GES - Earnings call transcript Q1 2021

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good day, everyone, and welcome to the Guess? First Quarter Fiscal 2021 Earnings Conference Call.

On the call are Carlos Alberini, Chief Executive Officer, and Katie Anderson, Chief Financial Officer.

During today's call, the company will be making forward-looking statements, including comments regarding future plans, strategic initiatives, capital allocation, and short and long-term outlook, including potential impact from the coronavirus outbreak. The company's actual results may differ materially from current expectations based on risk factors included in today's press release and the company's quarterly and annual reports filed with the SEC. Comments will also reference non-GAAP or adjusted measures. of can descriptions today's found and release. earnings reconciliations the be measures in GAAP

turn over the will I Now, call to Carlos.

Carlos Alberini

Thank you all morning. And us Good you, today. for operator. joining thank

what unprecedented, but future. in the that I at experienced daily impacting extraordinary all definitely present is only weeks and multiple during most think not last we our few life ways, have the into

terms what the pandemic, racism in addition events by also it George recent change. country the our of tremendously of for caused the for killing to it Floyd is and In outrage and of brings all hope means but in painful us,

Martin As I that we and said, that our support reality. our racism we and help a is programs. chapter to have pray all we for strongly threat believe everywhere the with are anywhere national world. to Luther fund more everywhere. At the make condemn King empowerment justice We to justice a Angeles injustice NAACP part partnering and in Los local their in Guess?,

that and and Katie quarter our crisis how will of then in open in lastly, we to briefly now. safety in I our inspiring we COVID-XX families the will then first results. commitment, in today each questions. and website $X Foundation associate impacted in the world and level unimaginable the was They very are teams and launched equipment Katie, I more accomplished to short well. financials we and featured of need. stores. the connection In the buy with made outlook. detail, Protect, GUESS this character Foundation are in centers to and leadership first cause. have will your GUESS crisis stores, our all attitude strongly media in more has people We after believe million protective for like commitment thinking. crisis, and Our a our proud you issues our actions be on organization couldn't relentless throughout #InThisTogether I your our demonstrated motion April on in address show hope I clearly. our million company corporate review contributed an of I donations and every our in its to extraordinary our that we this, to Inspire, COVID-XX campaign, the set the worldwide, our our we us. Give and want And And Guess?, touch true people as headquarters which $X for thank call our strategy update made our all social our you and around to I safe the priority. times and where time. and is how will and was for the their approached health a flagship committed empathy business than more that, and related product we and people's distribution and this, I other. most will company of all top unparalleled At

focus that communities the our Our our been serve. customers on has we associates, and

end by the the reopen light and we are our be of protect and to strict And become to results facility. entire our stores it opportunities the at the we for We build to costs the of operations sit and at careful cut follow June. protocols on showrooms, new we as look here reflect to that and tunnel and and have our end operations We can we all financial and organization continue very all our to this model. how with reopened challenging headquarter fully We crisis been distribution can our can operational when unleash actions as stores, our an liquidity. and excited plan our has how also our business see

We are doing both.

sufficient terms, strongly big to the clean closings a team was that importantly, head to development, position capital on renewals, in great just bank most inventory acting Fortunately, everything we small. a We financial inventory everything crisis into purchases, ready store a came the capable name strong crisis to few. control, projects, from quickly and our and and, position proactively liquidity, with decisively, and challenged or facility expenses line and payment charge a on, product

that is initiatives. changes months I the will aligned to here review few set the we we we priorities completely those at at now in the that We how significant and stay news reassessed current of are with lives practices. also plan further great light looked strategic accelerate customers those the our and by The ago, we are execution our initiatives the aggressively And changes being carefully home events observing. impacted in are minutes. a that a few of priorities and this planning

you company As has Asia. businesses global Europe with in extensive know, reach and sizable Americas, an the our well

business business a the the in Americas strategy, on cycle the learn virus we what to expect about by demand outbreak opportunity situation our experience success. This that is were and for first, have thought, regions the valuable. new and there going of satisfy and should highly how other the in Based from and much requirements. that liquidity to Europe significant we impacted need expected this risk XX remainder team our demand our mitigate our inventory where a for critical the year. proved Being weeks accurately structure the presented about to business. it to to cycle curve inventory the this, in our is to ahead initial and were analyzed demand you As guide experiencing to cost China bigger like ownership to China flow the us the When with forecasting determine the the we applied and

