Guess?, Inc. Reports Fiscal Year 2022 Fourth Quarter Results

Q4 Fiscal 2022 Revenues Reached $800 Million, Up 23% Compared to Q4 Fiscal 2021

Delivered Q4 Operating Margin of 15.7%

Q4 EPS of $1.04 and Adjusted EPS of $1.14

FY2022 Revenues Reached $2.59B, Up 38% Compared to FY2021

FY2022 Operating Margin of 11.8% and Adjusted Operating Margin of 12.0%

FY2022 EPS of $2.57 and Adjusted EPS of $2.92

Expects Low-Single Digit Revenue Growth and 10.5% Operating Margin for FY2023

Intends to Enter Into $175 Million Accelerated Share Repurchase Arrangement

LOS ANGELES--()--Guess?, Inc. (NYSE: GES) today reported financial results for its fourth quarter ended January 29, 2022.

Carlos Alberini, Chief Executive Officer, commented, “We are very pleased with our fourth quarter results. We delivered revenues in line with our expectations and exceeded our profit targets through strong gross margin performance and effective expense management. Our results this quarter cap an outstanding year for our Company, where the execution of our strategic initiatives helped to deliver much higher profitability, well in advance of our original plan. We closed the year with over $300 million in earnings from operations and reached an operating margin of 11.8%, more than double our pre-pandemic levels by both measures. We delivered a return on invested capital of 26% for the year, the highest it has been in ten years. Our balance sheet is strong, and we plan to use our capital opportunistically to return value to our shareholders through dividends and increased share repurchases.”

Paul Marciano, Co-Founder and Chief Creative Officer, added, “This has been an incredible year for our Company where we completely transformed our business. Our brand elevation strategy is at the center of that transformation. Today, the Guess brand enjoys strong momentum all over the world and the consistency of our assortments and brand images globally, the quality of our products and the perceived value of our offerings are among the best they have been in the history of Guess. Carlos and I want to thank and congratulate our entire team of Guess associates around the world who work together, relentlessly and fiercely, to make our Company better every single day.”

Mr. Alberini concluded, “Our business model transformation provides us with a strong foundation for sustainable and profitable growth. Last year was a baseline year for our Company as demand was suppressed due to lower promotions, price increases, store closures and limited product availability. We started the new year with a strong position to drive growth and leverage our global network to build a bigger business through increased comparable store sales and category expansion, digital growth and continued expansion of our wholesale business and store base. I believe the Company is better positioned than ever with a solid business model, strong brand momentum and a great team that is highly committed to delivering inspiring product to our customers and extraordinary value to all our shareholders.”

Adjusted Amounts

This press release contains certain non-GAAP, or adjusted, financial measures. References to “adjusted” results exclude the impact of (i) asset impairment charges, (ii) net gains on lease modifications, (iii) certain professional service and legal fees and related (credits) costs, (iv) certain separation charges, (v) non-cash debt discount amortization on our convertible senior notes, (vi) the related income tax effects of the foregoing items, as well as the impact from changes in the income tax law on deferred income taxes in certain tax jurisdictions, net income tax settlements and adjustments to specific uncertain income tax positions, and (vii) certain discrete income tax adjustments related primarily to an intra-entity transfer of intellectual property rights to a wholly-owned Swiss subsidiary, in each case where applicable. A reconciliation of reported GAAP results to comparable non-GAAP results is provided in the accompanying tables and discussed under the heading “Presentation of Non-GAAP Information” below.

Fourth Quarter Fiscal 2022 Results Compared to Fourth Quarter Fiscal 2020

For the fourth quarter of fiscal 2022, the Company recorded GAAP net earnings of $68.4 million, a 14.1% decrease from $79.6 million for the fourth quarter of fiscal 2020. GAAP diluted EPS decreased 11.9% to $1.04 for the fourth quarter of fiscal 2022, compared to $1.18 for the fourth quarter of fiscal 2020. The Company estimates a net positive impact from its share buybacks and its convertible notes transaction of $0.08 and a negative impact from currency of $0.18 on GAAP diluted EPS in the fourth quarter of fiscal 2022 when compared to the fourth quarter of fiscal 2020.

For the fourth quarter of fiscal 2022, the Company’s adjusted net earnings were $75.2 million, an 8.7% decrease from $82.3 million for the fourth quarter of fiscal 2020. Adjusted diluted EPS decreased 6.6% to $1.14, compared to $1.22 for the fourth quarter of fiscal 2020. The Company estimates a net positive impact from its share buybacks and its convertible notes transaction of $0.09 and a negative impact from currency of $0.18 on adjusted diluted EPS in the fourth quarter of fiscal 2022 when compared to the fourth quarter of fiscal 2020.

Net Revenue. Total net revenue for the fourth quarter of fiscal 2022 decreased 5.0% to $799.9 million, from $842.3 million in the fourth quarter of fiscal 2020. In constant currency, net revenue decreased by 5.0%.

Earnings from Operations. GAAP earnings from operations for the fourth quarter of fiscal 2022 increased 29.9% to $125.4 million (including $0.7 million net gains on lease modifications, $0.1 million in non-cash impairment charges taken on certain long-lived store related assets and a $3.5 million unfavorable currency translation impact), from $96.5 million (including $4.9 million in non-cash impairment charges taken on certain long-lived store related assets) in the fourth quarter of fiscal 2020. GAAP operating margin in the fourth quarter of fiscal 2022 increased 4.2% to 15.7%, from 11.5% in the fourth quarter of fiscal 2020, driven primarily by higher initial markups, lower markdowns and lower occupancy costs, partially offset by the unfavorable impact of negative comps sales in Europe and higher inbound freight costs. The negative impact of currency on operating margin for the quarter was approximately 30 basis points.

For the fourth quarter of fiscal 2022, adjusted earnings from operations increased 23.6% to $125.7 million, from $101.7 million in the fourth quarter of fiscal 2020. Adjusted operating margin increased 3.6% to 15.7%, from 12.1% in the fourth quarter of fiscal 2020, driven primarily by higher initial markups, lower markdowns and lower occupancy costs, partially offset by the unfavorable impact of negative comps sales in Europe and higher inbound freight costs.

Other income (expense), net. Other expense, net for the fourth quarter of fiscal 2022 was $18.7 million compared to other income, net of $1.8 million for the fourth quarter of fiscal 2020. The change was primarily due to higher net realized and unrealized losses from foreign currency exposures.

Fourth Quarter Fiscal 2022 Results Compared to Fourth Quarter Fiscal 2021

For the fourth quarter of fiscal 2022, the Company recorded GAAP net earnings of $68.4 million, a 2.8% decrease from $70.4 million for the fourth quarter of fiscal 2021. GAAP diluted EPS decreased 2.8% to $1.04 for the fourth quarter of fiscal 2022, compared to $1.07 for the same prior-year quarter. The Company estimates a net positive impact from its share buybacks and its convertible notes transaction of $0.02 and a negative impact from currency of $0.30 on GAAP diluted EPS in the fourth quarter of fiscal 2022 when compared to the same prior-year quarter.

For the fourth quarter of fiscal 2022, the Company’s adjusted net earnings were $75.2 million, a 3.2% decrease from $77.7 million for the fourth quarter of fiscal 2021. Adjusted diluted EPS decreased 3.4% to $1.14, compared to $1.18 for the same prior-year quarter. The Company estimates a net positive impact from its share buybacks and its convertible notes transaction of $0.02 and a negative impact from currency of $0.30 on adjusted diluted EPS in the fourth quarter of fiscal 2022 when compared to the same prior-year quarter.

