GES
$18.97
Guess
$.04
.21%
Earnings Details
2nd Quarter July 2019
Wednesday, August 28, 2019 4:15:00 PM
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Summary

Guess Beats

Guess (GES) reported 2nd Quarter July 2019 earnings of $0.38 per share on revenue of $683.2 million. The consensus earnings estimate was $0.29 per share on revenue of $673.1 million. The Earnings Whisper number was $0.30 per share. Revenue grew 5.8% on a year-over-year basis.

The company said it expects third quarter earnings of $0.15 to $0.18 per share on revenue of $617.5 million to $623.6 million. The current consensus earnings estimate is $0.27 per share on revenue of $627.3 million for the quarter ending October 31, 2019. The company said it expects fiscal year earnings of $1.28 to $1.36 per share on revenue of $2.69 billion to $2.70 billion. The company's previous guidance was earnings of $1.19 to $1.30 per share on revenue of $2.70 billion to $2.73 billion and the current consensus earnings estimate is $1.27 per share on revenue of $2.71 billion for the year ending January 31, 2020.

Guess? Inc., designs, markets, distributes and licenses a lifestyle collection of contemporary apparel and accessories for men, women and children that reflect the American lifestyle and European fashion sensibilities.

Results
Reported Earnings
$0.38
Earnings Whisper
$0.30
Consensus Estimate
$0.29
Reported Revenue
$683.2 Mil
Revenue Estimate
$673.1 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Guess?, Inc. Reports Second Quarter Results

Q2 Fiscal 2020 Revenues Increased 6% to $683 Million; Increased 9% in Constant Currency

Q2 Fiscal 2020 GAAP EPS of $0.35, Compared to $0.31 in Q2 Fiscal 2019; Q2 Fiscal 2020 Adjusted EPS of $0.38, Compared to $0.36 in Q2 Fiscal 2019

LOS ANGELES--(BUSINESS WIRE)--Guess?, Inc. (NYSE: GES) today reported financial results for its second quarter ended August 3, 2019.

Carlos Alberini, Chief Executive Officer, commented, “I am very pleased with our second quarter financial performance, which delivered strong operating profit growth. This performance exceeded our expectations and was driven by a solid top line increase, strong margin performance and effective expense management. During the quarter we increased revenues by 6% in U.S. dollars and 9% in constant currency. Overall, our direct-to-consumer businesses, which include stores and e-commerce, performed in line with our expectations in all regions and our wholesale businesses in the Americas and Europe delivered a very strong performance compared to our expectations. Based on our second quarter performance, our strong inventory position and our expectations for the Fall and Holiday seasons, we are raising our guidance for the full year.”

Mr. Alberini concluded, “As we previously communicated, our team is finalizing our strategic business planning process and we plan to share our findings and key strategic initiatives by the end of October. I look forward to sharing these findings and I couldn’t be more excited to update you on our Company’s opportunities for global growth, profit improvement and value creation.”

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 terminations, (iii) certain professional service and legal fees and related costs, (iv) non-cash debt discount amortization on our convertible senior notes and (v) the related tax effects of the foregoing items as well as adjustments to uncertain tax positions excluded from results in prior years, 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.

Share Repurchases. The Company has used substantially all of the net proceeds from its $300 million 2% convertible senior notes due 2024 issued during the first quarter of fiscal 2020 (after the related hedge and warrant transactions) to repurchase shares of its common stock. During the three months ended May 4, 2019, the Company used $170 million of such proceeds to enter into an accelerated share repurchase program (“ASR”), pursuant to which it received up-front approximately 5.2 million shares (representing approximately $102 million (or 60%) of the $170 million notional amount of the ASR), with the remaining portion expected to be completed by the beginning of September 2019. During the six months ended August 3, 2019, the Company also repurchased approximately 5.8 million shares of its common stock in open market and privately negotiated transactions totaling $110.6 million, of which approximately 0.7 million shares of its common stock were repurchased at an aggregate cost of $11.0 million during the three months ended August 3, 2019 and approximately 5.1 million shares of its common stock were repurchased at an aggregate cost of $99.6 million during the three months ended May 4, 2019. Combined, these transactions resulted in the repurchase of approximately 11.0 million shares for $212.6 million during the six months ended August 3, 2019, with the remaining portion of the ASR to be determined based on the average volume-weighted price of the Company’s shares during the term of the ASR (less an agreed discount).

Second Quarter Fiscal 2020 Results

For the second quarter of fiscal 2020, the Company recorded GAAP net earnings of $25.3 million, a 0.8% decrease compared to $25.5 million for the second quarter of fiscal 2019. GAAP diluted earnings per share increased 12.9% to $0.35 for the second quarter of fiscal 2020, compared to $0.31 for the prior-year quarter. The Company estimates that the share buybacks offset by the convert transaction had a net positive impact of $0.01 on diluted earnings per share and currency had a negative impact of $0.05 on diluted earnings per share in the second quarter of fiscal 2020.

For the second quarter of fiscal 2020, the Company recorded adjusted net earnings of $27.4 million, a 6.9% decrease compared to $29.5 million for the second quarter of fiscal 2019. Adjusted diluted earnings per share increased 5.6% to $0.38, compared to $0.36 for the prior-year quarter. The Company estimates that the share buybacks offset by the convert transaction had a net positive impact of $0.03 on adjusted diluted earnings per share in the second quarter of fiscal 2020.

Net Revenue. Total net revenue for the second quarter of fiscal 2020 increased 5.8% to $683.2 million, compared to $645.9 million in the prior-year quarter. In constant currency, net revenue increased by 8.8%.