the starting us merchant the and finished and our the teams, fast these react to demand all anticipate cross category. eliminated optimize several who worked a margins our and our the needs. increased product place with compared to spite full as inventory from partners, of adjusted to we of In all as purchase effects and processes improves. and a then capture intensely strategy pay to in year, track it's programs, opportunity and certain optimize challenging availability positioned during including very well price changes, excess to together. the We're partners quantities order to spite vendors side to well seasons effort with I fulfill vendors, for our off this product execution to last assortment plan, sales tremendous inventory supply our the in very as sales our functional accurately needs architected the remains see an globally XX% to we and put We plans. position, the to business. to by stood revealed opportunities from business exercise I chain operating side win each This We our well. this that course, quarter expected demand and licensees. as with want pandemic. of thank we times teams strategic the clean extended to licensees, selling flexibility wholesale through valued customers have believe and by and original required And this intact by our capture product wholesale our is valued Of adjust at of of down worked today

April, in Asia. of significant Regarding In but stores the drop with a our as conversion rates, sales we a locations, we in these date traffic, a momentum, reopen customer have majority year. entered results, last are Asia compared same closed meaningful our at we of a improvement. first store in significant year's quarter materially in the since improvement began to resulting lower quarter then, sales for to QX in we and running XX% productivity sales productivity, last gained But to experienced

North Regarding over Canada, by stores our we over reopened in June. with regions. and mid-April At to in of close in mid-March, operations Europe America the present, of the have stores XXX over both XXX and we US stores most to resuming temporarily decided Europe, course and

we thrilled levels. our conversion Canada partially by have are the anticipated, as As most US stores we reopened these in in offset seen slow XX% productivity of in and I'm than and quarter-to-date that improved we sales in Europe resulting report experienced stores, better year's China, rates. in last to performing XX% customer to traffic, roughly compared

essential as As you on last customer depend and performed the compared that would experienced exclusively in a In to in we the believe Canada were on connection now. focused customers deceleration demand trends business in first local the provide. in traveling the better do expect, experienced nobody's we those in stores have with Europe, we online than that quarter quarter we as tourism our on US and year fourth performance that that not depend products

so and second April our the in to starting and far digits materially second date. have is in double trending online now However, the up business improved, quarter, in quarter trends

retail challenging million. and an as in all, a behaved had of and our I loss similarly businesses operating quarter of sales to a businesses. All wholesale Our $XXX reported licensing very we we decrease liquidity. due we negative including believe control, to costs well were proactive aggressively, our what controlling we very reducing and were protecting could inventories we the exclusively forces control, results that that could not managing XX% and

same impacted also be forces, second current collection quarter have and and great for sales to holiday product the to expect we in trends back we capitalizes very While strong. school due the to coming the on the that profitability is

our to to be specific will to outlook on these liquidity of half for strong. have spend taken. we expect continue significantly that for the year and the issues We time and more actions the our second improve Katie

believe I models connection will that actively customers' the the on new and winners the preferences profoundly their adapt events their that new customers' in consumer with me to crisis. embrace recent believe those Let I lifestyles be business lifestyles the and changes touch priorities. the the impacting are the environment. in that companies

and Fortunately, not and and that a on critical product – customer quality this celebrating engagement think apparel lifestyles customer sustainability lines our world. that believe contribute diversity us. win for for isn't and in also to new durability I just the will well departure we for desirable, priority drive and serve a where true between in been become rooted new a and digital will inclusivity obsession heading centricity, were authentic the customer seamless crisis our big accessories I strongly for stronger before customer stores a focus an to channels has an experience but will this brand. comfortable factors from

with are these strongly our we than originally faster environment a competitive side initiatives this trusted with I these promotions distribution. of products. now less will see to an building the other a that, opportunities planned. plan blocks cleaner a Guess? long-term the reach each we on and strong of similar accelerate of global multichannel to the is offering on of our factors and execution crisis, strategy brand fewer much enviable All brands of and capitalize believe broad

to market gain expect share. on We this capitalize and

drivers XXX basis by As gross you may to expand points consisted efficiencies improvements. savings, the recall, plan operating margin margin financial and of primary cost operating our of

which further new accelerate for have we positioning strategy, initiatives, identified that previously can include will and we the implementation, omnichannel additional these model. cost structure As ecommerce light of eliminating customer also normal by an the further that experience a in crisis projects discussed. we of planned. our global that we believe and emphasized salesforce across are our simplifying business redesign strategic Among initiatives efficiencies the challenged opportunities had the new global our organizations our profit for be redundancies the centricity execution improvement we our We initiatives, model,