Net Revenue. Total net revenue for the fourth quarter of fiscal 2022 increased 23.4% to $799.9 million, from $648.5 million in the same prior-year quarter. In constant currency, net revenue increased by 28.1%.

Earnings from Operations. GAAP earnings from operations for the fourth quarter of fiscal 2022 increased 74.5% to $125.4 million (including $0.7 million net gains on lease modifications, $0.1 million in non-cash impairment charges taken on certain long-lived store related assets and a $6.7 million unfavorable currency translation impact), from $71.9 million (including $5.2 million in non-cash impairment charges taken on certain long-lived store related assets and $2.4 million net gains on lease modifications) in the same prior-year quarter. GAAP operating margin in the fourth quarter of fiscal 2022 increased 4.6% to 15.7%, from 11.1% in the same prior-year quarter, driven primarily by overall leveraging of expenses, lower markdowns and higher initial markups, partially offset by the prior year rent relief and government subsidies. The positive impact of currency on operating margin for the quarter was approximately 10 basis points.

For the fourth quarter of fiscal 2022, adjusted earnings from operations increased 69.3% to $125.7 million, from $74.2 million in the same prior-year quarter. Adjusted operating margin increased 4.3% to 15.7%, from 11.4% in the same prior-year quarter, driven primarily by overall leveraging of expenses, lower markdowns and higher initial markups, partially offset by the prior year rent relief and government subsidies.

Other income (expense), net. Other expense, net for the fourth quarter of fiscal 2022 was $18.7 million compared to other income, net of $14.6 million for the same prior-year quarter. The change was primarily due to higher net realized and unrealized losses from foreign currency exposures.

Fiscal 2022 Results Compared to Fiscal 2020

For the fiscal year ended January 29, 2022, the Company recorded GAAP net earnings of $171.4 million, a 78.5% increase from $96.0 million for the fiscal year ended February 1, 2020. GAAP diluted EPS increased 93.2% to $2.57 for fiscal 2022, compared to $1.33 for fiscal 2020. The Company estimates a net positive impact from its share buybacks and its convertible notes transaction of $0.29 and a negative currency impact of $0.36 on GAAP diluted EPS for fiscal 2022 when compared to fiscal 2020.

For fiscal 2022, the Company recorded adjusted net earnings of $194.7 million, an 85.4% increase from $105.0 million for fiscal 2020. Adjusted diluted EPS increased 101.4% to $2.92, compared to $1.45 for fiscal 2020. The Company estimates its share buybacks and its convertible notes transaction had a net positive impact of $0.37, and currency had a negative impact of $0.36 on adjusted diluted EPS during fiscal 2022 when compared to fiscal 2020.

Net Revenue. Total net revenue for fiscal 2022 decreased 3.2% to $2.59 billion, from $2.68 billion for fiscal 2020. In constant currency, net revenue decreased by 4.9%.

Earnings from Operations. GAAP earnings from operations for fiscal 2022 increased 116.8% to $305.0 million (including $0.3 million net gains on lease modifications, $3.1 million in non-cash impairment charges taken on certain long-lived store related assets and a $7.4 million unfavorable currency translation impact), from $140.7 million (including $10.0 million in non-cash impairment charges taken on certain long-lived store related assets) for fiscal 2020. GAAP operating margin for fiscal 2022 increased 6.5% to 11.8%, from 5.3% for fiscal 2020, driven primarily by higher initial markups, lower markdowns and lower occupancy costs, partially offset by the unfavorable impact of negative comps sales in Europe and temporary store closures and higher inbound freight costs. The negative impact of currency on operating margin for fiscal 2022 was approximately 40 basis points.

For fiscal 2022, adjusted earnings from operations increased 106.7% to $310.6 million, from $150.2 million for fiscal 2020. Adjusted operating margin improved 6.4% to 12.0% for fiscal 2022, from 5.6% for fiscal 2020, driven primarily by higher initial markups, lower markdowns and lower occupancy costs, partially offset by the unfavorable impact of negative comps sales in Europe and temporary store closures and higher inbound freight costs.

Other expense, net. Other expense, net for fiscal 2022 was $30.2 million compared to $2.5 million for fiscal 2020. The change was primarily due to higher net unrealized and realized losses from foreign currency exposures.

Fiscal 2022 Results Compared to Fiscal 2021

For the fiscal year ended January 29, 2022, the Company recorded GAAP net earnings of $171.4 million, compared to a GAAP net loss of $81.2 million for the fiscal year ended January 30, 2021. GAAP diluted EPS was $2.57 for fiscal 2022, compared to GAAP diluted loss per share of $1.27 for fiscal 2021. The Company estimates a net positive impact from its share buybacks and its convertible notes transaction of $0.06 and a negative impact from currency of $0.19 on GAAP diluted EPS for fiscal 2022 when compared to fiscal 2021.

For fiscal 2022, the Company recorded adjusted net earnings of $194.7 million, compared to an adjusted net loss of $4.5 million for fiscal 2021. Adjusted diluted EPS was $2.92, compared to adjusted loss per share of $0.07 for fiscal 2021. The Company estimates its share buybacks and its convertible notes transaction had a net positive impact of $0.08, and currency had a negative impact of $0.19 on adjusted diluted EPS during fiscal 2022 when compared to fiscal 2021.

Net Revenue. Total net revenue for fiscal 2022 increased 38.1% to $2.59 billion, from $1.88 billion in fiscal 2021. In constant currency, net revenue increased by 37.0%.

Earnings (Loss) from Operations. GAAP earnings from operations for fiscal 2022 were $305.0 million (including $0.3 million net gains on lease modifications, $3.1 million in non-cash impairment charges taken on certain long-lived store related assets and a $4.9 million unfavorable currency translation impact), compared to a GAAP loss from operations of $60.5 million (including $2.8 million net gains on lease modifications and $80.4 million in non-cash impairment charges taken on certain long-lived store related assets) in fiscal 2021. GAAP operating margin in fiscal 2022 increased 15.0% to 11.8%, from negative 3.2% in fiscal 2021, driven primarily by overall leveraging of expenses, lower non-cash impairment charges and lower markdowns. The positive impact of currency on operating margin for fiscal 2022 was approximately 10 basis points.

For fiscal 2022, adjusted earnings from operations were $310.6 million, compared to $20.0 million for fiscal 2021. Adjusted operating margin improved 10.9% to 12.0% for fiscal 2022, from 1.1% in fiscal 2021, driven primarily by overall leveraging of expenses and lower markdowns.

Other expense, net. Other expense, net for fiscal 2022 was $30.2 million compared to $6.0 million for fiscal 2021. The change was primarily due to higher net unrealized and realized losses from foreign currency exposures.

Outlook

We expect revenues in the first quarter of fiscal 2023, assuming no meaningful COVID-related shutdowns, to be up in the low-teens versus the first quarter of fiscal 2022 mainly driven by last year’s temporary store closures, wholesale growth and positive store comps.

For the full fiscal year 2023, assuming no meaningful COVID-related shutdowns, we expect revenues to be up in the low-single digits versus fiscal 2022 and operating margin to reach approximately 10.5%. The outlook for the first quarter and the year reflects significant disruptions in Russia.

Dividend

The Company’s Board of Directors approved a quarterly cash dividend of $0.225 per share on the Company’s common stock. The dividend will be payable on April 15, 2022 to shareholders of record as of the close of business on March 30, 2022.