  • Americas Retail revenues increased 0.9% in U.S. dollars and 1.2% in constant currency. Retail comp sales including e-commerce increased 2% in U.S. dollars and constant currency.
  • Americas Wholesale revenues increased 22.3% in U.S. dollars and 22.4% in constant currency.
  • Europe revenues increased 9.1% in U.S. dollars and 14.1% in constant currency. Retail comp sales including e-commerce decreased 3% in U.S. dollars and increased 1% in constant currency.
  • Asia revenues increased 0.6% in U.S. dollars and 5.2% in constant currency. Retail comp sales including e-commerce decreased 13% in U.S. dollars and 8% in constant currency.
  • Licensing revenues decreased 5.9% in U.S. dollars and constant currency.

Operating Earnings. GAAP earnings from operations for the second quarter of fiscal 2020 increased 44.2% to $46.0 million (including a $2.0 million unfavorable currency translation impact), compared to $31.9 million in the prior-year quarter. GAAP operating margin in the second quarter improved 180 basis points to 6.7%, compared to 4.9% in the prior-year quarter, driven primarily by higher initial markups in Europe and Americas Retail, lower logistics costs and leveraging of expenses in Europe and lower expenses related to certain professional service and legal fees and related costs, partially offset by higher advertising expenses, and wage pressures and higher markdowns in Americas Retail. The negative impact of currency on operating margin for the quarter was approximately 10 basis points.

For the second quarter of fiscal 2020, adjusted earnings from operations increased 29.8% to $47.9 million, compared to $36.9 million in the same prior-year quarter. Adjusted operating margin increased 130 basis points to 7.0%, compared to the same prior-year quarter, driven primarily by higher initial markups in Europe and Americas Retail, lower logistics costs and leveraging of expenses in Europe, partially offset by higher advertising expenses, and wage pressures and higher markdowns in Americas Retail.

  • Operating margin for the Company’s Americas Retail segment increased 20 basis points to 3.0% in the second quarter of fiscal 2020, compared to 2.8% in the prior-year quarter, driven primarily by the favorable impact from higher initial markups and positive comparable sales, partially offset by wage pressures and higher markdowns.
  • Operating margin for the Company’s Americas Wholesale segment increased 460 basis points to 20.1% in the second quarter of fiscal 2020, compared to 15.5% in the prior-year quarter, due primarily to higher initial markups and lower markdowns.
  • Operating margin for the Company’s Europe segment increased 540 basis points to 15.2% in the second quarter of fiscal 2020, compared to 9.8% in the prior-year quarter, driven primarily by higher initial markups, lower logistics costs and leveraging of expenses.
  • Operating margin for the Company’s Asia segment deteriorated 780 basis points to negative 5.8% in the second quarter of fiscal 2020, from 2.0% in the prior-year quarter, driven primarily by overall deleveraging of expenses and higher markdowns.
  • Operating margin for the Company’s Licensing segment decreased 470 basis points to 83.8% in the second quarter of fiscal 2020, compared to 88.5% in the prior-year quarter.

Other expense, net, was $6.4 million for the second quarter of fiscal 2020, a deterioration of $7.7 million, compared to other income, net, of $1.4 million in the same prior-year quarter. This change was driven primarily by our proportionate share of net losses related to our minority investment in a privately-held apparel company as well as unrealized losses on non-operating assets compared to unrealized gains in the same prior-year period, and lower net unrealized and realized mark-to-market gains on revaluation of foreign exchange currency contracts.

Six-Month Period Results

For the six months ended August 3, 2019, the Company recorded GAAP net earnings of $3.9 million, an 8.4% decrease from $4.3 million for the six months ended August 4, 2018. GAAP diluted earnings per share was flat at $0.05 for the six months ended August 3, 2019, compared to the same prior-year period. The Company estimates that the convert transaction offset by the share buybacks had a net unfavorable impact on diluted earnings per share of $0.04 and currency had a negative impact of $0.05 on GAAP diluted earnings per share for the six months ended August 3, 2019.

For the six months ended August 3, 2019, the Company recorded adjusted net earnings of $7.8 million, a 32.9% decrease compared to $11.6 million for the six months ended August 4, 2018. Adjusted diluted earnings per share decreased 28.6% to $0.10, from $0.14 for the same prior-year period. The Company estimates that the convert transaction offset by the share buybacks had a net unfavorable impact of $0.01 on adjusted diluted earnings per share in the first half of fiscal 2020.

Net Revenue. Total net revenue for the first six months of fiscal 2020 increased 4.5% to $1.22 billion, compared to $1.17 billion in the same prior-year period. In constant currency, net revenue increased by 8.6%.

  • Americas Retail revenues increased 1.9% in U.S. dollars and 2.5% in constant currency. Retail comp sales including e-commerce increased 3% in U.S. dollars and constant currency.
  • Americas Wholesale revenues increased 17.6% in U.S. dollars and 18.7% in constant currency.
  • Europe revenues increased 6.4% in U.S. dollars and 13.3% in constant currency. Retail comp sales including e-commerce decreased 2% in U.S. dollars and increased 4% in constant currency.
  • Asia revenues increased 1.0% in U.S. dollars and 5.9% in constant currency. Retail comp sales including e-commerce decreased 14% in U.S. dollars and 9% in constant currency.
  • Licensing revenues decreased 5.4% in U.S. dollars and constant currency.

Operating Earnings. GAAP operating earnings for the first six months of fiscal 2020 increased 207.7% to $21.5 million (including a $0.1 million unfavorable currency translation impact), compared to $7.0 million in the same prior-year period. GAAP operating margin in the first six months of fiscal 2020 increased 120 basis points to 1.8%, compared to 0.6% in the same prior-year period, driven primarily by the favorable impact from higher initial markups in Europe and Americas Retail and lower expenses related to certain professional service and legal fees and related costs, partially offset by higher advertising expenses. The impact of currency on operating margin for the first six months of fiscal 2020 was minimal.

For the six months ended August 3, 2019, adjusted earnings from operations increased 55.2% to $25.5 million, compared to $16.4 million for the six months ended August 4, 2018. Adjusted operating margin was 2.1% for the six months ended August 3, 2019, an increase of 70 basis points compared to the same prior-year period, driven primarily by the favorable impact from higher initial markups in Europe and Americas Retail, partially offset by higher advertising expenses.