can We we as three criticality. result points implementation by optimize business an to penetration results customer years our ecommerce to a in project launching engagement centricity In and increase journey initiative its and extra its be that to the decided of addition, Customer fund to next integration, a new is customer we we'll an accelerate personalization, due five XXX now initiative. data believe analysis. this continue

we lower As key promotions. back, including part We identified product on bring and Guess? of continue activewear, also partnerships key handbags. categories high quality, knit, excellence this and that effort, simplicity, categories outerwear, leverage standards to will global will and include our on of focus product essentials, focus continue and to the These to denim, roots focus brand plan elevating brand have on

performance, plan and we of functional efficiencies, consolidation to the in global new addition, global achieve to accountability. In consistency capabilities accelerate increased

very of on we clear part recent our least, that redesigned this a made As store and under optimized our new be store worldwide. organizational expected close structure initiative, in but are increase plans the XX next could model performance Last, to demand XXX working normal profitability. we the over in territories those months. to the and around America and true This North within stores portfolios world is have particularly China, not

with incredible region, a lease expiring future three-year in that years Fortunately, the strong thriving all a an of revealed we price. unique process efforts gaining over preferences, more of and globally less renewals. great of strong business simplifying This was and consistent years that point our our and a believe model, strongly timeframe, focused Guess? through portfolios functions. for only has business store flexibility consumer Guess? and world. and will within market and built the with more leases opportunities product XX we In with global and and XX% quality, other share world and become of a and gives organization. every future, power models. customer fully terms also been worldwide, over dynamic of it icon and on sense for foresight for the capitalize quantity also the company our closing, efficiencies business negotiation which and simplicity brand across has our a expect rationalizing nimble to chain operations, again have gain significant the with this preferences, because supply of brand be agile all duplication on us in more more I XX consistent and about a very new last relevant eliminating went efficient development strategy, I sustainability, significant not on the but side crisis once is view, a focused on into its

global that we and We very have so. well rapidly, to positioned model scale and a business distribution can great do are

of have Katie. few this During couldn't pass our couldn't accomplished. we excited With have team to tested weeks, what imagined everything we next. crisis. ways future been prior and I'm I'm me all confident be let to accomplish will we more the proud last our that, has in very about it in

Katie Anderson

Carlos. Good I'd working echoing Last the and am team world. team Guess? from around you, thankful and And came start our Carlos' for mid-March, I in express everyone. associates Guess? had stores Thank and how we comments morning, in by closed leadership we through not times. the miss like together time all just our our spoke focus America days prior. days a North two sharp homes. two But the these later, and determination a were we navigating fluid did suddenly beat, on with to

credit in the our We measures This of on All $XXX QX control seamlessly cash, that of And on cash pay to our expenses demand one-third we preserve $XXX industry we brand. in the say to implementing the least. in the business more of ended year team that that. controlled our borrowings the what told during this drop impact expenditures, long-term pandemic, to actions was we height And execution. operating this and postponed facilities. our last last humbling, and global in the the strengthen and react were optimize our we with cash other liquidity. and undeniable you million decision paralyzed ideas our only significantly massive call, we crisis. have line, worked burn removed from and both of We And bottom to including swift agility and million decreased health strong and quarter On dividend. reflected limit we sharing couldn't QX capital the of though the million $XX did globe, quarter. than appropriately spending We've plans We and an to reflect our order the even that. has sustainability across solutions each focus results cost spent our of the to in spirit, emphasis our with

Let minutes you additional me give of their measures a to these take impact. and couple on some details

of conjunction in April, headquarters office our our saving. the permanently and recently in US cost our We corporate closing. stores In to furloughed with the Los with of our ranging and of deferred reduce and employees of in XXX% our restructured our XX% start every about and beginning salary Angeles Let's field we in evaluated implemented way. government positions. organization reductions, funding store XXX optimized to increases. in Europe. a corporate payroll very cost XX% We We from these temporary merit programs, particularly XX% all We in deep granular and Canada for

We normal. portion we year a beyond. remainder sense as more that and the aspects continue impact regions structure across large to all of our we in A that operate to redundancies to new positive reduce actions will any and business a of assess extend of these model and efficient, more enter leaner, a makes of with cost agile the have the

also is in our are closures line that in with We and store experiencing. declines expenses with rental in negotiations landlords to appropriately traffic adjust our industry the