Share Repurchase

The Company repurchased 2.3 million shares of its common stock for $51.0 million during the fourth quarter of fiscal 2022, leaving a capacity of $149.0 million under its previously announced share repurchase program. On March 14, 2022, the Board of Directors expanded its repurchase authorization by $100 million, leaving a new capacity of $249.0 million. In connection with this expanded authorization, the Company intends to enter into an accelerated share repurchase (ASR) arrangement with a financial institution under which it will repurchase $175.0 million of its common stock on terms to be negotiated, subject to customary conditions.

Presentation of Non-GAAP Information

The financial information presented in this release includes non-GAAP financial measures, such as adjusted results, constant currency financial information, free cash flows and return on invested capital. For the periods presented, the adjusted results exclude the impact of certain professional service and legal fees and related (credits) costs, certain separation charges, asset impairment charges, net (gains) losses on lease modifications, non-cash amortization of debt discount on the Company’s convertible senior notes, the related income tax effects of the foregoing items, the impact from changes in the income tax law on deferred income taxes in certain tax jurisdictions, net income tax settlements and adjustments to specific uncertain income tax positions, as well as certain discrete income tax adjustments related primarily to an intra-entity transfer of intellectual property rights to a wholly-owned Swiss subsidiary, in each case where applicable. These non-GAAP measures are provided in addition to, and not as alternatives for, the Company’s reported GAAP results.

The Company has excluded these items from its adjusted financial measures primarily because it believes these items are not indicative of the underlying performance of its business and the adjusted financial information provided is useful for investors to evaluate the comparability of the Company’s operating results and its future outlook (when reviewed in conjunction with the Company’s GAAP financial statements). A reconciliation of reported GAAP results to comparable non-GAAP results is provided in the accompanying tables.

This release also includes certain constant currency financial information. Foreign currency exchange rate fluctuations affect the amount reported from translating the Company’s foreign revenue, expenses and balance sheet amounts into U.S. dollars. These rate fluctuations can have a significant effect on reported operating results under GAAP. The Company provides constant currency information to enhance the visibility of underlying business trends, excluding the effects of changes in foreign currency translation rates. To calculate net revenue and earnings (loss) from operations on a constant currency basis, actual or forecasted results for the current-year period are translated into U.S. dollars at the average exchange rates in effect during the comparable period of the prior year. The constant currency calculations do not adjust for the impact of revaluing specific transactions denominated in a currency different from the functional currency of that entity when exchange rates fluctuate. However, in calculating the estimated impact of currency on our earnings (loss) per share for our actual or forecasted results, the Company estimates gross margin (including the impact of merchandise-related hedges) and expenses using the appropriate prior-year rates, translates the estimated foreign earnings at the comparable prior-year rates, and excludes the year-over-year earnings impact of gains or losses arising from balance sheet remeasurement and foreign currency contracts not designated as merchandise hedges. The constant currency information presented may not be comparable to similarly titled measures reported by other companies.

The Company also includes information regarding its free cash flows in this release. The Company calculates free cash flows as cash flows from operating activities less (i) purchases of property and equipment and (ii) payments for property and equipment under finance leases. Free cash flows are not intended to be an alternative to cash flows from operating activities as a measure of liquidity, but rather to provide additional visibility to investors regarding how much cash is generated for discretionary and non-discretionary items after deducting purchases of property and equipment and payments for property and equipment under finance leases. Free cash flow information presented may not be comparable to similarly titled measures reported by other companies. A reconciliation of reported GAAP cash flows from operating activities to the comparable non-GAAP free cash flow measure is provided in the accompanying tables.

The Company also includes information regarding its return on invested capital (or “ROIC”) in this release. The Company defines ROIC as adjusted net operating profit after income taxes divided by two-year average invested capital. The Company believes ROIC is a useful financial measure for investors in evaluating how efficiently the Company deploys its capital. The Company’s method of calculating ROIC is provided in the accompanying tables and may differ from other companies’ methods and, therefore, might not be comparable.

Investor Conference Call

The Company will hold a conference call at 4:45 pm (ET) on March 16, 2022 to discuss the news announced in this press release. A live webcast of the conference call will be accessible at www.guess.com via the “Investor Relations” link. The webcast will be archived on the website for 30 days.

About Guess?

Guess?, Inc. designs, markets, distributes and licenses a lifestyle collection of contemporary apparel, denim, handbags, watches, eyewear, footwear and other related consumer products. Guess? products are distributed through branded Guess? stores as well as better department and specialty stores around the world. As of January 29, 2022, the Company directly operated 1,068 retail stores in the Americas, Europe and Asia. The Company’s partners and distributors operated 563 additional retail stores worldwide. As of January 29, 2022, the Company and its partners and distributors operated in approximately 100 countries worldwide. For more information about the Company, please visit www.guess.com.

Forward-Looking Statements

Except for historical information contained herein, certain matters discussed in this press release or the related conference call and webcast, including statements concerning the potential actions and impacts related to the COVID-19 pandemic; statements concerning the Company’s future outlook, including with respect to the first quarter and full year of fiscal 2023; statements concerning share repurchase plan; statements concerning the Company’s expectations, goals, future prospects, and current business strategies and strategic initiatives; and statements expressing optimism or pessimism about future operating results and growth opportunities are forward-looking statements that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements, which are frequently indicated by terms such as “expect,” “could,” “will,” “should,” “goal,” “strategy,” “believe,” “estimate,” “continue,” “outlook,” “plan,” “create,” “see,” and similar terms, are only expectations, and involve known and unknown risks and uncertainties, which may cause actual results in future periods to differ materially from what is currently anticipated.

Factors which may cause actual results in future periods to differ materially from current expectations include, among others: our ability to maintain our brand image and reputation; domestic and international economic or political conditions, including economic and other events that could negatively impact consumer confidence and discretionary consumer spending; recent sanctions and export controls targeting Russia; the continuation or worsening of impacts related to the COVID-19 pandemic; risks relating to our indebtedness; changes to estimates related to impairments, inventory and other reserves, which were made using the best information available at the time; changes in the competitive marketplace and in our commercial relationships; our ability to anticipate and adapt to changing consumer preferences and trends; our ability to manage our inventory commensurate with customer demand; the high concentration of our Americas Wholesale business; risks related to the costs and timely delivery of merchandise to our distribution facilities, stores and wholesale customers; unexpected or unseasonable weather conditions; our ability to effectively operate our various retail concepts, including securing, renewing, modifying or terminating leases for store locations; our ability to successfully and/or timely implement our growth strategies and other strategic initiatives; our ability to successfully enhance our global omni-channel capabilities; our ability to expand internationally and operate in regions where we have less experience, including through joint ventures; risks relating to our $300 million 2.0% convertible senior notes due 2024, including our ability to settle the liability in cash; disruptions at our distribution facilities; our ability to attract and retain management and other key personnel; obligations or changes in estimates arising from new or existing litigation, income tax and other regulatory proceedings; risks related to the income tax treatment of our third quarter fiscal 2022 intra-entity transfer of intellectual property rights from certain U.S. entities to a wholly-owned Swiss subsidiary; the occurrence of unforeseen epidemics, such as the COVID-19 pandemic; other catastrophic events; changes in U.S. or foreign income tax or tariff policy, including changes to tariffs on imports into the U.S.; accounting adjustments to our unaudited financial statements identified during the completion of our annual independent audit of financial statements and financial controls or from subsequent events arising after issuance of this release; risk of future non-cash asset impairments, including goodwill, right-of-use lease assets and/or other store asset impairments; violations of, or changes to, domestic or international laws and regulations; risks associated with the acts or omissions of our licensees and third party vendors, including a failure to comply with our vendor code of conduct or other policies; risks associated with cyber-attacks and other cyber security risks; risks associated with our ability to properly collect, use, manage and secure consumer and employee data; risks associated with our vendors’ ability to maintain the strength and security of information technology systems; changes in economic, political, social and other conditions affecting our foreign operations and sourcing, including the impact of currency fluctuations, global income tax rates and economic and market conditions in the various countries in which we operate; fluctuations in quarterly performance; slowing in-person customer traffic; increases in labor costs; increases in wages; risks relating to proxy contests and activist investor activity; and the significant voting power of our family founders.