  • Operating margin for the Company’s Americas Retail segment increased 110 basis points to 1.1% in the first six months of fiscal 2020, compared to relatively breakeven in the same prior-year period, driven primarily by the favorable impact from higher initial markups and positive comparable sales, partially offset by wage pressures and higher markdowns.
  • Operating margin for the Company’s Americas Wholesale segment increased 330 basis points to 18.4% in the first six months of fiscal 2020, compared to 15.1% in the same prior-year period. The increase in operating margin was due primarily to higher initial markups, lower markdowns and overall leveraging of expenses.
  • Operating margin for the Company’s Europe segment increased 440 basis points to 6.4% in the first six months of fiscal 2020, compared to 2.0% in the same prior-year period. This increase was driven primarily by higher initial markups and leveraging of expenses due primarily to higher sales.
  • Operating margin for the Company’s Asia segment deteriorated 810 basis points to negative 4.7% in the first six months of fiscal 2020, from 3.4% in the same prior-year period, driven primarily by overall deleveraging of expenses and higher markdowns.
  • Operating margin for the Company’s Licensing segment decreased 220 basis points to 86.2% in the first six months of fiscal 2020, from 88.4% in the same prior-year period.

Other expense, net, was $4.3 million for the first six months of fiscal 2020, a deterioration of $3.0 million, compared to $1.3 million in the same prior-year period. The deterioration was due primarily to lower net unrealized and realized mark-to-market gains on revaluation of foreign exchange currency contracts and our proportionate share of net losses related to our minority investment in a privately-held apparel company, partially offset by higher unrealized gains on non-operating assets and lower net unrealized mark-to-market revaluations losses on foreign currency balances.

Dividends

The Company’s Board of Directors has approved a quarterly cash dividend of $0.1125 per share on the Company’s common stock. The dividend will be payable on September 27, 2019 to shareholders of record at the close of business on September 11, 2019.

Outlook

The Company’s expectations for the third quarter ending November 2, 2019 and its updated outlook for the fiscal year ending February 1, 2020 are as follows:

Outlook for Total Company1

 

 

 

 

 

 

 

Third Quarter of Fiscal 2020

 

Fiscal Year 2020

 

 

 

 

 

Consolidated net revenue in U.S. dollars

 

increase between 2.0% and 3.0%

 

increase between 3.0% and 3.5%

 

 

 

 

 

Consolidated net revenue in constant currency2

 

increase between 4.5% and 5.5%

 

increase between 6.0% and 6.5%

 

 

 

 

 

GAAP operating margin

 

3.0% to 3.5%

 

5.2% to 5.5%

 

 

 

 

 

Adjusted operating margin3

 

3.0% to 3.5%

 

5.3% to 5.6%

 

 

 

 

 

Currency impact included in operating margin4

 

(10) basis points

 

(10) basis points

 

 

 

 

 

Cash interest expense, and amortization of debt issuance costs related to convertible senior notes

 

$1.7 million

 

$5.3 million

 

 

 

 

 

Amortization of debt discount related to convertible senior notes

 

$2.4 million

 

$7.5 million

 

 

 

 

 

Estimated diluted shares outstanding5

 

67.9 million

 

71.6 million

 

 

 

 

 

GAAP EPS5

 

$0.12 to $0.15

 

$1.18 to $1.26

 

 

 

 

 

Adjusted EPS3, 5

 

$0.15 to $0.18

 

$1.28 to $1.36

 

 

 

 

 

Currency impact included in EPS4

 

$0.01

 

$(0.08)

 

 

 

 

 

Estimated impact of convertible senior notes and share repurchases included in GAAP EPS5, 6

 

$(0.01)

 

$0.05

 

 

 

 

Estimated impact of convertible senior notes and share repurchases included in adjusted EPS5, 7

 

$0.02

 

$0.13

___________________________________________

Notes:

1

 

The Company’s outlook for the third quarter ending November 2, 2019 and the fiscal year ending February 1, 2020 assumes that foreign currency exchange rates remain at prevailing rates and includes the estimated impact of known tariffs on imports into the U.S.

2

 

Eliminates the impact of expected foreign currency translation to give investors a better understanding of the underlying trends within the business.

3

 

The adjusted operating margin and adjusted EPS guidance for the fiscal year 2020 reflect the exclusion of certain items which the Company believes are not indicative of the underlying performance of its business. Refer to the table below for a reconciliation of our GAAP and adjusted outlook.

4

 

Represents the estimated translational and transactional gains (losses) of foreign currency rate fluctuations within operating margin and EPS measures presented.

5

 

These amounts rely upon estimates of future weighted average share count including the impact from actual shares repurchased during the first six months of fiscal 2020 and the estimated impact of the remaining shares yet to be repurchased under the ASR. These estimates are subject to change and are dependent upon the stock price for the ultimate quantity of shares repurchased as well as timing of the repurchases.

6

 

Represents the estimated net impact of share repurchases, cash interest expense, and amortization of debt discount and debt issuance costs (related to the $300 million convertible senior notes issued during the first quarter of fiscal 2020) on our GAAP EPS outlook.

7

 

Represents the estimated net impact of share repurchases, cash interest expense and amortization of debt issuance costs (related to the $300 million convertible senior notes issued during the first quarter of fiscal 2020) on our adjusted EPS outlook.

