Guess?, Inc.

Guess?, Inc. (NYSE: GES) creates, markets, distributes, and licenses lifestyle apparel and accessory collections for men, women, and children. Its operations are divided into segments including Europe, Americas Retail, Americas Wholesale, Asia, and Licensing.

Recent Business and Financial Updates

• Revenue Growth from Acquisitions: GES reported a 13% revenue increase to USD 739 million in Q3 FY2025, reflecting a 14% growth in constant currency. This was largely driven by the acquisition of rag & bone and moderate expansion in core Guess businesses. However, Licensing revenue remained flat due to the internalization of the outerwear business. Growth was strongest in Europe, while North America and Asia faced challenges from slower customer traffic in direct-to-consumer channels.
• Profitability Decline: Despite higher revenue, profitability declined. The company reported a GAAP net loss of USD 23.4 million, compared to net earnings of USD 55.7 million in the prior year, primarily due to a USD 39.8 million unrealized loss from derivative remeasurement on convertible notes. Adjusted net earnings fell 35% to USD 17.7 million, with adjusted EPS declining 31% to USD 0.34. Operating margins also dropped, with GAAP and adjusted margins at 5.7% and 5.8%, respectively, down from 8.4% and 8.9% a year ago.
• Segment Performance: Regional and segment results were mixed. Europe saw 7% revenue growth, with retail comparable sales up 8%. Americas Retail grew 12%, though comparable sales declined 14%. Americas Wholesale posted a 79% revenue surge, while Asia’s revenue rose just 2%, hindered by a 17% decline in retail comparable sales. Licensing revenue remained unchanged. Operating margins fell across all segments, particularly in Americas Retail and Asia, due to an unfavorable channel mix and rising costs.
• Integration of rag & bone Acquisition: The April 2024 acquisition of rag & bone, in partnership with WHP Global, significantly contributed to revenue growth. The brand has been integrated into Guess?, Inc.’s operations, with management optimistic about expanding its market presence both domestically and internationally.
• Revised FY2025 Outlook: Due to ongoing challenges, including weak customer traffic in North America and Asia, currency fluctuations, and rising expenses, the company lowered its full-year forecast. Revenue is now expected to grow 7.1%-8.1%, with GAAP and adjusted operating margins between 6.1%-6.4% and 6.2%-6.5%, respectively. GAAP EPS is projected at USD 0.70-USD 0.82, while adjusted EPS is forecasted at USD 1.85-USD 2.00.
• Nine-Month Performance and Profitability Issues: Over the first nine months of FY2025, net revenue grew 9% to USD 2.06 billion, but profitability deteriorated. The GAAP net loss was USD 21.0 million, and adjusted net earnings dropped 58% to USD 26.8 million. Increased operating expenses, separation costs, and currency headwinds led to a GAAP operating margin decline to 3.4%, from 6.3% in the prior year.
• Strategic Investments Amid Challenges: The company continues investing in new product launches and marketing initiatives, which have been well received by customers. However, higher costs, an unfavorable channel mix, and weak market conditions in North America and Asia continue to pressure margins. Despite these hurdles, Guess?, Inc. remains committed to enhancing brand recognition and customer engagement.
• Dividend and Free Cash Flow Outlook: The company declared a quarterly dividend of USD 0.30 per share, payable on December 27, 2024. For FY2025, free cash flow is expected to reach USD 40 million, supported by USD 135 million in net cash from operating activities. Capital expenditures are projected at USD 95 million, including finance lease payments. Management remains confident in driving long-term shareholder value through strategic growth initiatives.

Technical Observation (on the daily chart):

Guess Inc remains in a strong downtrend, with both the 21-day and 50-day moving averages sloping downward. The stock recently bounced near USD 8, showing potential support, while resistance levels are at USD 10.48 and USD 11.45. The RSI at 35.73 suggests it is nearing oversold territory, hinting at a possible short-term rebound. However, sustained upside momentum would require a break above key moving averages with strong volume confirmation.

Guess?, Inc. reported 13% revenue growth in Q3 FY2025, driven by the rag & bone acquisition and expansion in core businesses, particularly in Europe. Despite profitability pressures from derivative losses and higher costs, the company continues to invest in product innovation and brand expansion. While revising its FY2025 outlook, Guess? remains focused on long-term growth, supported by strategic initiatives, a USD 0.30 dividend, and projected USD 40 million free cash flow. 

As per the above-mentioned price action, recent key business and financial updates, momentum in the stock over the last month, and technical indicators analysis, a ‘Buy’ rating has been given to Guess?, Inc. (NYSE: GES) at the closing market price of USD 9.70 as of March 14,2025. 

Individuals can evaluate the stock based on the support and resistance levels provided in the report in case of keen interest taking into consideration the risk-reward scenario. 

Markets are trading in a highly volatile zone currently due to certain macro-economic issues and prevailing geopolitical tensions. Therefore, it is prudent to follow a cautious approach while investing.

Related Risk: This report may be looked at from a high-risk perspective and a recommendation is provided for a short duration. This report is solely based on technical parameters, and the fundamental performance of the stocks has not been considered in the decision-making process. Other factors which could impact the stock prices include market risks, regulatory risks, interest rates risks, currency risks, social and political instability risks etc. 

Note 1: Past performance is not a reliable indicator of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance level is March 14,2025. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Note 4: Target Price refers to a price level that the stock is expected to reach as per the relative valuation method and or technical analysis taking into consideration both short-term and long-term scenarios.

Note 5: ‘Kalkine reports are prepared based on the stock prices captured either from the New York Stock Exchange (NYSE), NASDAQ Capital Markets (NASDAQ), and or REFINITIV. Typically, all sources (NYSE, NASDAQ, or REFINITIV) may reflect stock prices with a delay which could be a lag of 15-20 minutes. There can be no assurance that future results or events will be consistent with the information provided in the report. The information is subject to change without any prior notice.