In addition to these factors, the economic, technological, managerial, and other risks identified in the Company’s most recent annual report on Form 10-K and other filings with the Securities and Exchange Commission, including but not limited to the risk factors discussed therein, could cause actual results to differ materially from current expectations. The current global economic climate, length and severity of the COVID-19 pandemic, and uncertainty surrounding potential changes in U.S. policies and regulations may amplify many of these risks. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

 

Guess?, Inc. and Subsidiaries

Condensed Consolidated Statements of Income

(amounts in thousands, except per share data)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

January 29, 2022

January 30, 2021

February 1, 2020

 

$

%

$

%

$

%

 

 

 

 

 

 

 

Product sales

$

773,265

 

96.7

%

$

618,973

 

95.5

%

$

815,975

 

96.9

%

Net royalties

 

26,670

 

3.3

%

 

29,482

 

4.5

%

 

26,279

 

3.1

%

Net revenue

 

799,935

 

100.0

%

 

648,455

 

100.0

%

 

842,254

 

100.0

%

Cost of product sales

 

429,678

 

53.7

%

 

372,130

 

57.4

%

 

503,660

 

59.8

%

Gross profit

 

370,257

 

46.3

%

 

276,325

 

42.6

%

 

338,594

 

40.2

%

Selling, general and administrative expenses

 

245,502

 

30.7

%

 

201,638

 

31.1

%

 

237,237

 

28.1

%

Asset impairment charges

 

55

 

0.0

%

 

5,166

 

0.8

%

 

4,851

 

0.6

%

Net gains on lease modifications

 

(700

)

(0.1

%)

 

(2,351

)

(0.4

%)

 

 

%

Earnings from operations

 

125,400

 

15.7

%

 

71,872

 

11.1

%

 

96,506

 

11.5

%

Other income (expense):

 

 

 

 

 

 

Interest expense

 

(5,533

)

(0.7

%)

 

(5,657

)

(0.9

%)

 

(4,973

)

(0.6

%)

Interest income

 

559

 

0.1

%

 

629

 

0.1

%

 

563

 

0.1

%

Other, net

 

(18,669

)

(2.3

%)

 

14,603

 

2.3

%

 

1,817

 

0.2

%

Earnings before income tax expense

 

101,757

 

12.8

%

 

81,447

 

12.6

%

 

93,913

 

11.2

%

Income tax expense

 

30,092

 

3.8

%

 

8,512

 

1.4

%

 

11,864

 

1.5

%

Net earnings

 

71,665

 

9.0

%

 

72,935

 

11.2

%

 

82,049

 

9.7

%

Net earnings attributable to noncontrolling interests

 

3,250

 

0.4

%

 

2,516

 

0.3

%

 

2,445

 

0.2

%

Net earnings attributable to Guess?, Inc.

$

68,415

 

8.6

%

$

70,419

 

10.9

%

$

79,604

 

9.5

%

Net earnings per common share attributable to common stockholders:

Basic

$

1.07

 

 

$

1.10

 

 

$

1.21

 

 

Diluted1

$

1.04

 

 

$

1.07

 

 

$

1.18

 

 

Weighted average common shares outstanding attributable to common stockholders:

Basic

 

63,341

 

 

 

63,033

 

 

 

65,019

 

 

Diluted1

 

65,352

 

 

 

65,003

 

 

 

66,653

 

 

Effective income tax rate

 

29.6

%

 

 

10.5

%

 

 

12.6

%

 

Adjusted selling, general and administrative expenses2:

$

244,587

 

30.6

%

$

202,117

 

31.2

%

$

236,919

 

28.1

%

Adjusted earnings from operations2:

$

125,670

 

15.7

%

$

74,208

 

11.4

%

$

101,675

 

12.1

%

Adjusted net earnings attributable to Guess?, Inc.2:

$

75,183

 

9.4

%

$

77,668

 

12.0

%

$

82,336

 

9.8

%

Adjusted diluted earnings per common share attributable to common stockholders2:

$

1.14

 

 

$

1.18

 

 

$

1.22

 

 

Adjusted effective income tax rate2:

 

25.2

%

 

 

7.2

%

 

 

16.5

%

 

______________________________________________________________________

See end of release for footnotes.

Guess?, Inc. and Subsidiaries

Condensed Consolidated Statements of Income (Loss)

(amounts in thousands, except per share data)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fiscal Year Ended

 

January 29, 2022

January 30, 2021

February 1, 2020

 

$

%

$

%

$

%

 

 

 

 

 

 

 

Product sales

$

2,494,922

 

96.3

%

$

1,802,533

 

96.1

%

$

2,592,262

 

96.8

%

Net royalties

 

96,709

 

3.7

%

 

73,996

 

3.9

%

 

85,847

 

3.2

%

Net revenue

 

2,591,631

 

100.0

%

 

1,876,529

 

100.0

%

 

2,678,109

 

100.0

%

Cost of product sales

 

1,422,126

 

54.9

%

 

1,179,427

 

62.9

%

 

1,662,401

 

62.1

%

Gross profit

 

1,169,505

 

45.1

%

 

697,102

 

37.1

%

 

1,015,708

 

37.9

%

Selling, general and administrative expenses

 

861,578

 

33.2

%

 

679,958

 

36.1

%

 

865,060

 

32.2

%

Asset impairment charges

 

3,149

 

0.1

%

 

80,442

 

4.3

%

 

9,977

 

0.4

%

Net gains on lease modifications

 

(259

)

(0.0

%)

 

(2,801

)

(0.1

%)

 

 

%

Earnings (loss) from operations

 

305,037

 

11.8

%

 

(60,497

)

(3.2

%)

 

140,671

 

5.3

%

Other income (expense):

 

 

 

 

 

 

Interest expense

 

(23,018

)

(0.9

%)

 

(22,869

)

(1.2

%)

 

(16,129

)

(0.6

%)

Interest income

 

1,881

 

0.1

%

 

2,237

 

0.1

%

 

1,729

 

0.1

%

Other, net

 

(30,171

)

(1.2

%)

 

(5,950

)

(0.3

%)

 

(2,529

)

(0.2

%)

Earnings (loss) before income tax expense (benefit)

 

253,729

 

9.8

%

 

(87,079

)

(4.6

%)

 

123,742

 

4.6

%

Income tax expense (benefit)

 

73,680

 

2.9

%

 

(6,338

)

(0.3

%)

 

22,513

 

0.8

%

Net earnings (loss)

 

180,049

 

6.9

%

 

(80,741

)

(4.3

%)

 

101,229

 

3.8

%

Net earnings attributable to noncontrolling interests

 

8,686

 

0.3

%

 

488

 

0.0

%

 

5,254

 

0.2

%

Net earnings (loss) attributable to Guess?, Inc.