We at optimistic are which are expenses, all here. last in haven't payments that operating cancelled critical, QX agreements million to noting all expenses in capital time $XX It's Outside this $X can year. are were that accrued adjustments we but will and not rent year CapEx expenditures million in worth reducing proper landlords rental until beginning in of be making QX progress with from April, we about achieve suspended the multiple what place, made. we mission final

return. one the protected platform. digital investment that this high terms of discretionary very believe area have a spending rapid will As Carlos mentioned, We our we in is and

cash consistent our CapEx to year. manage for this the rest adjusted terms expect We've be pretty help level of We the payment spending of flow. to also

for times everyone. Our teams that term are and while to extensions, our worked vendors find licensees challenging with these conscious have remaining

again measure as postponing to cash. are our the We a pay decision proactive preserve quarter dividend this to

we revisit the as will pandemic. this through move board Our

drew $XXX we for our years, it where funding credit on facility sense. million made loan additional to down renewed Lastly, facilities our and asset-backed three maximize raised liquidity,

Our $XX borrowing. $XXX in access $XXX another million available last million we year time this million in cash have to compares to and

me give some results first now. you quarter Let additional into insight our

quarter closures stores constant a in negatively all COVID-XX dollars, First in were revenues were regions as crisis. lower US currency. in million, were of Revenues the result both productivity and XX% store $XXX XX% that open, impacted by the and down of

lower year. as a the margin million licensee quarter pressure $XXX $XX we our the quarter and royalties of increased cancellations of prior than was in savings $XX similar a crisis. headcount, decreases loss and the our million SG&A result demand. as for other markdowns inventory loss cost of the our in XX.X%, million $XX as deleverage, addition, year, returns wholesale Most fees, In and wholesale and margin quarter the the to Gross Adjusted of million as of decreased and for partners advertising as recorded travel XX.X% $XXX the the measures were operating versus experiencing discretionary last a order prior for reserves obsolescence million from well year. reserves roughly came spending. $XXX Adjusted a professional compared and also but result for occupancy was additional of decrease million for was

rate in XX% $XX versus Our the or first significant and year. adjusted the was were $XXX down $XX versus of tax XX% last and Inventories terms. million, payment through a negative million, flow flat. by an our in considering great negative If the of free of were was cash reductions quarter This first X.X%, in spend the earnings. of costs constant a achieved impact $XXX year, Free US quarter Commission a and both year. dollars accomplishment of was currency year, last cash for the fine exclude flows combination and $XX adjusted from million European we the relatively increase circumstances million, quarter million is statutory mix last paid $XX million XX.X% last driven down

formal saw the provide As environment. we're the level you in not current in guidance the high of release, going to given uncertainty

quarter, decline as However, in half of as the strong other store you far. the the about quarter, about similar encouraged business e-commerce we wholesale businesses We recovery to to the affecting businesses. decline course In same continue to revenue second year. we're normalization how curves the And of year back for versus momentum, the I licensee over be portion our partners. of our we with retail want closures level business well to be our QX, with so as by enough the of thinking compensate with share expect of our last and our over the for more are Carlos believe but year. our We anticipate will mentioned, won't the

have team company crisis unprecedented through right not the In importantly, has tirelessly and be of company our are The to honest, to puts accomplished nature we situation. of proud the easy. really crisis. I'm this we liquidity in lot of we that the what closing, pressure amidst Lastly, this through this support the confident I a have on way. function, last worked this quarter and to was financial manage the sufficient

career. from win my people the that results emerge achieve to into that, we most we passion our stronger on I the open the when across call of were the leadership, will questions. than of know from it let's this With period that the your tangible the and some for and made the With organization, up work team able came Guess? it. finance fulfilling to

Operator

Anderson B. from And our question FBR. from Susan Thank comes [Operator Riley first you. Instructions].

Susan Anderson

also, over that seeing seeing store open? then my the And then stores if the the are there. thanks you you open, productivity could I talk was the that the conversion have you the in build I Thanks are that taking in the also, that maybe curious, guess, seeing the do I So, weeks the for you're bit stores? been been about question. longer for increase? better Hi, than on you good morning. stores Europe? was the has And US why wondering think a color –

Carlos Alberini

are sure. Yes, Good Susan? you, How morning.