A reconciliation of the Company’s outlook for GAAP operating margin to adjusted operating margin and GAAP earnings per share to adjusted earnings per share for the third quarter ending November 2, 2019 and the fiscal year ending February 1, 2020 is as follows:

Reconciliation of GAAP Outlook to Adjusted Outlook

 

 

 

 

 

 

 

Third Quarter of
Fiscal 2020

 

Fiscal Year 2020

 

 

 

 

 

GAAP operating margin

 

3.0% to 3.5%

 

5.2% to 5.5%

Certain professional service and legal fees and related costs1

 

—%

 

0.0%

Asset impairment charges2

 

—%

 

0.1%

 

 

 

 

 

Adjusted operating margin

 

3.0% to 3.5%

 

5.3% to 5.6%

 

 

 

 

 

GAAP earnings per share

 

$0.12 to $0.15

 

$1.18 to $1.26

Certain professional service and legal fees and related costs1

 

$—

 

$0.00

Asset impairment charges2

 

$—

 

$0.04

Amortization of debt discount3

 

$0.03

 

$0.08

Adjustments to uncertain tax positions excluded in prior years4

 

$—

 

$(0.02)

 

 

 

 

 

Adjusted earnings per share

 

$0.15 to $0.18

 

$1.28 to $1.36

___________________________________________

Notes:

1

Amounts for the full fiscal year include certain professional service and legal fees and related costs recognized during the six months ended August 3, 2019 which the Company otherwise would not have incurred as part of its business operations. The Company is unable to predict future amounts as these expenditures are inconsistent in amount and frequency and certain elements used to estimate such items have not yet occurred or are out of the Company’s control. As such, the Company has not considered any future charges in the accompanying GAAP outlook.

2

Amounts for the full fiscal year include asset impairment charges for certain retail locations recognized during the six months ended August 3, 2019 that resulted from store under-performance and expected store closures. The adjusted results do not assume any additional asset impairment charges as the Company has recorded amounts currently anticipated under GAAP.

3

Amounts for the third quarter and full fiscal year represent amortization of the debt discount related to the $300 million convertible senior notes issued during the first quarter of fiscal 2020.

4

Amounts for the full fiscal year represent adjustments of uncertain tax positions during the six months ended August 3, 2019 which related to items excluded from adjusted results in prior years. The adjusted results do not assume any other changes to specified uncertain tax positions as the Company’s current accrual reflects its best estimate of amounts that will eventually be realized.

On a segment basis, the Company expects the following ranges for percentage changes for comparable sales including e-commerce (“comps”) and net revenue in U.S. dollars and constant currency compared to the same prior-year period:

Outlook by Segment1

 

 

 

 

 

 

 

 

 

 

 

 

 

Third Quarter of Fiscal 2020

 

Fiscal Year 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Dollars

 

Constant Currency2

 

U.S. Dollars

 

Constant Currency2

 

 

 

 

 

 

 

 

 

 

Americas Retail:

 

 

 

 

 

 

 

 

 

Comps

 

__

 

flat to up LSD

 

__

 

up LSD

 

Net Revenue

 

down LSD

 

down LSD to flat

 

flat to up LSD

 

up LSD

 

 

 

 

 

 

 

 

 

 

Americas Wholesale:

 

 

 

 

 

 

 

 

 

Net Revenue

 

up LSD

 

up MSD

 

up MSD

 

up MSD

 

 

 

 

 

 

 

 

 

 

Europe:

 

 

 

 

 

 

 

 

 

Comps

 

__

 

up LSD

 

__

 

up LSD

 

Net Revenue

 

up MSD

 

up LDD

 

up HSD

 

up LDD

 

 

 

 

 

 

 

 

 

 

Asia:

 

 

 

 

 

 

 

 

 

Comps

 

__

 

down LDD to HSD

 

__

 

down HSD

 

Net Revenue

 

flat to up LSD

 

up LSD to MSD

 

down LSD

 

flat to up LSD

 

 

 

 

 

 

 

 

 

 

Licensing:

 

 

 

 

 

 

 

 

 

Net Revenue

 

down MSD

 

__

 

down MSD

 

__

___________________________________________

Notes:

1

 

As used in the table above, “LSD” is used to refer to the range of Low-Single-Digits, “MSD” is used to refer to the range of Mid-Single-Digits, “HSD” is used to refer to the range of High-Single-Digits, and “LDD” is used to refer to the range of Low-Double-Digits.

2

 

Eliminates the impact of expected foreign currency translation to give investors a better understanding of the underlying trends within the business.

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 and free cash flow measures. For the three and six months ended August 3, 2019, the adjusted results exclude the impact of asset impairment charges, certain professional service and legal fees and related costs, non-cash amortization of debt discount on our convertible senior notes, and the applicable tax effects of these adjustments as well as adjustments to uncertain tax positions excluded from results in prior years, where applicable. For the three and six months ended August 4, 2018, the adjusted results exclude the impact of asset impairment charges, net gains on lease terminations, certain professional service and legal fees and related costs and the applicable tax effects of these adjustments, 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 that 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, comparable sales 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 that is different to 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 and 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 provides 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.

Investor Conference Call

The Company will hold a conference call at 4:45 pm (ET) on August 28, 2019 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 August 3, 2019, the Company directly operated 1,162 retail stores in the Americas, Europe and Asia. The Company’s partners and distributors operated 562 additional retail stores worldwide. As of August 3, 2019, 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 Company’s expectations, future prospects, business strategies and strategic initiatives; statements expressing optimism or pessimism about future operating results, growth opportunities and projected sales (including comparable sales), earnings, capital expenditures, operating margins, cost reduction opportunities, results of the ASR and cash needs; and guidance for the third quarter and full year of fiscal 2020, 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,” “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 conditions, including economic and other events that could negatively impact consumer confidence and discretionary consumer spending; 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; risks related to the timing and costs of delivering merchandise to our stores and our 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 expand internationally and operate in regions where we have less experience, including through joint ventures; risks related to our convertible senior notes issued in April 2019, including our ability to settle the liability in cash; our ability to successfully or timely implement plans for cost reductions; our ability to effectively and efficiently manage the volume and costs associated with our European distribution centers without incurring shipment delays; our ability to attract and retain key personnel; changes to our short or long-term strategic initiatives, including those that may be initiated by our new Chief Executive Officer; obligations or changes in estimates arising from new or existing litigation, tax and other regulatory proceedings; risks related to the complexity of the Tax Reform, future clarifications and legislative amendments thereto, as well as our ability to accurately interpret and predict its impact on our cash flows and financial condition; the risk of economic uncertainty associated with the pending exit of the United Kingdom from the European Union (“Brexit”) or any other similar referendums that may be held; changes in U.S. or foreign tax or tariff policy, including changes to tariffs on imports into the U.S.; accounting adjustments identified after issuance of this release; risk of future store asset and/or goodwill impairments or restructuring charges; our ability to adapt to new regulatory compliance and disclosure obligations; risks associated with our foreign operations, such as violations of laws prohibiting improper payments and the burdens of complying with a variety of foreign laws and regulations (including global data privacy regulations); risks associated with the acts or omissions of our 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; and changes in economic, political, social and other conditions affecting our foreign operations and sourcing, including the impact of currency fluctuations, global tax rates and economic and market conditions in the various countries in which we operate. 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 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

