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GI

GUESS INC (GES)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 FY2025 revenue rose 13% to $739M with adjusted EPS of $0.34; gross margin was 43.6% and adjusted operating margin 5.8% as rag & bone drove growth while retail traffic stayed soft in North America and Asia .
  • Guidance lowered on FX, freight and tax: FY2025 revenue growth now 7.1–8.1%, adjusted operating margin 6.2–6.5%, and adjusted EPS $1.85–$2.00; Q4 adjusted EPS guided to $1.37–$1.52 .
  • Currency turned from an expected tailwind to a headwind, removing ~$45M of full-year revenue and $10M of operating profit; freight headwinds ($5M) tied to Red Sea disruption will impact Q4 .
  • European wholesale was strong (pulled-forward shipments ~$10M), Europe retail comps positive on conversion and AUR; Americas retail comps -15% (incl. e-com) with pricing/promotions under review .
  • S&P Global Wall Street consensus estimates were unavailable at time of query, so beats/misses vs Street could not be assessed (we will update when accessible).

What Went Well and What Went Wrong

What Went Well

  • European momentum: retail comps +8% USD/+7% CC on better conversion and higher AURs; wholesale mid-single-digit growth with ahead-of-plan shipments (~$10M) .
  • Americas wholesale grew ~79% (83% CC), benefiting from internalized outerwear and off-price shipments; segment operating margin 25.7% .
  • Strategic platform execution and brand investments: “We significantly increased our marketing and advertising investments, roughly an 85% increase…to build stronger brand awareness” .
  • Quote: “Rag & bone…is delivering double-digit sales growth against its prior year numbers” and DTC trends were strong in October .

What Went Wrong

  • Retail softness: Americas retail comps -15% including e-com; operating loss margin -4.3% with deleverage on fixed costs .
  • Asia comps -16% CC with pressure in South Korea and China; segment operating loss margin -2% .
  • FX shock: USD strength turned an expected ~$1.5M tailwind into a >$10M revenue headwind in Q3, driving a full-year revenue impact of ~$45M and ~$10M operating profit impact .
  • Freight inflation (Red Sea) and higher tax: incremental ~$5M freight headwind expected in Q4 and higher adjusted tax rate (Q3 adjusted ETR 36.6%) .

Financial Results

Consolidated P&L Summary (Oldest → Newest)

MetricQ3 FY2024Q1 FY2025Q2 FY2025Q3 FY2025
Revenue ($USD Millions)$651.2 $591.9 $732.6 $738.5
GAAP Diluted EPS ($)$0.82 $0.23 ($0.28) ($0.47)
Adjusted Diluted EPS ($)$0.49 ($0.27) $0.42 $0.34
Gross Margin (%)44.7% 41.9% 43.7% 43.6%
GAAP Operating Margin (%)8.4% (3.4%) 6.5% 5.7%
Adjusted Operating Margin (%)8.9% (1.3%) 5.2% 5.8%

Segment Net Revenue (Oldest → Newest)

Segment ($USD Millions)Q3 FY2024Q1 FY2025Q2 FY2025Q3 FY2025
Europe$344.5 $283.9 $383.2 $368.4
Americas Retail$153.9 $144.2 $181.5 $172.8
Americas Wholesale$55.3 $62.1 $84.4 $98.8
Asia$64.5 $72.8 $54.3 $65.5
Licensing$33.0 $29.0 $29.1 $33.0
Total$651.2 $591.9 $732.6 $738.5

KPIs and Segment Margins

KPIQ1 FY2025Q2 FY2025Q3 FY2025
Europe retail comps (USD/CC)+4% / +9% +1% / +4% +8% / +7%
Americas retail comps (incl. e-com, USD/CC)-7% / -8% -10% / -10% -14% / -12%
Asia retail comps (USD/CC)-9% / -5% -14% / -10% -17% / -16%
Europe operating margin (%)(0.2%) 9.8% 8.8%
Americas Retail operating margin (%)(7.2%) 1.5% (4.3%)
Americas Wholesale operating margin (%)22.7% 18.9% 25.7%
Asia operating margin (%)5.1% (2.3%) (2.0%)
Licensing operating margin (%)92.0% 93.3% 91.8%

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Consolidated net revenue (USD)FY2025+9.5% to +11.0% +7.1% to +8.1% Lowered
GAAP operating marginFY20257.2% to 7.7% 6.1% to 6.4% Lowered
Adjusted operating marginFY20257.3% to 7.8% 6.2% to 6.5% Lowered
GAAP diluted EPS ($)FY2025$1.92 to $2.14 $0.70 to $0.82 Lowered
Adjusted diluted EPS ($)FY2025$2.42 to $2.70 $1.85 to $2.00 Lowered
Free cash flow ($M)FY2025$100 $40 Lowered
Consolidated net revenue (USD)Q4 FY2025NA+2.2% to +5.4% New
GAAP/Adjusted operating marginQ4 FY2025NA12.2% to 13.0% New
GAAP diluted EPS ($)Q4 FY2025NA$1.10 to $1.22 New
Adjusted diluted EPS ($)Q4 FY2025NA$1.37 to $1.52 New