Susan Anderson

morning. Good. Good

Carlos Alberini

what We said, stores, rate. locations not necessarily we we wanted areas of when What that compensated lot is think but That were to the to And, and that is with purpose applies improved things by Canada, reopen conversion and the which more function of didn't by were impacted opened because that we North me like local is applicable almost it gradually every have so in The that tourism being seen is see opened more have could big we that decided more stores we comment of landlords of I lower those you think and case, two to malls stores forth. productivity, area a that start coming that open in on entire somewhat US, And but we or suggests open we that And look where fleet. not well that. been Really, like stores by the think, a do every that open probably to of of we at impacted I as significantly And function this open course, was dependent were we productivity, in many rate. be the the a let choose the single were that that stores by Europe. the are phenomenon necessarily saying as that in did were this conversion representative things. traffic the we less or local customer America customers. in lower, both customer have mentioned, it's tourism. a traffic, also the seeing

the weeks stores like to of a more see and and going that. buying are the less they of being open, but to things attitude people, kind the certain that after we see, the ways more of open old being are with behaving in all couple less see of come comfortable that we back that virus shopping and about of concern I think And especially with Europe, customers what did we a more. that is So,

were profitability, overall, were better We based lot expecting pleased. curves, now. And regions on the with more and tourism reopen And, than were there at as be on are countries based beginning, which in dependent very that countries we a both both how we and curves of very applied were So, course, terms that, those better more significantly us I pleased others. significant China, on how doing those we think behave some very And expected. for that difficult sales the markets. will in those we that new experience our which they are than are again, as of others, are of several

again, in is and us both impacting Europe So, well. the in regions, in factor tourism as the US

Susan Anderson

wondering I And helpful. if you maybe about sponsors you with much just this back. how then very the that's talk bit during terms are connecting little marketing you time? digital how or Great, in continued a could And consumers marketing? much was media your of then, how pulled have And social also,

Carlos Alberini

and very back marketing Katie I'll in more we just say to But, direction numbers. then and on a realizing that couple of exposed. just overall, probably because in things a jump people will open with were little pull the bit general did on going not very be

things would kept homes. that see the we what of more is the from to people related most So,

Katie? So, we continue support where overall continue did we business, but the less. dollars needed and support significantly online were we social to did to our to market

Katie Anderson

there's that. back on marketing to on lag And a we bit but pulled a quarter, in of the little

that QX make in right the and we'll to the lot of given So, achieve decisions forward, then, environment. going we were a able

Susan Anderson

Great. Thanks in so luck quarter. much. the next and and good Hope everyone's healthy safe

Carlos Alberini

Thank you. Thank you, you. Susan. Thank

Susan Anderson

Thanks.

Operator

question following from comes Our Stichter Janine Jefferies. from

Janine Stichter

Hi, good morning.

Carlos Alberini

Hi, Janine.

Janine Stichter

Good ask wholesale and morning. bit about I base there. the Europe a wanted to customer

in you fragmented have bit US. think the quite what I it's than a more

the you're health customers that how curious view out the the suggest that number a to maybe there and just you European would overall of doors you seeing wholesale of sell Just anything of contraction accounts. in your

Carlos Alberini

Yes.

do So, We thousands fragmented. The sell The customer Canada. the very more US you're are think we two took right. interesting accounts. in of But top to of thing the European base you and if are they businesses there about where is our the and than customers half countries the different markets absolutely wholesale a top that, XX business, is more in the each in Europe they business. represent than customers, lot when of you

we is with in our with a have situations grow They customers. opportunity are relationship So, to and those continue to very big really share close them. a there very strong

did In bit been through them has quite with it fact, and very exercise, of very, work we helpful. this a

very their a crisis we we about others, seeing leads impact business. our even of very how result believe are anticipating are going there We is as in to that to us can role of a about With base think respect part obviously, and healthy that the be are careful way customer that a thinking the they we being believe trends we that to future. our they they business, and which with in play are as in bigger the the strongly significant the brands very think

We anticipate pretty production impacted reflecting of we we to of receivables we are or cut deliveries. terms pleased have a how our demand size significantly going the that be fact good have the pretty very is And to with just insured. future that anticipate also, our in

So, be we to going impact we are going day. and is every a to think that that significant it watch there

And there that in of lot purchases could back and And where the team, will respect cancel and in very through fortunately, there change position, to in demand. go we able as very back. especially our really new forced good probably North were on, of our think the years we in very with a in way we to us. of with which think looking readjust some we reallocate partnerships, and something back come similar forth. us a lot to to similar few instant so we're vendors America, have I our and cancellations then, Europe, we a that We're at amazing to were way work situations a receipts in in really a and those the cancellations and shipments experienced business early managing has of experience was and

to be So, fulfill to those be when orders to able we they prepared come. want new

