Q4 2025 Earnings Summary
- Strong Guess Jeans Opportunity: The executives highlighted that the robust launch of Guess Jeans in Europe—with plans for upcoming store openings in key U.S. and Japanese markets—and its potential to become a $100 million+ opportunity drives optimism for rapid revenue acceleration.
- Growth Prospects from rag & bone: Management expressed strong excitement about the rag & bone acquisition, emphasizing its organic growth, successful e-commerce performance, and planned global store expansion as key growth levers.
- Retail Recovery Initiatives in the Americas: Executives outlined strategic moves to enhance store productivity through improved product mix, pricing, and clustering models, positioning the business to reverse declining comps and boost profitability.
- Slower U.S. traction for new brands: Executives noted that while Guess Jeans had a strong launch overall, its U.S. rollout has been slower and relies primarily on wholesale distribution, posing risks for achieving domestic growth targets.
- Americas retail operational challenges: There are concerns over declining store productivity and underperforming same-store comps, particularly in U.S. and Canadian Guess retail operations, which could hamper future revenue recoveries.
- Product mix and execution risks: The executives acknowledged that the initial Guess Jeans collections, especially in Europe, did not fully capture fashion demand and may require further refinement, posing uncertainty in meeting evolving consumer expectations.
Metric | YoY Change | Reason |
---|---|---|
Total Revenue | +4.5% (from $891.0M to $932.3M) | A modest revenue increase driven by improved performance in key regions—especially Europe, which contributed $493.9M—helping to raise overall revenue despite challenging market conditions compared to the prior period. |
Product Sales | +4% (from $862.7M to $899.0M) | Product sales grew modestly thanks to an improved product mix and effective sales execution that continued the trends from the previous period, reflecting a gradual enhancement in sales performance. |
Operating Earnings | -28% (from $144.8M to $103.6M) | Operating earnings declined significantly due to higher SG&A and other operating expenses, as well as an unfavorable channel mix, which eroded margins despite modest revenue growth compared to the previous quarter. |
Net Earnings | -29% (from $115.3M to $81.4M) | Net earnings dropped by 29% owing to the combined impact of increased operating costs, higher impairment charges, and additional non-operating expenses that further reduced the bottom line relative to the prior period. |
Geographic Highlights | – | Europe emerged as the strongest performer, with key markets like Italy ($103.3M) and Germany ($71.5M) driving growth, which contrasts with softer performance in other regions; this shift underscores regional strengths compared to prior periods. |
Asset Impairment Charges | +257% (from $0.594M to $2.115M) | Asset impairment charges surged markedly due to more aggressive write-downs on underperforming retail properties and expected store closures, reflecting a significant deterioration in asset performance compared to the previous period. |
Metric | Period | Previous Guidance | Current Guidance | Change |
---|---|---|---|---|
Revenue Growth | FY 2026 | 7% to 8% | 3.9% to 6.2% | lowered |
Adjusted Operating Margin | FY 2026 | 6.2% to 6.5% | 4.5% to 5.4% | lowered |
Adjusted EPS | FY 2026 | 1.85 to 2 | $1.32 to $1.76 | lowered |
Free Cash Flow | FY 2026 | approx $40 million | $55 million | raised |
Currency Impact | FY 2026 | no prior guidance | 1‐point net currency headwind | no prior guidance |
Revenue Growth | Q1 2026 | 2.2% to 5.4% | 5.8% to 7.5% | raised |
Operating Loss Margin | Q1 2026 | no prior guidance | 5.6% to 4.7% | no prior guidance |
Adjusted Loss Per Share | Q1 2026 | no prior guidance | $0.74 to $0.65 | no prior guidance |
Metric | Period | Guidance | Actual | Performance |
---|---|---|---|---|
Revenue Growth | Q4 2025 | 2.2% to 5.4% | ~4.6% year-over-year increase (from 891,050To 932,252) | Met |
Adjusted Operating Margin | Q4 2025 | 12.2% to 13% | 11.1% (103,649 ÷ 932,252) | Missed |
Adjusted EPS | Q4 2025 | $1.37 to $1.52 | $1.16 | Missed |
Revenue | FY 2025 | 7% to 8%, at or slightly below $3B | $2.995B (sum of Q1: 591,943+ Q2: 732,560+ Q3: 738,518+ Q4: 932,252) | Met |
Adjusted Operating Margin | FY 2025 | 6.2% to 6.5% | 5.8% (sum of Op. Inc. −19,888+ 47,776+ 42,276+ 103,649÷ $2.995B total revenue) | Missed |
Adjusted EPS | FY 2025 | $1.85 to $2 | ~$0.74 (summing Q1–Q4 diluted EPS: 0.23− 0.19− 0.46+ 1.16) | Missed |
Topic | Previous Mentions | Current Period | Trend |
---|---|---|---|
Guess Jeans Brand Expansion | Emphasized as a major driver in Q1 , Q2 and Q3 with a focus on capturing younger demographics and leveraging heritage; consistent emphasis on multi-channel rollout and strategic retail events. | Q4 highlighted sustained global expansion with enhanced sustainability messaging, key retail store launches in Melrose and Tokyo, and continued wholesale growth. | **Steady and refined growth messaging: the theme remains consistent while evolving to a more global and sustainability‐focused strategy. ** |
Rag & Bone Acquisition | Repeated across Q1 , Q2 and Q3 emphasizing revenue contributions and short-term margin dilution as part of a strategic diversification push. | Q4 detailed stronger revenue contributions (e.g., 9 percentage points and 63% growth in Americas Wholesale) with ongoing margin pressure yet clear long‐term potential. | **Consistent focus on strategic importance with a gradual narrative shift from short‑term expansion challenges to longer‑term margin improvement. ** |