 

Six Months Ended

 

August 3, 2019

 

August 4, 2018

 

August 3, 2019

 

August 4, 2018

 

 

$

%

 

$

%

 

$

%

 

$

%

 

 

 

 

 

 

 

 

 

 

 

 

Product sales

$

664,678

 

97.3

%

 

$

626,162

 

96.9

%

 

$

1,182,551

 

96.9

%

 

$

1,127,667

 

96.6

%

Net royalties

18,542

 

2.7

%

 

19,709

 

3.1

%

 

37,360

 

3.1

%

 

39,493

 

3.4

%

Net revenue

683,220

 

100.0

%

 

645,871

 

100.0

%

 

1,219,911

 

100.0

%

 

1,167,160

 

100.0

%

 

 

 

 

 

 

 

 

 

 

 

 

Cost of product sales

417,554

 

61.1

%

 

406,440

 

62.9

%

 

772,296

 

63.3

%

 

753,791

 

64.6

%

 

 

 

 

 

 

 

 

 

 

 

 

Gross profit

265,666

 

38.9

%

 

239,431

 

37.1

%

 

447,615

 

36.7

%

 

413,369

 

35.4

%

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative expenses

218,175

 

32.0

%

 

204,569

 

31.7

%

 

422,820

 

34.6

%

 

402,788

 

34.5

%

Asset impairment charges

1,504

 

0.2

%

 

2,981

 

0.5

%

 

3,279

 

0.3

%

 

3,740

 

0.3

%

Net gains on lease terminations

 

%

 

 

%

 

 

%

 

(152

)

(0.0

%)

 

 

 

 

 

 

 

 

 

 

 

 

Earnings from operations

45,987

 

6.7

%

 

31,881

 

4.9

%

 

21,516

 

1.8

%

 

6,993

 

0.6

%

 

 

 

 

 

 

 

 

 

 

 

 

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

Interest expense

(4,951

)

(0.7

%)

 

(863

)

(0.1

%)

 

(6,210

)

(0.5

%)

 

(1,602

)

(0.1

%)

Interest income

313

 

0.0

%

 

1,132

 

0.2

%

 

674

 

0.1

%

 

2,109

 

0.1

%

Other income (expense), net

(6,355

)

(0.9

%)

 

1,360

 

0.2

%

 

(4,284

)

(0.4

%)

 

(1,254

)

(0.1

%)

 

 

 

 

 

 

 

 

 

 

 

 

Earnings before income tax expense

34,994

 

5.1

%

 

33,510

 

5.2

%

 

11,696

 

1.0

%

 

6,246

 

0.5

%

 

 

 

 

 

 

 

 

 

 

 

 

Income tax expense

8,818

 

1.3

%

 

7,776

 

1.2

%

 

6,101

 

0.5

%

 

1,499

 

0.1

%

 

 

 

 

 

 

 

 

 

 

 

 

Net earnings

26,176

 

3.8

%

 

25,734

 

4.0

%

 

5,595

 

0.5

%

 

4,747

 

0.4

%

 

 

 

 

 

 

 

 

 

 

 

 

Net earnings attributable to noncontrolling interests

854

 

0.1

%

 

204

 

0.0

%

 

1,647

 

0.2

%

 

438

 

0.0

%

 

 

 

 

 

 

 

 

 

 

 

 

Net earnings attributable to Guess?, Inc.

$

25,322

3.7

%

 

$

25,530

 

4.0

%

 

$

3,948

 

0.3

%

 

$

4,309

 

0.4

%

 

 

 

 

 

 

 

 

 

 

 

 

Net earnings per common share attributable to common stockholders:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

$

0.36

 

 

 

$

0.32

 

 

 

$

0.05

 

 

 

$

0.05

 

 

Diluted

$

0.35

 

 

 

$

0.31

 

 

 

$

0.05

 

 

 

$

0.05

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding attributable to common stockholders:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

70,508

 

 

 

80,110

 

 

 

75,216

 

 

 

80,006

 

 

Diluted

71,356

 

 

 

81,550

 

 

 

76,155

 

 

 

81,248

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Effective tax rate

25.2

%

 

 

23.2

%

 

 

52.2

%

 

 

24.0

%

 

 

Adjusted selling, general and administrative expenses1:

$

217,770

 

31.9

%

 

$

202,543

 

31.4

%

 

$

422,143

 

34.6

%

 

$

396,953

 

34.0

%

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted earnings from operations1:

$

47,896

 

7.0

%

 

$

36,888

 

5.7

%

 

$

25,472

 

2.1

%

 

$

16,416

 

1.4

%

 

Adjusted net earnings attributable to Guess?, Inc.1:

$

27,414

 

4.0

%

 

$

29,454

 

4.6

%

 

$

7,798

 

0.6

%

 

$

11,623

 

1.0

%

 

Adjusted diluted earnings per common share attributable to common stockholders1:

$

0.38

 

 

 

$

0.36

 

 

 

$

0.10

 

 

 

$

0.14

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted effective tax rate1:

28.2

%

 

 

23.0

%

 

 

48.4

%

 

 

23.0

%

___________________________________________

Notes:

1

 

The adjusted results for the three and six months ended August 3, 2019 reflect the exclusion of certain professional service and legal fees and related costs, asset impairment charges, amortization of debt discounts on the Company’s convertible senior notes, the related tax impacts of these adjustments as well as adjustments to uncertain tax positions excluded from results in prior years, where applicable. The adjusted results for the three and six months ended August 4, 2018 reflect the exclusion of certain professional service and legal fees and related costs, asset impairment charges, net gains on lease terminations and the related tax impacts of these adjustments, where applicable. A complete reconciliation of actual results to adjusted results is presented in the table entitled “Reconciliation of GAAP Results to Adjusted Results.”

