Guess lowers full-year outlook during "year of transformation and investment"

Guess? Inc., which recently acquired Rag & Bone, has published its financial results for the second quarter ending 3 August 2024. During the quarter, the company reported a net loss of £8 million ($10.6 million), which it claimed was due to an increase in its marketing investments to support the international expansion of its brands.

During the second quarter, the company reported a net loss of £8 million ($10.6 million), compared to GAAP net earnings of £29.5 million ($39 million) the year prior.

Adjusted net earnings were £17.4 million ($23 million), a 42% decrease from £30 million ($39.7 million) for the same prior-year quarter. Adjusted diluted EPS decreased 42% to £0.32 ($0.42) and total net revenue increased 10% to £555.1 million ($732.6 million).

Carlos Alberini, Chief Executive Officer, commented: "During the second quarter we delivered revenue growth of 10%, in line with our expectations. This performance was fueled by the Rag & Bone acquisition and strong wholesale performance in our Europe and Americas businesses. All our segments, except for Asia, delivered top-line growth.

"Our bottom-line results reflect our decision to significantly increase our marketing investments compared to last year’s spend to support the international expansion of our brands, including our core Guess brand as well as the new additions to our portfolio – Guess Jeans and Rag & Bone."

Paul Marciano, Co-Founder and Chief Creative Officer, said: "I am very excited about the rag & bone acquisition. During the last few months, we met frequently with Andrew Rosen and the Rag & Bone team to develop our expansion strategy and put our plan into action... Under Andrew’s leadership, we are capitalising on our capabilities and have already begun adding product categories to the portfolio and plan to accelerate store openings both domestically and abroad."

As for the six months ending 3 August, Guess reported net earnings of £1.8 million ($2.4 million), a 91% decrease from £20.6 million ($27.2 million) for the same prior-year period.

The company recorded adjusted net earnings of £6.9 million ($9.1 million), a 75% decrease from the year prior. Adjusted diluted EPS decreased 75% to £0.12 ($0.16) and total net revenue increased 7% to £990 million ($1.32 billion).

Looking ahead, Guess has lowered its full-year guidance. The company expects revenues to increase between 9.5% and 11%. Operating margins are expected to sit between 7.3% and 7.8%.

Alberini added: "As we look into the second half of the year, we are adjusting our outlook for revenues and earnings to reflect the softer consumer environment. As always, we will manage our costs and inventories carefully, while we continue to support the growth of our business, including investments in marketing, new stores and infrastructure. For us, this is a year of transformation and investment – a year when our business is further diversifying with new brands in our portfolio that have significant opportunities for growth and value creation."