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GI

GUESS INC (GES)·Q4 2025 Earnings Summary

Executive Summary

  • Q4 FY2025 revenue beat consensus and EPS was above expectations: revenue $932.3M vs S&P Global consensus $907.8M (+2.7%); adjusted EPS $1.48 vs consensus $1.38; EBITDA came in modestly below consensus ($122.7M vs $128.1M). Drivers were rag & bone contribution and wholesale strength; headwinds were lower gross margin (44.1%, -130bps YoY) and elevated SG&A from marketing and store costs . Consensus values retrieved from S&P Global.*
  • FY2026 guidance: revenue growth +3.9% to +6.2%, adjusted operating margin 4.5%–5.4%, adjusted EPS $1.32–$1.76; Q1 FY2026 guidance implies an operating loss and adjusted LPS of $0.74–$0.65 .
  • Strategic portfolio optimization: plan to transition Greater China to a local partner by year-end FY2026 and close ~20 non-strategic NA stores; combined initiatives expected to unlock ~$30M in operating profit starting FY2027 .
  • Capital allocation: $0.30 quarterly dividend approved (payable May 2, 2025); rag & bone integration progressing; Middle East JV consolidates retail into revenues, with minority interest below OI .

What Went Well and What Went Wrong

What Went Well

  • Wholesale strength and rag & bone lift: Americas Wholesale +63% YoY; Europe wholesale delivered double-digit constant-currency growth despite one less shipping week; rag & bone outperformed expectations, particularly in e-commerce .
  • Licensing momentum: licensing revenues +18% YoY with strong footwear, fragrances, handbags, and eyewear; licensing segment operating margin expanded to 94.8% in Q4 .
  • Management execution and brand platform: “We launched our new brand, Guess Jeans globally… and executed our first acquisition… rag & bone,” underscoring portfolio expansion and platform leverage .

What Went Wrong

  • DTC traffic and comps: Americas Retail comps down 14% in USD (-11% CC) and Asia comps down 16% in USD (-11% CC); deleverage pressured segment margins (Americas Retail adj OM 8.9%, -610bps YoY; Asia adj OM 1.3%, -350bps YoY) .
  • Gross margin and SG&A pressure: GM 44.1% (-130bps YoY) due to higher markdowns and currency; adjusted SG&A rate rose 190bps to 32.7% on marketing and rag & bone infrastructure .
  • GAAP below adjusted from derivative mark-to-market: Q4 GAAP “other, net” expense of $23.4M included a $18.9M noncash unrealized loss from convertible note derivatives, depressing GAAP EPS to $1.16 vs adjusted $1.48 .

Financial Results

MetricQ2 FY2025Q3 FY2025Q4 FY2025
Revenue ($USD Millions)$732.6 $738.5 $932.3
GAAP Diluted EPS ($)$(0.28) $(0.47) $1.16
Adjusted Diluted EPS ($)$0.42 $0.34 $1.48
Gross Margin %43.7% 43.6% 44.1%
GAAP Operating Margin %6.5% 5.7% 11.1%
Adjusted Operating Margin %5.2% 5.8% 11.4%
Q4 FY2025 vs S&P ConsensusConsensusActualSurprise
Revenue ($USD Millions)$907.8M*$932.3M +$24.5M / +2.7%*
Primary EPS ($)$1.38*$1.48 +$0.10 / +7.5%*
EBITDA ($USD Millions)$128.1M*$122.7M*-$5.4M / -4.2%*
Segment Net Revenue ($USD Millions)Q4 FY2024Q4 FY2025YoY Change
Europe$484.6 $493.8 +2% (CC +7%)
Americas Retail$245.9 $254.6 +4%
Americas Wholesale$49.5 $80.6 +63%
Asia$82.7 $69.9 -15%
Licensing$28.3 $33.3 +18%
Total$891.1 $932.3 +5%
Segment Operating Margin (%)Q4 FY2024Q4 FY2025
Europe18.0% 15.4%
Americas Retail15.0% 8.9%
Americas Wholesale28.5% 12.8%
Asia4.8% 1.3%
Licensing92.7% 94.8%
Total GAAP OM16.3% 11.1%
Total Adjusted OM14.6% 11.4%
KPIs (Q4 FY2025)USDConstant Currency
Europe retail comps (incl. e-com)~Flat +5%
Americas Retail comps (incl. e-com)-14% -11%
Asia retail comps (incl. e-com)-16% -11%
Gross Margin44.1% n/a
Adjusted SG&A ($)$304.7M n/a