$

171,363

 

6.6

%

$

(81,229

)

(4.3

%)

$

95,975

 

3.6

%

Net earnings (loss) per common share attributable to common stockholders:

 

 

Basic

$

2.65

 

 

$

(1.27

)

 

$

1.35

 

 

Diluted1

$

2.57

 

 

$

(1.27

)

 

$

1.33

 

 

Weighted average common shares outstanding attributable to common stockholders:

 

 

Basic

 

64,021

 

 

 

64,179

 

 

 

70,461

 

 

Diluted1

 

65,919

 

 

 

64,179

 

 

 

71,669

 

 

Effective income tax rate

 

29.0

%

 

 

7.3

%

 

 

18.2

%

 

Adjusted selling, general and administrative expenses2:

$

858,926

 

33.1

%

$

677,110

 

36.0

%

$

865,479

 

32.3

%

Adjusted earnings from operations2:

$

310,579

 

12.0

%

$

19,992

 

1.1

%

$

150,229

 

5.6

%

Adjusted net earnings (loss) attributable to Guess?, Inc.2:

$

194,687

 

7.5

%

$

(4,521

)

(0.2

%)

$

105,036

 

3.9

%

Adjusted diluted earnings (loss) per common share attributable to common stockholders2:

$

2.92

 

 

$

(0.07

)

 

$

1.45

 

 

Adjusted effective income tax rate2:

 

24.8

%

 

 

206.0

%

 

 

21.7

%

 

______________________________________________________________________

 

 

See end of release for footnotes.

Guess?, Inc. and Subsidiaries

Reconciliation of GAAP Results to Adjusted Results

(dollars in thousands)

The reconciliations of reported GAAP selling, general and administrative expenses to adjusted selling, general and administrative expenses, reported GAAP earnings (loss) from operations to adjusted earnings (loss) from operations, reported GAAP net earnings (loss) attributable to Guess?, Inc. to adjusted net earnings (loss) attributable to Guess?, Inc. and reported GAAP income tax expense (benefit) to adjusted income tax expense follows:

 

Three Months Ended

 

January 29,
2022

January 30,
2021

February 1,
2020

 

 

 

 

Reported GAAP selling, general and administrative expenses

$

245,502

 

$

201,638

 

$

237,237

 

Certain professional service and legal fees and related credits (costs)3

 

(915

)

 

509

 

 

120

 

Separation charges4

 

 

 

(30

)

 

(438

)

Adjusted selling, general and administrative expenses2

$

244,587

 

$

202,117

 

$

236,919

 

Reported GAAP earnings from operations

$

125,400

 

$

71,872

 

$

96,506

 

Certain professional service and legal fees and related (credits) costs3

 

915

 

 

(509

)

 

(120

)

Separation charges4

 

 

 

30

 

 

438

 

Asset impairment charges5

 

55

 

 

5,166

 

 

4,851

 

Net gains on lease modifications6

 

(700

)

 

(2,351

)

 

 

Adjusted earnings from operations2

$

125,670

 

$

74,208

 

$

101,675

 

Reported GAAP net earnings attributable to Guess?, Inc.

$

68,415

 

$

70,419

 

$

79,604

 

Certain professional service and legal fees and related (credits) costs3

 

915

 

 

(509

)

 

(120

)

Separation charges4

 

 

 

30

 

 

438

 

Asset impairment charges5

 

55

 

 

5,166

 

 

4,851

 

Net gains on lease modifications6

 

(700

)

 

(2,351

)

 

 

Amortization of debt discount7

 

2,781

 

 

2,598

 

 

2,449

 

Discrete income tax adjustments8

 

4,490

 

 

3,248

 

 

 

Income tax impact from adjustments9

 

(773

)

 

(933

)

 

(4,886

)

Total adjustments affecting net earnings attributable to Guess?, Inc.

 

6,768

 

 

7,249

 

 

2,732

 

Adjusted net earnings attributable to Guess?, Inc.2

$

75,183

 

$

77,668

 

$

82,336

 

Reported GAAP income tax expense

$

30,092

 

$

8,512

 

$

11,864

 

Discrete income tax adjustments8

 

(4,490

)

 

(3,248

)

 

 

Income tax impact from adjustments9

 

773

 

 

933

 

 

4,886

 

Adjusted income tax expense2

$

26,375

 

$

6,197

 

$

16,750

 

Adjusted effective income tax rate2

 

25.2

%

 

7.2

%

 

16.5

%

______________________________________________________________________

See end of release for footnotes.

Guess?, Inc. and Subsidiaries

Reconciliation of GAAP Results to Adjusted Results (Continued)

(dollars in thousands)

 

Fiscal Year Ended

 

January 29,
2022

January 30,
2021

February 1,
2020

 

 

 

 

Reported GAAP selling, general and administrative expenses

$

861,578

 

$

679,958

 

$

865,060

 

Certain professional service and legal fees and related credits (costs)3

 

(2,652

)

 

565

 

 

857

 

Separation charges4

 

 

 

(3,413

)

 

(438

)

Adjusted selling, general and administrative expenses2

$

858,926

 

$

677,110

 

$

865,479

 

Reported GAAP earnings (loss) from operations

$

305,037

 

$

(60,497

)

$

140,671

 

Certain professional service and legal fees and related (credits) costs3

 

2,652

 

 

(565

)

 

(857

)

Separation charges4

 

 

 

3,413

 

 

438

 

Asset impairment charges5

 

3,149

 

 

80,442

 

 

9,977

 

Net gains on lease modifications6

 

(259

)

 

(2,801

)

 

 

Adjusted earnings from operations2

$

310,579

 

$

19,992

 

$

150,229

 

Reported GAAP net earnings (loss) attributable to Guess?, Inc.

$

171,363

 

$

(81,229

)

$

95,975

 

Certain professional service and legal fees and related (credits) costs3

 

2,652

 

 

(565

)

 

(857

)

Separation charges4

 

 

 

3,413

 

 

438

 

Asset impairment charges5

 

3,149

 

 

80,442

 

 

9,977

 

Net gains on lease modifications6

 

(259

)

 

(2,801

)

 

 

Amortization of debt discount7

 

11,125

 

 

10,394

 

 

7,558

 

Discrete income tax adjustments8

 

10,630

 

 

4,053

 

 

 

Income tax impact from adjustments9

 

(3,973

)

 

(18,228

)

 

(8,055

)

Total adjustments affecting net earnings (loss) attributable to Guess?, Inc.

 

23,324

 

 

76,708

 

 

9,061

 

Adjusted net earnings (loss) attributable to Guess?, Inc.2

$

194,687

 

$

(4,521

)

$

105,036

 

Reported GAAP income tax expense (benefit)

$

73,680

 

$

(6,338

)

$

22,513

 

Discrete income tax adjustments8

 

(10,630

)

 

(4,053

)

 

 

Income tax impact from adjustments9

 

3,973

 

 

18,228

 

 

8,055

 

Adjusted income tax expense2

$

67,023

 

$

7,837

 

$

30,568

 

Adjusted effective income tax rate2

 

24.8

%

 

206.0

%

 

21.7

%

______________________________________________________________________

 

See end of release for footnotes.