And that position. a we so, are feel in we very good

Janine Stichter

Great, that's on North regionally store helpful. either months more Any give it context over me. then closures I context think stores? for you maybe – mentioned profitability XX that's And just I America those think can China. you or you. the the and there, next Thank between of XXX any

Carlos Alberini

North plan is to China. mentioned I XXX And over I think close and XX primarily Yes. Sure, is we they stores our months. about are in have globally Well, Janine. – the America what in next that so

Just XX idea, stores in February to you May, and give closed China. between have an we

we America, North opportunity more and about go expirations few for next So, too gives up a our And lot have horizon the very case of of between short lease in few in us significant And optimize to fact, the have there months. flexibility. of one-third is now we there. us a coming really And in is fleet to a here. lot of that a a the portfolio

are well stores are can we is have as on close no mean maintain brand may point doesn't important crisis strongly business represent and way having are stores here stores believe we There of be and close side. our to an it all overall, renewal we has we great, of acquisition all that the And – a think also vehicle that normal very, there with considering are coming But year. I think how going than continue our not store. And brand. I part through terms customer terms. XX% we the the been stores, big just think that here, is strongly stores, to we have to positioned well that but very to because an this be there closures. sure we piece the success. stores we're better of about think opportunity renegotiate to that the have. in even that with we an We going those not important very result number we a make particular lease that representation within presence go that that feel think that are want very this for lot also new and we merchandised many about a Europe, our may to strong And always of more and medium we stores. of that the And that one store in that impact, – feel we numbers very make think of this that up experienced. what just So, case, expiration And also in we And to are. over the And opportunities, a healthy. it's of next our And term

presence support in having overall, stores. very will strong a continue So, we to

Janine Stichter

you. thank Okay,

Carlos Alberini

Janine. you, Thank

Operator

Kernan next comes Our from Company. and question Cowen John from

John Kernan

An Congrats you, through of all uncertainty and very headed. confident the company sound you Katie. Carlos good early the morning things to navigating on this and about where are

on that. congrats So,

Carlos Alberini

much. Thank John. you, Thank very you

Katie Anderson

Thank you.

John Kernan

and pivot to you was could in you Guess? going I do think play pandemic? what's remarks, You during the talked recent the towards way your brand this a move you model best in that? and your how it think business prepared consumer how that. simplicity now, thought quality, reinforced And how future – sustainability fellows, the role about by gone What what of on view has is towards the to the

Carlos Alberini

Yeah, think brand the with it starts me. I for

and started less has think quality quality. everything just think very an We think you us. it's I as focus and for. ends the result the brands, heritage, think products. we big that leveraging with then, It the I for stood think really We of is promotional customer do. opportunity product ensure to brands in our we at in and after product looking And what for I brand couple these in the I a collaborations and that just have standards a present ago, always a a lifestyle everything. legacy partnerships on strong and being see starts have Also, opportunity of that is highest about consumer are of changes to essential years brand the terms as of looking want

pick, make us. believe to everything, opportunities are categories for this including in becomes product, that and did now even more our much and here. us the key even important. our brings be back Denim of as part dominant this a can for category we and customer that think bigger but fabrics product prior of think we in a opportunities I I piece that that relates major been details comment this calls, has we always As key it assortment there a

significant activewear big Activewear, with the category styling and the a that a as are men it price handbags think high think we it's and because continue us the more lifestyle, business, during of traction an great have that is at opportunity be big business, incredibly come. We gain to we months on a we a market continue Knitwear last meaningful I well-positioned both now with few big just this that's think a think Handbags, to point continue think denim, gained bigger in and can I marketplace that another and how changes Outerwear opportunity always you is, incredibly in a but and about where I well-positioned even when is outerwear this there our the think our product share. the women. big will the gain and price, – quality, to to share is item. impacts that that had is with we opportunity. and also – for to there

As a very business you men's our know, women's have to and sizable we meaningful in business. addition

little the dressy. put it that and many line like, very you we is very So, wow, opportunities it's There is how of together all have.