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2)Current Period (Q3)Trend
FX impactFX headwinds cited; CC growth emphasized USD strength removed $45M FY revenue/$10M OP; Q3 >$10M revenue vs plan Deteriorating
Freight/Red SeaRed Sea risk disclosed in filings Incremental ~$5M Q4 freight headwind; use of air freight and proximity sourcing Deteriorating
European wholesaleStrong order book; Q2 mid-single-digit growth Pulled-forward shipments (~$10M) ahead of plan; S/S ’25 order book +10% Improving
Americas retail trafficSoftness continued from Q1–Q2 Traffic headwinds intensified; comps -15% incl. e-com; pricing/promotions under review Deteriorating
Rag & bone integrationAcquisition closed Q1; expansion plans Q2 Double-digit growth YTD; DTC strength; timing shift of wholesale into Q4 Improving
Marketing investmentsStep-up in spend; transformation year ~85% YoY increase; influencers, experiential activations, loyalty pilots Accelerating
Asia trendsQ2 declines; comps negative Continued pressure in SK/China; comps -16% CC; margin to loss Deteriorating
Pricing strategyElevated AURs post-COVID Pricing/promotions being re-evaluated for holiday amid price-sensitive consumer Adjusting

Management Commentary

  • “In the quarter, we grew revenues by 13%…Our company growth was fueled primarily by the addition of rag & bone, along with a modest increase in sales from our core Guess business” — Carlos Alberini .
  • “We significantly increased our marketing and advertising investments, roughly an 85% increase…directed to build stronger brand awareness” — Carlos Alberini .
  • “We now expect full year revenues at or slightly below $3 billion…updated our adjusted EPS outlook for the year to a range of $1.85 to $2” — Carlos Alberini .
  • “Assuming [FX] remains at roughly prevailing rates, [it] will consume about $45 million in full year revenues and about $10 million in operating profit” — Dennis Secor .
  • “For the fourth quarter, we expect revenue growth in the range between 2.2% and 5.4%…and adjusted EPS in the range of $1.37 to $1.52” — Dennis Secor .

Q&A Highlights

  • Q4 bridge: Management normalized for last year’s extra week and FX, indicating implied Q4 adjusted operating profit roughly flat YoY at midpoint; European wholesale strength offsets retail headwinds .
  • Pricing/promotions: U.S. consumer price sensitivity noted; company reviewing pricing strategy, particularly in factory stores, to balance elevation and competitiveness .
  • Pulled-forward shipments: ~$10M European wholesale shipped earlier in Q3 to secure product amid supply chain challenges; expected offset in Q4 .
  • Rag & bone margin trajectory: Currently dilutive to operating margin but expected to become accretive as integration and growth initiatives scale .
  • Tariffs/sourcing flexibility: Reduced China dependency and ability to shift sourcing; monitoring tariff risks (including Mexico) without compromising product quality .

Estimates Context

  • S&P Global Wall Street consensus estimates were unavailable at time of query due to access limits; therefore, we cannot provide EPS/revenue beats/misses vs consensus in this report. Values will be updated once SPGI access resumes.
  • Company guidance implies Q4 adjusted EPS of $1.37–$1.52 and FY2025 adjusted EPS of $1.85–$2.00, which may drive estimate revisions given FX/freight/tax headwinds signaled by management .

Key Takeaways for Investors

  • Guidance reset is primarily FX/freight/tax-driven, not a collapse in core demand; watch USD trend and freight normalization for potential relief in H1 FY2026 .
  • European wholesale strength and positive Europe retail comps (conversion/AUR) provide near-term support; expect Q4 partial offset from Q3 shipment pull-forward .
  • Americas retail is the swing factor; management’s pricing/promotion recalibration and intensified marketing/loyalty pilots are the key turnaround levers into holiday and beyond .
  • Rag & bone integration is on track with double-digit YTD growth and DTC momentum; short-term margin dilution expected to fade as initiatives scale in FY2026 .
  • Freight headwinds (~$5M in Q4) tied to Red Sea disruption and use of air freight should be transitory; inventory build includes in-transit mitigation steps (8 pts of YoY growth from in-transit) .
  • Higher tax rate weighed on Q3 adjusted EPS (adjusted ETR 36.6%); full-year rate reset implies lower after-tax earnings until mix improves .
  • With estimates likely to revise lower post-guide, catalysts ahead include: holiday execution (pricing/promo), Q4 rag & bone wholesale timing, and evidence of U.S. retail traffic stabilization .