to the Red Sea crisis have led to delays in product deliveries and higher freight costs. The company is incurring additional expenses by opting for more expensive air freight to ensure timely product arrival, which is putting pressure on margins. ( , )
- Significant investments in marketing and talent acquisition are expected to impact short-term profitability. The company acknowledges that these investments will take time to yield returns, suggesting that near-term margins may be under pressure. ( , )
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