And forth. that well. this trends that I new direction activewear And product We for is So, what's with for going to the coming some happy And the and very of going to the already were are can that very on think with some impact so be that are changes positive lines able and we're delivered. we capitalize excited. were us. in we think very we we of as holiday

So, we of key. that you we can is of about that customer we Improving accelerate. the always think And the think big strategy that's the a entire that part talked what think then, about here customer centricity. we experience, just

I integrated also bring to that you to is completely integration the we We live all to absolutely a priority have and something now the is is right be going this and be better, XXX. has analyzing we all database. really are customer our mentioned It's this be something this the customer that knowledge for all we countries to rolling salesforce that so that to to went the we week been think make as been we where Customers able and implementation application past also could big into have so And salesforce able right better, to on and project for we customer don't extend are actually launching one of have anything another to called company, working that by do us speak. out already and in decided big as application close Journey a It which data built personalization do the it's that much here data engagement analyze results that we France.

effectively. but We great we have a to application data, a a don't of customers, have it able have lot we of be analyze lot to

John Kernan

reserve and perspective? inventory from from think look do an there. Certainly, going Do gross where the from be you're Understood. what you Thanks inventory at detail to of you talk retailers environment on about of year need markdown Katie, reducing the person. job balance some like you you've might in some – forward? for of it all of sheet. a rest the you updated a quarter maybe We've about the the brands feel good and the done could the heard second the margin some US commentary the

margin of rest if about really the in we you QX how curious year, detail. give of can Thank gross environment overall should terms Just any you. and the think for the

Katie Anderson

sure. Yeah,

with have plans the about inventory Really, So, as course quarter you talked into plans. adjustments the inventory. know, the first And all the we feel the pretty year clean our and came our that into we about year over really – from made. where we've good for biggest piece total of opportunity assortment that Carlos crisis, but the in inventory million, took of – with there. made about $XX in China and China. we we for the we And the was some we reserve it bigger adjustment have was product coming

the – and in we have we good good we forward and took about feel good strategy inventory we think go really are. a that So, really where

Carlos Alberini

that add and much I that with, have on here want we a significance outcome to okay, very good desirable to inventory needed have is what a how margins. is started we – just kind would instead and starting And look like the be we and able demand what be start of to inventory healthy Yeah. number, we with like to rearchitected of then

may the year, past. see some we what with promotional. And aligned be because the absolutely going into in of product we our the being feel seen So, margin margins we anything, of that if not improvement rest should have as

And, brand, most very, with dollar So, inventory rather importantly. be our are anything, away we if the would from inventories. extra an position and protect very walk margins to our planning to tight and order we in sale

John Kernan

Day, much forecasted just final XXXX come margin. we go margin from then, to the to of the back question. was one Investor consolidated And maybe gross the If for business improvement

embedded over wasn't reductions about in SG&A think You store about some identified closures, confident the plan. talked having of think of a SG&A period next made you There reduction much some that the – into you've rate at we time, do that. that now, how Do that in opportunity you seemed in really longer XXXX timeline? the over headquarters,

Carlos Alberini

big efficiencies, the One and around two top operational about aligned basis XXX basis that Investor XXX additional what with comments. And of identified of remaining drivers me improvement, line we more But Yeah, was start key look that at that there underneath supported Katie points. going when points increase. XXX And margin that was categories. the that was the have expansion. worth was And that, just just that. will back basis had sure let points with you to operating were I'm Day,

had first let buckets. four about was opportunities we logistics identified. one. that touch the me One So, We on had the

one second The efficiencies. was supply chain

one those touched streamlining. this. all are savings. here are really, again, one about accelerating was like, to you of third kind portfolio, tremendous about and look expense all The at it. And we fourth opportunities and you the really I of some to tackle think the that there those on just And store And continue was

with vendor and our team Fabric than project is year launched a that. supply XXX. less what We This a consolidated vendors. about processes. have a told base. this digitalize that our operating I you another are bit chain has If about had XXX Today, we opportunity, we of platforming, we're quite big We to done. doing ago,

eliminated have agents. all We

then, regions. are when look that all savings. chain Now, direct we to we're design, functions and going you and And as at streamlining those also between vendor contributed well has supply teams, our

a ongoing reduction. headcount for big So, for see we opportunity opportunity

and there's So, there. big opportunities all they're

we to network but in continue This opportunities is is that see also logistics touching Canada. primarily work most We for project optimization. part, a the Europe the on

I think mentioned we that.

closing We then, DCs we the we so when met, have go think were but the to that to and two optimize many we we opportunities portfolio, weren't store on you just thought And planning yes, we one. portfolio, I stores that planning mentioned, had so to quickly.