Guess?, Inc. and Subsidiaries

Consolidated Segment Data

(dollars in thousands)

 

 

 

 

 

 

 

Three Months Ended

% change

 

January 29,
2022

January 30,
2021

February 1,
2020

January 30,
2021

February 1,
2020

Net revenue:

 

 

 

 

Americas Retail

$

247,668

 

$

195,829

 

$

258,334

 

26%

 

(4%)

Americas Wholesale

 

46,915

 

 

35,476

 

 

41,884

 

32%

 

12%

Europe

 

402,239

 

 

307,648

 

 

420,297

 

31%

 

(4%)

Asia

 

76,443

 

 

80,020

 

 

95,460

 

(4%)

 

(20%)

Licensing

 

26,670

 

 

29,482

 

 

26,279

 

(10%)

 

1%

Total net revenue

$

799,935

 

$

648,455

 

$

842,254

 

23%

 

(5%)

 

 

 

 

 

 

 

Earnings (loss) from operations:

 

 

 

 

 

 

Americas Retail

$

42,642

 

$

25,128

 

$

16,533

 

70%

 

158%

Americas Wholesale

 

11,916

 

 

8,353

 

 

8,222

 

43%

 

45%

Europe

 

74,736

 

 

38,925

 

 

79,336

 

92%

 

(6%)

Asia

 

4,940

 

 

3,971

 

 

1,541

 

24%

 

221%

Licensing

 

24,149

 

 

28,105

 

 

22,896

 

(14%)

 

5%

Total segment earnings from operations

 

158,383

 

 

104,482

 

 

128,528

 

52%

 

23%

 

 

 

 

 

 

 

Corporate overhead

 

(33,628

)

 

(29,795

)

 

(27,171

)

13%

 

24%

Asset impairment charges

 

(55

)

 

(5,166

)

 

(4,851

)

(99%)

 

(99%)

Net gains on lease modifications

 

700

 

 

2,351

 

 

 

(70%)

 

 

Total earnings from operations

$

125,400

 

$

71,872

 

$

96,506

 

74%

 

30%

 

 

 

 

 

 

Operating margins:

 

 

 

 

 

Americas Retail

 

17.2

%

 

12.8

%

 

6.4

%

 

 

Americas Wholesale

 

25.4

%

 

23.5

%

 

19.6

%

 

 

Europe

 

18.6

%

 

12.7

%

 

18.9

%

 

 

Asia

 

6.5

%

 

5.0

%

 

1.6

%

 

 

Licensing

 

90.5

%

 

95.3

%

 

87.1

%

 

 

 

 

 

 

 

 

GAAP operating margin for total Company

 

15.7

%

 

11.1

%

 

11.5

%

 

 

Certain professional service and legal fees and related (credits) costs2, 3

 

0.1

%

 

(0.1

%)

 

(0.0

%)

 

 

Separation charges2, 4

 

%

 

0.0

%

 

0.0

%

 

 

Asset impairment charges2, 5

 

0.0

%

 

0.8

%

 

0.6

%

 

 

Net gains on lease modifications2, 6

 

(0.1

%)

 

(0.4

%)

 

%

 

 

Adjusted operating margin for total Company2

 

15.7

%

 

11.4

%

 

12.1

%

 

 

______________________________________________________________________

See end of release for footnotes.

Guess?, Inc. and Subsidiaries

Consolidated Segment Data

(dollars in thousands)

 

 

 

 

 

 

 

Fiscal Year Ended

% change

 

January 29,
2022

January 30,
2021

February 1,
2020

January 30,
2021

February 1,
2020

Net revenue:

 

 

 

 

Americas Retail

$

759,117

 

$

510,806

 

$

811,547

 

49%

 

(6%)

Americas Wholesale

 

201,202

 

 

117,607

 

 

186,389

 

71%

 

8%

Europe

 

1,297,550

 

 

941,546

 

 

1,248,114

 

38%

 

4%

Asia

 

237,053

 

 

232,574

 

 

346,212

 

2%

 

(32%)

Licensing

 

96,709

 

 

73,996

 

 

85,847

 

31%

 

13%

Total net revenue

$

2,591,631

 

$

1,876,529

 

$

2,678,109

 

38%

 

(3%)

 

 

 

 

 

 

 

Earnings (loss) from operations:

 

 

 

 

 

 

Americas Retail

$

124,902

 

$

(15,776

)

$

22,279

 

(892%)

 

461%

Americas Wholesale

 

53,731

 

 

19,912

 

 

35,674

 

170%

 

51%

Europe

 

174,860

 

 

66,790

 

 

134,078

 

162%

 

30%

Asia

 

(4,114

)

 

(20,758

)

 

(8,894

)

(80%)

 

(54%)

Licensing

 

88,136

 

 

67,938

 

 

74,459

 

30%

 

18%

Total segment earnings from operations

 

437,515

 

 

118,106

 

 

257,596

 

270%

 

70%

 

 

 

 

 

 

 

Corporate overhead

 

(129,588

)

 

(100,962

)

 

(106,948

)

28%

 

21%

Asset impairment charges

 

(3,149

)

 

(80,442

)

 

(9,977

)

(96%)

 

(68%)

Net gains on lease modifications

 

259

 

 

2,801

 

 

 

(91%)

 

 

Total earnings (loss) from operations

$

305,037

 

$

(60,497

)

$

140,671

 

(604%)

 

117%

 

 

 

 

 

 

Operating margins:

 

 

 

 

 

Americas Retail

 

16.5

%

 

(3.1

%)

 

2.7

%

 

 

Americas Wholesale

 

26.7

%

 

16.9

%

 

19.1

%

 

 

Europe

 

13.5

%

 

7.1

%

 

10.7

%

 

 

Asia

 

(1.7

%)

 

(8.9

%)

 

(2.6

%)

 

 

Licensing

 

91.1

%

 

91.8

%

 

86.7

%

 

 

 

 

 

 

 

 

GAAP operating margin for total Company

 

11.8

%

 

(3.2

%)

 

5.3

%

 

 

Certain professional service and legal fees and related (credits) costs2, 3

 

0.1

%

 

(0.0

%)

 

(0.1

%)

 

 

Separation charges2, 4

 

%

 

0.1

%

 

0.0

%

 

 

Asset impairment charges2, 5

 

0.1

%

 

4.3

%

 

0.4

%

 

 

Net gains on lease modifications2, 6

 

(0.0

%)

 

(0.1

%)

 

%

 

 

Adjusted operating margin for total Company2

 

12.0

%

 

1.1

%

 

5.6

%

 

 

______________________________________________________________________

See end of release for footnotes.