Guess?, Inc. and Subsidiaries

Reconciliation of GAAP Results to Adjusted Results

(dollars in thousands)

The following table provides reconciliations of reported GAAP selling, general and administrative expenses to adjusted selling, general and administrative expenses, reported GAAP earnings from operations to adjusted earnings from operations, reported GAAP net earnings attributable to Guess?, Inc. to adjusted net earnings attributable to Guess?, Inc. and reported GAAP income tax expense to adjusted income tax expense for the three and six months ended August 3, 2019 and August 4, 2018.

 

Three Months Ended

 

Six Months Ended

 

August 3,
2019

 

August 4,
2018

 

August 3,
2019

 

August 4,
2018

 

 

 

 

 

 

 

 

Reported GAAP selling, general and administrative expenses

$

218,175

 

 

$

204,569

 

 

$

422,820

 

 

$

402,788

 

Certain professional service and legal fees and related costs1

(405

)

 

(2,026

)

 

(677

)

 

(5,835

)

 

 

 

 

 

 

 

 

Adjusted selling, general and administrative expenses

$

217,770

 

 

$

202,543

 

 

$

422,143

 

 

$

396,953

 

 

 

 

 

 

 

 

 

Reported GAAP earnings from operations

$

45,987

 

 

$

31,881

 

 

$

21,516

 

 

$

6,993

 

Certain professional service and legal fees and related costs1

405

 

 

2,026

 

 

677

 

 

5,835

 

Asset impairment charges2

1,504

 

 

2,981

 

 

3,279

 

 

3,740

 

Net gains on lease terminations3

 

 

 

 

 

 

(152

)

 

 

 

 

 

 

 

 

Adjusted earnings from operations

$

47,896

 

 

$

36,888

 

 

$

25,472

 

 

$

16,416

 

 

 

 

 

 

 

 

 

Reported GAAP net earnings attributable to Guess?, Inc.

$

25,322

 

 

$

25,530

 

 

$

3,948

 

 

$

4,309

 

Certain professional service and legal fees and related costs1

405

 

 

2,026

 

 

677

 

 

5,835

 

Asset impairment charges2

1,504

 

 

2,981

 

 

3,279

 

 

3,740

 

Net gains on lease terminations3

 

 

 

 

 

 

(152

)

Amortization of debt discount4

2,449

 

 

 

 

2,662

 

 

 

Income tax adjustments5

(2,266

)

 

(1,083

)

 

(2,768

)

 

(2,109

)

 

 

 

 

 

 

 

 

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

2,092

 

 

3,924

 

 

3,850

 

 

7,314

 

 

 

 

 

 

 

 

 

Adjusted net earnings attributable to Guess?, Inc.

$

27,414

 

 

$

29,454

 

 

$

7,798

 

 

$

11,623

 

 

 

 

 

 

 

 

 

Reported GAAP income tax expense

$

8,818

 

 

$

7,776

 

 

$

6,101

 

 

$

1,499

 

Income tax adjustments5

2,266

 

 

1,083

 

 

2,768

 

 

2,109

 

 

 

 

 

 

 

 

 

Adjusted income tax expense

$

11,084

 

 

$

8,859

 

 

$

8,869

 

 

$

3,608

 

 

 

 

 

 

 

 

 

Adjusted effective tax rate

28.2

%

 

23.0

%

 

48.4

%

 

23.0

%

___________________________________________

Notes:

1

During the three and six months ended August 3, 2019 and August 4, 2018, the Company recorded certain professional service and legal fees and related costs, which it otherwise would not have incurred as part of its business operations.

2

During the three and six months ended August 3, 2019 and August 4, 2018, the Company recognized asset impairment charges for certain retail locations resulting from under-performance and expected store closures.

3

During the six months ended August 4, 2018, the Company recorded net gains on lease terminations related primarily to the early termination of certain lease agreements. The net gains on lease terminations were recorded during the three months ended May 5, 2018.

4

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, will be amortized as non-cash interest expense over the term of the Notes.

5

The income tax effect of certain professional service and legal fees and related costs, asset impairment charges, net gains on lease terminations and amortization of debt discount was based on the Company’s assessment of deductibility using the statutory tax rate (inclusive of the impact of valuation allowances) of the tax jurisdiction in which the charges were incurred. The income tax adjustment for the three and six months ended August 3, 2019 also includes adjustments to uncertain tax positions excluded from results in prior years.

Guess?, Inc. and Subsidiaries

Consolidated Segment Data

(dollars in thousands)

 

 

Three Months Ended

 

Six Months Ended

 

August 3,
2019

 

August 4,
2018

 

%
change

 

August 3,
2019

 

August 4,
2018

 

%
change

 

 

 

 

 

 

 

 

 

 

 

 

Net revenue:

 

 

 

 

 

 

 

Americas Retail

$

198,966

 

 

$

197,125

 

 

1

%

 

$

375,389

 

 

$

368,465

 

 

2

%

Americas Wholesale

41,902

 

 

34,253

 

 

22

%

 

88,107

 

 

74,932

 

 

18

%

Europe

340,509

 

 

311,998

 

 

9

%

 

550,564

 

 

517,433

 

 

6

%

Asia

83,301

 

 

82,786

 

 

1

%

 

168,491

 

 

166,837

 

 

1

%

Licensing

18,542

 

 

19,709

 

 