Americas Retail Operational Challenges | Q1 noted declines in traffic, conversion and significant comp drops. Q2 and Q3 reiterated headwinds with declining store comps and rising operational costs. | In Q4, challenges persist with notable comp declines, increased markdowns and store cost pressures, though recovery initiatives (inventory management, pricing and store consolidation) are being accelerated. | **Persistent retail challenges that remain a consistent concern across periods, with evolving recovery initiatives showing incremental progress. ** |
International Expansion Strategies | Q1 mentioned emerging markets including India, Chile, Peru and the Middle East. Q2 discussed India and the Middle East. Q3 focused on Japan, India and the Middle East. | Q4 emphasized strategic moves in India (22 new stores), the Middle East (JV with Chalhoub) and Japan (new Tokyo store for Guess Jeans) while omitting Chile and Peru. | **Consistent pursuit of international growth—steady emphasis on India, the Middle East and Japan, with less frequent mention of Chile/Peru over time. ** |
Fluctuations in Product Mix and Execution Risks | Q3 provided indirect insights via discussions of varied product performance and promotional adjustments but not explicit focus; Q1 and Q2 did not specifically highlight these issues. | Q4 did not include any discussion of fluctuations in product mix or execution risks. | These topics have largely diminished in discussion, indicating a reduced emphasis or successful management over time. [None] |
Supply Chain Disruptions and Freight Cost Pressures | Q1 mentioned persistent freight cost headwinds due to the Red Sea disruption. Q2 elaborated on increased ocean and air freight costs and proactive logistics measures. Q3 detailed operational adjustments and strategic sourcing shifts to mitigate these issues. | Q4 emphasized that despite earlier challenges, effective management has mitigated most external supply chain disruptions, allowing on‑time deliveries and healthy margins. | **A clear reduction in emphasis as proactive measures have lessened the supply chain disruptions and freight cost pressures. ** |
Marketing Investment and Brand Repositioning Strategies | Q1 introduced initiatives around the launch of Guess Jeans with integrated campaigns. Q2 saw a significant ramp‑up of marketing spend and repositioning, especially for new brands and international awareness. Q3 reported an 85% increase in marketing spend and focused repositioning initiatives including social media and influencer programs. | Q4 outlined continued and even heightened investments in marketing—doubling spend, rolling out a new CRM system in Europe, local imagery enhancements, and leveraging flagship events to drive brand engagement. | **A steady and intensifying focus on marketing and brand repositioning, with increasing investments reinforcing an evolving, customer-centric global strategy. ** |
Currency Headwinds Impacting Revenues | Q1 discussed significant headwinds across regions (Europe, Asia, Americas) with impacts on revenue growth and margins. Q2 mentioned mixed currency impacts in Asia with potential tailwinds if trends persist. Q3 highlighted strong USD effects that turned expected tailwinds into headwinds, causing notable revenue adjustments. | Q4 provided a detailed breakdown by region showing that currency headwinds reduced overall growth figures (e.g., converting a 14% adjusted growth into 5% reported growth) and noted ongoing strategic expectations for tailwinds later in the year. | **A consistently challenging factor with persistent negative impacts, though management now provides more granular adjustments and future outlook insights. ** |
Operating Margin Expansion and Pricing Strategy Adjustments | Q1 focused on future margin expansion through improved full‑price selling, disciplined inventory management, and brand integrations like rag & bone. Q2 discussed margin improvements via cost management, pricing discipline in rag & bone and adjusting promotions. Q3 emphasized target operating margin recovery, highlighting initiatives in pricing and cost control. | Q4 set clear targets for fiscal 2026 operating margins (4.5%–5.4%) and outlined detailed pricing adjustments (entry price expansions, speed-to-market models) with strategic plans for cost rationalization including store consolidations. | **An evolving narrative moving from initial strategies for margin recovery to more detailed, forecasted targets and comprehensive pricing discipline as part of long‑term profitability plans. ** |
-
Rag & Bone
Q: What drives rag & bone growth and Americas retail recovery?
A: Management noted the strong potential of the rag & bone acquisition driven by effective leadership, healthy e-commerce performance, and new store openings. They also outlined measures to revitalize the Americas retail footprint through refined product strategies, pricing adjustments, and more targeted store clustering to combat headwinds. -
Guess Jeans
Q: What is Guess Jeans opportunity in retail?
A: Management highlighted a robust Guess Jeans launch with impressive initial wholesale traction in Europe and plans to expand in key markets like West Hollywood and Tokyo, foreseeing a $100 million-plus opportunity as the brand ramps up its market presence. -
License Control
Q: What about license portfolio for dresses and outerwear?
A: Management explained that the integration of the G-III outerwear and dresses portfolio is a natural fit, leveraging long-standing, stable licensing relationships without plans for immediate changes, thus preserving brand consistency and integrity.
Research analysts covering GUESS.