Guess?, Inc. and Subsidiaries

Constant Currency Financial Measures

(dollars in thousands)

 

 

 

 

 

 

 

 

As Reported

Foreign
Currency
Impact

Constant
Currency

As Reported

As Reported

Constant
Currency

 

Three Months Ended

% change

 

January 29, 2022

January 30, 2021

 

 

Net revenue:

 

 

 

 

 

 

Americas Retail

$

247,668

$

(229

)

$

247,439

$

195,829

26%

 

26%

Americas Wholesale

 

46,915

 

168

 

 

47,083

 

35,476

32%

 

33%

Europe

 

402,239

 

27,796

 

 

430,035

 

307,648

31%

 

40%

Asia

 

76,443

 

3,017

 

 

79,460

 

80,020

(4%)

 

(1%)

Licensing

 

26,670

 

 

 

26,670

 

29,482

(10%)

 

(10%)

Total net revenue

$

799,935

$

30,752

 

$

830,687

$

648,455

23%

 

28%

 

 

 

 

 

 

 

 

 

 

February 1, 2020

 

 

 

Net revenue:

 

 

 

 

 

 

 

Americas Retail

$

247,668

$

202

 

$

247,870

$

258,334

(4%)

 

(4%)

Americas Wholesale

 

46,915

 

715

 

 

47,630

 

41,884

12%

 

14%

Europe

 

402,239

 

668

 

 

402,907

 

420,297

(4%)

 

(4%)

Asia

 

76,443

 

(1,139

)

 

75,304

 

95,460

(20%)

 

(21%)

Licensing

 

26,670

 

 

 

26,670

 

26,279

1%

 

1%

Total net revenue

$

799,935

$

446

 

$

800,381

$

842,254

(5%)

 

(5%)

 

 

 

 

 

 

 

 

 

Fiscal Year Ended

 

 

 

 

January 29, 2022

January 30, 2021

 

 

 

Net revenue:

 

 

 

 

 

 

 

Americas Retail

$

759,117

$

(7,756

)

$

751,361

$

510,806

49%

 

47%

Americas Wholesale

 

201,202

 

(3,848

)

 

197,354

 

117,607

71%

 

68%

Europe

 

1,297,550

 

(6,397

)

 

1,291,153

 

941,546

38%

 

37%

Asia

 

237,053

 

(3,286

)

 

233,767

 

232,574

2%

 

1%

Licensing

 

96,709

 

 

 

96,709

 

73,996

31%

 

31%

Total net revenue

$

2,591,631

$

(21,287

)

$

2,570,344

$

1,876,529

38%

 

37%

 

 

 

 

 

 

 

 

 

 

February 1, 2020

 

Net revenue:

 

 

 

 

 

 

 

Americas Retail

$

759,117

$

(1,946

)

$

757,171

$

811,547

(6%)

 

(7%)

Americas Wholesale

 

201,202

 

1,076

 

 

202,278

 

186,389

8%

 

9%

Europe

 

1,297,550

 

(36,757

)

 

1,260,793

 

1,248,114

4%

 

1%

Asia

 

237,053

 

(5,894

)

 

231,159

 

346,212

(32%)

 

(33%)

Licensing

 

96,709

 

 

 

96,709

 

85,847

13%

 

13%

Total net revenue

$

2,591,631

$

(43,521

)

$

2,548,110

$

2,678,109

(3%)

 

(5%)

 

 

 

 

 

 

 

Guess?, Inc. and Subsidiaries

Selected Condensed Consolidated Balance Sheet Data

(in thousands)

 

 

 

 

 

January 29,
2022

January 30,
2021

February 1,
2020

 

 

 

 

ASSETS

 

 

 

 

Cash and cash equivalents

$

415,565

$

469,110

$

284,613

 

 

 

 

Receivables, net

 

328,856

 

314,147

 

327,281

 

 

 

 

Inventories

 

462,295

 

389,144

 

393,129

 

 

 

 

Other current assets

 

77,378

 

60,123

 

59,212

 

 

 

 

Property and equipment, net

 

228,765

 

216,196

 

288,112

 

 

 

 

Restricted cash

 

 

235

 

215

 

 

 

 

Operating lease right-of-use assets

 

685,799

 

764,804

 

851,990

 

 

 

 

Other assets

 

356,970

 

252,109

 

224,410

Total assets

$

2,555,628

$

2,465,868

$

2,428,962

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

Current portion of borrowings and finance lease obligations

$

43,379

$

38,710

$

9,490

 

 

 

 

Current operating lease liabilities

 

195,516

 

222,800

 

192,066

 

 

 

 

Other current liabilities

 

578,979

 

501,029

 

436,857

 

 

 

 

Long-term debt and finance lease obligations

 

60,970

 

68,554

 

32,770

 

 

 

 

Convertible senior notes, net

 

270,595

 

258,614

 

247,363

 

 

 

 

Long-term operating lease liabilities

 

582,757

 

662,657

 

714,079

 

 

 

 

Other long-term liabilities

 

160,289

 

144,004

 

130,259

 

 

 

 

Redeemable and nonredeemable noncontrolling interests

 

40,485

 

25,837

 

26,364

 

 

 

 

Guess?, Inc. stockholders’ equity

 

622,658

 

543,663

 

639,714

Total liabilities and stockholders’ equity

$

2,555,628

$

2,465,868

$

2,428,962

 

Guess?, Inc. and Subsidiaries

Condensed Consolidated Cash Flow Data

(in thousands)

 

 

 

 

 

Fiscal Year Ended

 

January 29,
2022

January 30,
2021

February 1,
2020

 

 

 

 

Net cash provided by operating activities10

$

131,642

 

$

209,050

 

$

197,913

 

Net cash used in investing activities

 

(62,277

)

 

(22,161

)

 

(56,471

)

Net cash used in financing activities

 

(97,044

)

 

(9,907

)

 

(64,165

)

Effect of exchange rates on cash, cash equivalents and restricted cash

 

(26,101

)

 

7,535

 

 

(3,444

)

Net change in cash, cash equivalents and restricted cash

 

(53,780

)

 

184,517

 

 

73,833

 

Cash, cash equivalents and restricted cash at the beginning of the year

 

469,345

 

 

284,828

 

 

210,995

 

Cash, cash equivalents and restricted cash at the end of the period

$

415,565

 

$

469,345

 

$

284,828

 

 

 

 

 

Supplemental information:

 

 

 

Depreciation and amortization

$

56,799

 

$

63,501

 

$

72,188

 

Total lease costs (excluding finance lease cost)

$

289,412

 

$

283,806

 

$

368,435

 

 

 

 

 

Guess?, Inc. and Subsidiaries

Reconciliation of Net Cash Provided By Operating Activities to Free Cash Flow

(in thousands)

 

 

 

 

 

Fiscal Year Ended

 

January 29,
2022

January 30,
2021

February 1,
2020

 

 

 

 

Net cash provided by operating activities10

$

131,642

 

$

209,050

 

$

197,913

 

Less: Purchases of property and equipment

 

(63,521

)

 

(18,876

)

 

(61,868

)

Less: Payments for property and equipment under finance leases

 

(7,014

)

 

(7,131

)

 

(2,733

)

Free cash flow

$

61,107

 

$

183,043

 

$

133,312

 

______________________________________________________________________

See end of release for footnotes.

Guess?, Inc. and Subsidiaries

Retail Store Data

Global Store and Concession Count

 

 

 

 

 

 

 

 

Stores

Concessions

Region

Total

Directly
Operated

Partner
Operated

Total

Directly
Operated

Partner
Operated

 

As of January 29, 2022

 

 

 

 

 

 

 

United States

245

 

245

 

 

1

 

 

1

Canada

74

 

74

 

 

 

 

Central and South America

103

 

69

 

34

 

29

 

29

 

Total Americas

422

 

388

 

34

 

30

 

29

 

1

Europe and the Middle East

779

 

556

 

223

 

50

 

50

 

Asia and the Pacific

430

 

124

 

306

 

257

 

99

 

158

Total

1,631

 

1,068

 

563

 

337

 

178

 

159

 

 

 

 

 

 

 

 

As of January 30, 2021

 

 

 

 

 

 

 

United States

251

 

249

 

2

 

1

 

 

1

Canada

76

 

76

 

 

 

 

Central and South America

105

 

70

 

35

 

27

 

27

 

Total Americas

432

 

395

 

37

 

28

 

27

 

1

Europe and the Middle East

725

 