(6

%)

 

37,360

 

 

39,493

 

 

(5

%)

Total net revenue

$

683,220

 

 

$

645,871

 

 

6

%

 

$

1,219,911

 

 

$

1,167,160

 

 

5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings (loss) from operations:

 

 

 

 

 

 

 

 

 

 

 

Americas Retail

$

5,957

 

 

$

5,582

 

 

7

%

 

$

4,145

 

 

$

(98

)

 

4,332

%

Americas Wholesale

8,422

 

 

5,325

 

 

58

%

 

16,236

 

 

11,351

 

 

43

%

Europe

51,594

 

 

30,531

 

 

69

%

 

35,267

 

 

10,198

 

 

246

%

Asia

(4,800

)

 

1,634

 

 

(394

%)

 

(8,003

)

 

5,699

 

 

(240

%)

Licensing

15,547

 

 

17,437

 

 

(11

%)

 

32,191

 

 

34,923

 

 

(8

%)

Total segment earnings from operations

76,720

 

 

60,509

 

 

27

%

 

79,836

 

 

62,073

 

 

29

%

 

 

 

 

 

 

 

 

 

 

 

 

Corporate overhead

(29,229

)

 

(25,647

)

 

14

%

 

(55,041

)

 

(51,492

)

 

7

%

Asset impairment charges

(1,504

)

 

(2,981

)

 

(50

%)

 

(3,279

)

 

(3,740

)

 

(12

%)

Net gains on lease terminations

 

 

 

 

 

 

 

 

152

 

 

(100

%)

Total earnings from operations

$

45,987

 

 

$

31,881

 

 

44

%

 

$

21,516

 

 

$

6,993

 

 

208

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating margins:

 

 

 

 

 

 

 

 

 

 

 

Americas Retail

3.0

%

 

2.8

%

 

 

 

1.1

%

 

(0.0

%)

 

 

Americas Wholesale

20.1

%

 

15.5

%

 

 

 

18.4

%

 

15.1

%

 

 

Europe

15.2

%

 

9.8

%

 

 

 

6.4

%

 

2.0

%

 

 

Asia

(5.8

%)

 

2.0

%

 

 

 

(4.7

%)

 

3.4

%

 

 

Licensing

83.8

%

 

88.5

%

 

 

 

86.2

%

 

88.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP operating margin for total Company

6.7

%

 

4.9

%

 

 

 

1.8

%

 

0.6

%

 

 

Certain professional service and legal fees and related costs

0.1

%

 

0.3

%

 

 

 

0.0

%

 

0.5

%

 

 

Asset impairment charges

0.2

%

 

0.5

%

 

 

 

0.3

%

 

0.3

%

 

 

Net gains on lease terminations

%

 

%

 

 

 

%

 

0.0

%

 

 

Adjusted operating margin for total Company

7.0

%

 

5.7

%

 

 

 

2.1

%

 

1.4

%

 

 

Guess?, Inc. and Subsidiaries

Constant Currency Financial Measures

(dollars in thousands)

 

 

Three Months Ended

 

 

 

 

 

August 3,
2019

 

August 4,
2018

 

% change

 

As Reported

 

Foreign
Currency
Impact

 

Constant
Currency

 

As Reported

 

As Reported

 

Constant
Currency

Net revenue:

 

 

 

 

 

 

 

 

 

 

 

Americas Retail

$

198,966

 

 

$

563

 

 

$

199,529

 

 

$

197,125

 

 

1%

 

1%

Americas Wholesale

41,902

 

 

14

 

 

41,916

 

 

34,253

 

 

22%

 

22%

Europe

340,509

 

 

15,343

 

 

355,852

 

 

311,998

 

 

9%

 

14%

Asia

83,301

 

 

3,754

 

 

87,055

 

 

82,786

 

 

1%

 

5%

Licensing

18,542

 

 

 

 

18,542

 

 

19,709

 

 

(6%)

 

(6%)

Total net revenue

$

683,220

 

 

$

19,674

 

 

$

702,894

 

 

$

645,871

 

 

6%

 

9%

 

 

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended

 

 

 

 

 

August 3,
2019

 

August 4,
2018

 

% change

 

As Reported

 

Foreign
Currency
Impact

 

Constant
Currency

 

As Reported

 

As Reported

 

Constant
Currency

Net revenue:

 

 

 

 

 

 

 

 

 

 

 

Americas Retail

$

375,389

 

 

$

2,192

 

 

$

377,581

 

 

$

368,465

 

 

2%

 

2%

Americas Wholesale

88,107

 

 

802

 

 

88,909

 

 

74,932

 

 

18%

 

19%

Europe

550,564

 

 

35,945

 

 

586,509

 

 

517,433

 

 

6%

 

13%

Asia

168,491

 

 

8,166

 

 

176,657

 

 

166,837

 

 

1%

 

6%

Licensing

37,360

 

 

 

 

37,360

 

 

39,493

 

 

(5%)

 

(5%)

Total net revenue

$

1,219,911

 

 

$

47,105

 

 

$

1,267,016

 

 

$

1,167,160

 

 

5%

 

9%

Guess?, Inc. and Subsidiaries

Selected Condensed Consolidated Balance Sheet Data

(in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

August 3,
2019

 

February 2,
2019

 

August 4,
2018

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

Cash and cash equivalents

$

131,060

 

 

$

210,460

 

 

$

219,062

 

 

 

 

 

 

 

Receivables, net

292,985

 

 

321,995

 

 

283,375

 

 

 

 

 

 

 

Inventories

484,236

 

 

468,897

 

 

464,531

 

 

 

 

 

 

 

Other current assets

59,226

 

 

87,343

 

 

86,030

 

 

 

 

 

 

 

Property and equipment, net

302,906

 

 

315,558

 

 

288,740

 

 

 

 

 

 

 

Restricted cash

519

 

 

535

 

 

372

 

 

 

 

 

 

 

Operating lease right-of-use assets1

900,062

 