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Consolidated net revenue growth (USD)Q1 FY2026—+5.8% to +7.5% New
GAAP operating marginQ1 FY2026—(5.6)% to (4.7)% New
Adjusted operating marginQ1 FY2026—(5.6)% to (4.7)% New
GAAP diluted EPSQ1 FY2026—$(0.75) to $(0.66) New
Adjusted diluted EPSQ1 FY2026—$(0.74) to $(0.65) New
Consolidated net revenue growth (USD)FY2026—+3.9% to +6.2% New
GAAP operating marginFY2026—4.3% to 5.2% New
Adjusted operating marginFY2026—4.5% to 5.4% New
GAAP diluted EPSFY2026—$1.03 to $1.37 New
Adjusted diluted EPSFY2026—$1.32 to $1.76 New
Restructuring charges (excluded from adjusted)FY2026—~$7M New
Free cash flow (high-end)FY2026—~$55M New
Dividend per shareQ2 FY2026 (calendar Q2 2025)$0.30 (prior practice)$0.30 payable May 2, 2025 Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q-2 and Q-1)Current Period (Q4 FY2025)Trend
Marketing investment and SG&ASignificantly increased marketing to support Guess Jeans and rag & bone; SG&A rate elevated Marketing and advertising more than doubled in Q4; adjusted SG&A rate +190bps YoY to 32.7% Continued ramp
Supply chain (Red Sea)Red Sea crisis risk flagged, mitigation actions noted Continued impact on shipping times/costs; inventory brought forward in Europe to mitigate; working capital to normalize post-resolution Persistent headwind
Tariffs/macroCurrencies and freight cited in outlook revisions New U.S. tariff risk excluded from guidance; ~75% business ex-U.S.; plan counter-sourcing (Latin America) and pricing power at rag & bone Emerging risk, manageable
DTC productivityAmericas comps down; Asia softness; Europe retail comps positive Americas Retail comps -14%; Asia comps -11% CC; initiatives on product, pricing, clustering, VM, CRM to lift productivity Mixed; action plan underway
Guess JeansLaunch and distribution build (Europe-heavy); slower U.S. start Targeting $100M+ opportunity; new Tokyo flagship & Melrose store; VERDY collaboration Scaling up
Rag & boneAcquisition closed; early integration Outperformed expectations; strong e-com margins; store expansion in EU/U.S.; licensing extensions (handbags) Strong growth driver
Greater ChinaAsia comps negative; business challenging Transition to third-party operator by year-end FY2026; expected profitability improvement in FY2027 Structural change
Middle East JVn/aJV consolidates full P&L; deeper revenue capture with minority interest below OI Accretive mix shift

Management Commentary

  • “In the fourth quarter, we delivered revenue growth of 5% in U.S. dollars and 9% in constant currency… driven by the rag & bone acquisition… wholesale… increased licensing revenues” .
  • “We are focusing our strategic initiatives on increasing direct-to-consumer sales productivity globally and improving profitability through business and portfolio optimization… transitioning Greater China to a local, highly experienced partner… streamline our Guess full price store portfolio in North America” .
  • “Our marketing and advertising spending more than doubled in the quarter… designed to build stronger brand awareness and enhance customer engagement” .
  • CFO transition: “Alberto Toni… appointed Chief Financial Officer of Guess?… will lead Guess?’s finance team globally” .

Q&A Highlights

  • Rag & bone growth drivers: management emphasized strong brand equity, healthy e-commerce margins not driven by promotions, new products (e.g., Miramar), EU expansion (Amsterdam, Germany), and licensing extensions (handbags; fragrances, eyewear under evaluation) .
  • Americas retail strategy: detailed plan across exclusive DTC product, speed-to-market (keeping ~50% open-to-buy), granular store clustering (price sensitivity, weather, fashion mix), opening price points, visual merchandising, and omnichannel/CRM upgrades to restore store productivity .
  • Guess Jeans trajectory: wholesale-led in Europe with richer fashion in newer collections; U.S. build via Melrose flagship and Tokyo flagship; VERDY collaboration to drive awareness .
  • Licensing and insourcing: re-internalized outerwear and dresses (from G-III), performing well; no major plans to take back other licenses given long-tenured partnerships .

Estimates Context

  • Q4 FY2025: Revenue beat by ~$24.5M (+2.7%), adjusted EPS beat by $0.10 (+7.5%), EBITDA miss ($5.4M, -4.2%). Sequentially, Q3 revenue/EPS missed modestly and Q2 was roughly in line versus consensus (EPS $0.42 vs $0.43; revenue $732.6M vs $729.9M) . Consensus and comparison values retrieved from S&P Global.*
  • FY2025: Adjusted EPS $1.96 vs consensus $1.86*, revenue $3.00B vs $2.97B*, indicating slight full-year beats . Consensus values retrieved from S&P Global.*
  • FY2026: S&P Global consensus EPS ~$1.56* sits within company’s adjusted EPS guidance range ($1.32–$1.76), suggesting estimates may migrate based on execution and tariff outcomes . Consensus values retrieved from S&P Global.*

Key Takeaways for Investors

  • Q4 quality of beat: topline strength and adjusted EPS beat driven by rag & bone and wholesale momentum; margin headwinds from markdowns and higher SG&A temper near-term leverage .
  • FY2026 setup: guidance brackets consensus EPS with explicit first-half margin pressure (Q1 operating loss) as marketing and integration costs flow through; improvement bias targeted into Q4 FY2026 .
  • Structural optimization: Greater China transition and ~20 NA store closures are tangible levers to expand profit and ROIC, with ~$30M operating profit unlock expected in FY2027 .
  • Rag & bone is a core growth engine: accelerating store rollout (U.S./EU), licensing expansion, and strong e-commerce margins provide multi-year topline lift and potential mix benefit .
  • Guess Jeans scaling: wholesale-led growth in Europe, U.S./Japan flagships and collaborations to build awareness; management targets $100M+ revenue in the near term .
  • Middle East JV and wholesale share gains in Europe deepen revenue capture and add resiliency; monitor minority interest effect on below-the-line items .
  • Risk watch: tariffs (U.S. exposure ~25% of business cost base), FX headwinds, DTC traffic softness in Americas/Asia, and convertible derivative volatility impacting GAAP earnings; however, counter-sourcing and pricing power provide mitigation vectors .

Values retrieved from S&P Global.*