Back to top

Image: Bigstock

Why Is Guess (GES) Down 18.4% Since Last Earnings Report?

Read MoreHide Full Article

A month has gone by since the last earnings report for Guess (GES - Free Report) . Shares have lost about 18.4% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Guess due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Guess? Q4 Earnings & Revenues Top Estimates, Grow Y/Y

Guess? reported solid fourth-quarter fiscal 2024 results, wherein both the top and bottom lines increased year over year and beat the Zacks Consensus Estimate. The robust performance encouraged management to announce a special dividend, reflecting its commitment to shareholders.

Results benefited from robust brand momentum globally and strong customer response to its collections across various product categories. Management remains optimistic about its robust global platform, which will facilitate the growth and expansion of the company’s Guess and Marciano businesses, alongside rag & bone, which will mark the company’s first acquisition. Management remains positive about the new fiscal, wherein it expects to surpass $3 billion in revenues for the first time, supported by an impressive growth plan for its core business, the integration of rag & bone into its portfolio and the introduction of Guess Jeans to cater to the demand from Generation Z consumers.

Results in Detail

Guess? posted adjusted earnings of $2.01 per share, up 16% from $1.74 reported in the year-ago period. Earnings were positively impacted by share buybacks, partly negated by currency headwinds. The bottom line surpassed the Zacks Consensus Estimate of $1.55 per share.

Net revenues amounted to $891.1 million, cruising ahead of the consensus mark of $856 million. The metric rose 9% year over year. On a constant-currency (cc) basis, too, net revenues grew 9%, driven by contributions from an extra week in the quarter under review.

The company’s gross margin expanded from 44.2% to 45.4% in the reported quarter. As a percentage of sales, SG&A expenses declined to 29.1% from 31.1% in the prior-year quarter’s level. Adjusted earnings from operations surged 21.1% to $130.2 million. The adjusted operating margin jumped 1.5% to 14.6% due to increased revenues and initial markups, partly negated by elevated expenses, currency headwinds and greater markdowns.

Segment Performance

Revenues in the Americas Retail segment increased 1% year over year on a reported basis while remaining flat at cc. Retail comp sales (including e-commerce) dropped 1% on a reported basis and fell 2% at cc. The segment’s operating margin fell 0.4% to 15% in the quarter. Americas Wholesale revenues soared 44% on a reported basis and 39% at cc. The segment’s operating margin jumped 7.6% to 28.5% in the quarter.

The Europe segment’s revenues increased 9% on a reported basis and rose 10% at cc. Retail comp sales (including e-commerce) climbed 6% on a reported basis and 7% on a cc basis. The segmental operating margin was 18%, up 2% year over year.

Asia revenues advanced 18% on a reported basis and 19% at cc. Retail comp sales (including e-commerce) fell 2% on a reported basis, while the same declined 1% at cc. The operating margin for the segment stood at 4.8%, reflecting 2% year-over-year growth.

Licensing revenues rallied 15% on a reported basis and at cc. The segmental operating margin was 92.7% compared with 88.2% in the year-ago quarter.

Other Updates

The company exited the quarter with cash and cash equivalents of $360.3 million and long-term debt and finance lease obligations of nearly $28.2 million. Stockholders’ equity was around $684.9 million. Net cash provided by operating activities for the fiscal year ended Feb 3, 2024 was $330.4 million. Free cash flow for the same period amounted to $248.4 million. For fiscal 2025, free cash flow is envisioned to be $160 million.

GES announced a quarterly dividend of 30 cents per share and a special cash dividend of $2.25 per share on the company’s common stock, both payable on May 3, 2024 to shareholders on record as of Apr 17.

In January 2024, Guess? repurchased nearly 0.9 million shares for $21.1 million under its 2021 Share Repurchase Program. Management boosted its buyback authorization by $1.4 million to cover its January buybacks. As of Feb 3, 2024, the company did not have any pending authority under its 2021 Share Repurchase Program.


For fiscal 2025, Guess? anticipates revenues to grow in the range of 11.5-13.5%. The adjusted operating margin is likely to be 7.5-8.5%. The GAAP operating margin is likely to be 7.4-8.4%. Management expects adjusted earnings per share (EPS) in the band of $2.56-$3.00 in fiscal 2025 compared with the $3.14 recorded in fiscal 2024. On a GAAP basis, EPS is envisioned in the range of $2.08-$2.43 compared with the $3.09 reported in fiscal 2024.  

For the first quarter of fiscal 2025, management expects revenue growth of 1-2%. On an adjusted basis, Guess? expects to post a loss of 41-37 cents per share. On a GAAP basis, it expects to deliver a loss in the range of 50-48 cents per share.

How Have Estimates Been Moving Since Then?

It turns out, estimates review have trended downward during the past month.

The consensus estimate has shifted -6966.67% due to these changes.

VGM Scores

At this time, Guess has a strong Growth Score of A, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.


Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Guess has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

See More Zacks Research for These Tickers

Normally $25 each - click below to receive one report FREE:

Guess?, Inc. (GES) - free report >>

Published in