 

 

 

 

 

 

 

 

 

 

Other assets

231,210

 

 

244,417

 

 

247,788

 

 

 

 

 

 

 

Total assets

$

2,402,204

 

 

$

1,649,205

 

 

$

1,589,898

 

 

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

Current portion of borrowings and finance lease obligations

$

32,554

 

 

$

4,315

 

 

$

3,504

 

 

 

 

 

 

 

Current operating lease liabilities1

213,912

 

 

 

 

 

 

 

 

 

 

 

Other current liabilities

426,886

 

 

539,049

 

 

466,385

 

 

 

 

 

 

 

Long-term debt and finance lease obligations

35,512

 

 

35,012

 

 

36,945

 

 

 

 

 

 

 

Convertible senior notes, net

242,055

 

 

 

 

 

 

 

 

 

 

 

Long-term operating lease liabilities1

747,791

 

 

 

 

 

 

 

 

 

 

 

Other long-term liabilities1

125,915

 

 

212,331

 

 

212,032

 

 

 

 

 

 

 

Redeemable and nonredeemable noncontrolling interests

22,707

 

 

21,271

 

 

19,163

 

 

 

 

 

 

 

Guess?, Inc. stockholders’ equity

554,872

 

 

837,227

 

 

851,869

 

 

 

 

 

 

 

Total liabilities and stockholders’ equity

$

2,402,204

 

 

$

1,649,205

 

 

$

1,589,898

 

___________________________________________

Notes:

1

During the quarter ended May 4, 2019, 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. In addition, other long-term liabilities no longer includes deferred rent and lease incentives since these items are now included in operating lease right-of-use assets due to the adoption of the new standard.

Guess?, Inc. and Subsidiaries

Condensed Consolidated Cash Flow Data

(in thousands)

 

 

 

Six Months Ended

 

 

August 3,
2019

 

August 4,
2018

 

 

 

 

 

Net cash used in operating activities

 

$

(22,957

)

 

$

(21,652

)

 

 

 

 

 

Net cash used in investing activities

 

(33,868

)

 

(53,223

)

 

 

 

 

 

Net cash used in financing activities

 

(18,549

)

 

(56,792

)

 

 

 

 

 

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

 

(4,042

)

 

(16,581

)

 

 

 

 

 

Net change in cash, cash equivalents and restricted cash

 

(79,416

)

 

(148,248

)

 

 

 

 

 

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

 

210,995

 

 

367,682

 

 

 

 

 

 

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

 

$

131,579

 

 

$

219,434

 

 

 

 

 

 

 

 

 

 

 

Supplemental information:

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

$

37,225

 

 

$

33,045

 

 

 

 

 

 

Total lease costs1

 

$

180,307

 

 

$

174,118

 

 

 

 

 

 

 

 

 

 

 

Non-cash investing and financing activity:

 

 

 

 

 

 

 

 

 

Assets acquired under finance leases2

 

$

3,055

 

 

$

1,164

 

___________________________________________

Notes:

1

In connection with the adoption of new lease guidance during the first quarter of fiscal 2020, the Company has elected to include non-lease components, which is inclusive of common area maintenance charges, in the measurement of its lease liabilities for its directly operated real estate leases. Therefore, total lease costs includes lease and non-lease components related to the Company’s directly operated real estate leases for the six months ended August 3, 2019 and August 4, 2018.

2

During the six months ended August 3, 2019 and August 4, 2018, the Company entered into finance leases related primarily to computer hardware and software.

Guess?, Inc. and Subsidiaries

Reconciliation of Net Cash Used in Operating Activities to Free Cash Flow

(in thousands)

 

 

 

Six Months Ended

 

 

August 3,
2019

 

August 4,
2018

 

 

 

 

 

Net cash used in operating activities

 

$

(22,957

)

 

$

(21,652

)

 

 

 

 

 

Less: Purchases of property and equipment

 

(34,551

)

 

(46,006

)

 

 

 

 

 

Less: Payments for property and equipment under finance leases

 

(1,202

)

 

(776

)

 

 

 

 

 

Free cash flow

 

$

(58,710

)

 

$

(68,434

)

Guess?, Inc. and Subsidiaries

Retail Store Data

Global Store and Concession Count

 

 

 

 

 

 

 

 

 

 

 

 

 

As of August 3, 2019

 

Stores

 

Concessions

Region

Total

 

Directly
Operated

 

Partner
Operated

 

Total

 

Directly
Operated

 

Partner
Operated

 

 

 

 

 

 

 

 

 

 

 

 

United States

287

 

285

 

2

 

1

 

 

1

Canada

80

 

80

 

 

 

 

Central and South America

111

 

71

 

40

 

27

 

27

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Americas

478

 

436

 

42

 

28

 

27

 

1

 

 

 

 

 

 

 

 

 

 

 

 

Europe and the Middle East

726

 

510

 

216

 

37

 

37

 

Asia and the Pacific

520

 

216

 

304

 

337

 

162

 

175

 

 

 

 

 

 

 

 

 

 

 

 

Total

1,724

 

1,162

 

562

 

402

 

226

 

176

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of August 4, 2018

 

Stores

 

Concessions

Region

Total

 

Directly
Operated

 

Partner
Operated

 

Total

 

Directly
Operated

 

Partner
Operated

 

 

 

 

 

 

 

 

 

 

 

 

United States

295

 

293

 

2

 

1

 

 

1

Canada

86

 

86

 

 

 

 

Central and South America

104

 

61

 

43

 

27

 

27

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Americas

485

 

440

 

45

 

28

 

27

 

1

 

 

 

 

 

 

 

 

 

 

 

 

Europe and the Middle East

674

 

440

 

234

 

36

 

36

 

Asia and the Pacific

503

 

181

 

322

 

365

 

174

 

191

 

 

 

 

 

 

 

 

 

 

 

 

Total

1,662

 

1,061

 

601

 

429

 

237

 

192

 

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

Source: Guess?, Inc.