507

 

218

 

44

 

44

 

Asia and the Pacific

413

 

144

 

269

 

304

 

101

 

203

Total

1,570

 

1,046

 

524

 

376

 

172

 

204

 

 

 

 

 

 

 

 

As of February 1, 2020

 

 

 

 

 

 

 

United States

282

 

280

 

2

 

1

 

 

1

Canada

80

 

80

 

 

 

 

Central and South America

113

 

73

 

40

 

27

 

27

 

Total Americas

475

 

433

 

42

 

28

 

27

 

1

Europe and the Middle East

745

 

517

 

228

 

39

 

39

 

Asia and the Pacific

509

 

219

 

290

 

327

 

117

 

210

Total

1,729

 

1,169

 

560

 

394

 

183

 

211

Guess?, Inc. and Subsidiaries

Return on Invested Capital for the Fiscal Year

(in thousands)

 

 

 

 

 

 

 

 

FY2019

FY2020

FY2020
2-Year
Average

FY2021

FY2022

FY2022
2-Year
Average

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total assets11

$

1,649,205

 

$

2,428,962

 

$

2,039,084

 

$

2,465,868

 

$

2,555,628

 

$

2,510,748

 

Cash and cash equivalents

 

(210,460

)

 

(284,613

)

 

(247,537

)

 

(469,110

)

 

(415,565

)

(442,338

)

Operating right-of-use assets11

 

 

 

(851,990

)

 

(425,995

)

 

(764,804

)

 

(685,799

)

(725,302

)

Accounts payable

 

(286,657

)

 

(232,761

)

 

(259,709

)

 

(300,427

)

 

(325,797

)

(313,112

)

Accrued expenses

 

(252,392

)

 

(204,096

)

 

(228,244

)

 

(200,602

)

 

(253,182

)

(226,892

)

Accrual for European Commission fine12

 

45,619

 

 

 

 

22,809

 

 

 

 

 

 

 

Average invested capital

$

945,315

 

$

855,502

 

$

900,408

 

$

730,925

 

$

875,285

 

$

803,104

 

 

 

 

 

 

 

 

 

 

 

FY2020

 

 

FY2022

 

 

 

 

 

 

 

Reported GAAP earnings from operations

 

 

$

140,671

 

 

 

$

305,037

 

Certain professional service and legal fees and related (credits) costs3

 

 

 

(857

)

 

 

 

2,652

 

Asset impairment charges5

 

 

 

9,977

 

 

 

 

3,149

 

Separation charges4

 

 

 

438

 

 

 

 

 

Net gains on lease modifications6

 

 

 

 

 

 

 

(259

)

Adjusted earnings from operations2

 

 

$

150,229

 

 

 

$

310,579

 

Asset impairments5

 

 

 

(9,977

)

 

 

 

(3,149

)

Other expense, net

 

 

 

(2,529

)

 

 

 

(30,171

)

Income tax expense13

 

 

 

(29,886

)

 

 

 

(68,760

)

Adjusted net operating profit after taxes2

 

 

$

107,837

 

 

 

$

208,499

 

 

 

 

 

 

 

 

Non-GAAP return on invested capital14

 

 

 

12

%

 

 

 

26

%

______________________________________________________________________

See end of release for footnotes.

Guess?, Inc. and Subsidiaries

Footnotes to Condensed Consolidated Financial Data

 

 

Footnotes:

 

 

1

For GAAP purposes, the Company incurs dilution above the initial strike price of the Company’s convertible senior notes of $25.78. However, the Company excludes from its adjusted diluted shares outstanding calculation the dilutive impact of the convertible notes between $25.78 and $46.88, based on the bond hedge contracts in place that will deliver shares to offset dilution in these ranges. At stock prices in excess of $46.88, the Company incurs dilution related to the notes, and it would have an obligation to deliver additional shares in excess of the dilution protection provided by the bond hedges. Diluted net income per share for the three months and fiscal year ended January 29, 2022 is calculated based on GAAP net income and diluted weighted-average shares of 65,352,416 and 65,919,260, respectively. There was no dilution related to the convertible notes for either period.

 

2

The adjusted results reflect the exclusion of certain professional service and legal fees and related (credits) costs, certain separation charges, asset impairment charges, net gains on lease modifications, non-cash amortization of debt discount on the Company’s convertible senior notes, the related income tax impacts of these adjustments, as well as certain discrete income tax adjustments related primarily to an intra-entity transfer of intellectual property rights to a wholly-owned Swiss subsidiary, in each case where applicable. A complete reconciliation of actual results to adjusted results is presented in the “Reconciliation of GAAP Results to Adjusted Results.”

 

3

Amounts recorded represent certain professional service and legal fees and related (credits) costs which the Company otherwise would not have incurred as part of its business operations.

 

4

Amounts represent certain separation-related charges due to headcount reduction in response to the pandemic and due to the separation of our former Chief Executive Officer.

 

5

Amounts represent asset impairment charges related primarily to impairment of operating lease right-of-use assets and property and equipment related to certain retail locations resulting from lower revenue and future cash flow projections from the effects of the COVID-19 pandemic and expected store closures.

 

6

Amounts recorded represent net gains on lease modifications related primarily to the early termination of certain lease agreements.

 

7

In April 2019, the Company issued $300 million principal amount of 2.00% convertible senior notes due 2024 (the “Notes”) in a private offering. The Company has separated the Notes into liability (debt) and equity (conversion option) components. The debt discount, which represents an amount equal to the fair value of the equity component, is amortized as non-cash interest expense over the term of the Notes.

 

8

Amounts represent discrete income tax adjustments related primarily to the impacts from an intra-entity transfer of intellectual property rights to a wholly-owned Swiss subsidiary during the quarter ended October 30, 2021, impacts from cumulative valuation allowances and the income tax benefits from an income tax rate change due to net operating loss carrybacks.

 

9

The income tax effect of certain professional service and legal fees and related (credits) costs, separation charges, asset impairment charges, net gains on lease modifications and the amortization of debt discount was based on the Company’s assessment of deductibility using the statutory income tax rate (inclusive of the impact of valuation allowances) of the tax jurisdiction in which the charges were incurred.

 

10

The Company made a U.S. income tax payment of $26.8 million and $107.2 million in the three months and fiscal year ended January 29, 2022, respectively, due to an intra-entity transfer of intellectual property rights to a wholly-owned Swiss subsidiary.

 

11

During fiscal year 2020, the Company adopted a comprehensive new lease standard which superseded previous lease guidance. The standard requires a lessee to recognize an asset related to the right to use the underlying asset and a liability that approximates the present value of the lease payments over the term of contracts that qualify as leases under the new guidance. The adoption of the standard resulted in the recording of operating lease right-of-use assets and operating lease liabilities.

 

12

During fiscal year 2019, the Company recognized a charge of €39.8 million ($45.6 million) related to a fine by the European Commission related to its inquiry concerning potential violations of European Union competition rules by the Company.

 

13

Income tax expense is calculated using the adjusted effective income tax rate of 24.8% and 21.7% for the fiscal 2022 and 2020, respectively.

 

14

The Company defines return on invested capital (or "ROIC") as adjusted net operating profit after taxes divided by two-year average invested capital.

 

Contacts

Guess?, Inc.
Fabrice Benarouche
VP, Finance and Investor Relations
(213) 765-5578

Contacts

Guess?, Inc.
Fabrice Benarouche
VP, Finance and Investor Relations
(213) 765-5578