start real into in gaining expansion the with anything, I looking were is at as us. And seeing many productivity. respect And And be store us even, in obviously, going landlords think just new of but can are And And store line, this to think is go opportunities be to to very then, sure happen so, setting that if reduction. We this a be a top accelerate this quickly be areas to their believe. store estate be something expansion, can back good expansion help we line share, would we permanent just an I that there and that they're for going want sales us portfolio. we represented brand very savings to top that then to centers. not to that optimization on result opportunities the going of improving to hope incredible that I'm the is going the as

implementation ecom. Day, top more And, on that be Investor increase to this as to XXXX. bigger sales because to where about could doing biggest that plan this It get fiscal with that was about And now do glad plan. consumer is new very I'm we needed going time, think have be we to talked what with to XX%. thought of by is think number the about we fact, to see definitely mentioned our in a we year that and I advanced to about penetration on XX% of and we we were part going, we digital. opportunity, are line the that in something think that execute And penetration. XX% than At we be what opportunity of that about we the our so that ecom, we is platform able was we Now, expansion were to even

place. of opportunity the functions a cost big we on think most overall, back talk think And here. not that and I if But this does Consolidating we that, details that is opportunity. [indiscernible] I IT is are and a about is So, all in another very at significant side, for opportunities globally I underway It big think look we that they there. us. the too. infrastructure the uncovered are good have the

John Kernan

second detail going Thanks, Carlos, the all quarter. the best for and luck of into

Carlos Alberini

thank much, so you John. Yeah,

Operator

Omar question ISI. Evercore Saad next comes The from from

Omar Saad

A Good couple questions A on morning. of Thanks you. Thanks for China. for Hi, I questions. information, for Carlos. Katie. to guys. couple start Hey, taking of wanted all question. my the

You're closing stores.

You've been closing stores.

market profitability? it's the closing have a the in of context, it what's You're color designer kind brand then aim companies opportunity more market for stores. Maybe kind shrink follow. follow-up. of for shrink and overall Is of closures update harvest that to Thanks. and to there a a the It's and big big put of would be really term and I and grow, And lot is we Any a more store around long kind helpful. it medium fashion strategy?

Carlos Alberini

I a addressing because has share too, us in believe those. China, for have been We road Frankly, that and had we it Sure. of that feel are fair challenging a issues internal Omar. we

talked side, the there. we that calls have I with on in we team working product we previous about now the our and are think opportunities

our addition story. In the and to, helping position putting to really product American with assortment with really merchants best we team to the from how are help

we road I were that very desirable closing we confident that interesting. here locations. it's I'm feel So, stores, And yes, on we're but are are Yeah, closing that, stores to success. our not

the or in a believe don't that or representation this So, feel don't I in any that in way territory we opportunity. in is the market the

These going In to still have tier three XX presence closures in stores we're I have after cities. fact, that cities. are one left are the to be with, tier that these mentioned, going to we all

not that store opportunity the we from away it's here. walking So, are

the where in that we're are happy stores closing not making in I Now, we're or closing presence in of of am significant that terms terms territory that these of profitability. a were because brand contribution

have meantime, – in to bit the to shrink to are our grow, words, able that we think we and now your quite market. done So, have cut a use in to the we costs to be we

I start a corporate move. to over that's we have we our also investment, we And So, reduced think had of We taking And a really that the very territory this is think and good and should well market. it's a and costs aggressive and second believe inventory very the I really and huge we are still that go a half perceived. pretty importantly, approach clean improvement into the in you significant the more year. as brand see

a quality after that same I just going much big brand and So, apply for we principles a have big this about the we and market making a to think of that opportunity. that we brands representation but the offers opportunity, kind in want mentioned

are that and all sizing are So, as also going we opportunities on that we and think be there addressing well. to fits,

Omar Saad

behind and And BOPIS from store. know ecommerce the more put great well and to that That's ecommerce positive you growth the to business as explanation. digits. super out strong, contact side is as numbers ecommerce opportunities It's the we into ask like double do hearing digital you, Thank see some ship crazy we the It's digital you of we're of for Maybe in coming color, some things some Thanks. of digital. the cover. maybe big growth companies I helpful but of opportunity about also some omnichannel. drivers Carlos. building back for as wanted a the slower stores the

Carlos Alberini

at companies some in bigger it type we Yeah, have. seeing I'm as closed. that sure the especially were way. customer you. a have about those essentials. tougher Thank the similar time quarter, a not Yeah, had that and business frankly, was yeah. ecommerce, stores we about time, believe that positive the looking is their companies product are we just think of I beginning more hear more into much a I And quarter, as first more doing with numbers, over of reacting significantly did we our

place have tools significantly. – continue once looking trends to our – capabilities that example. am improve I of we for many think I those forward in in just have very right don't we And to Europe, the

those, crisis even the healthy So, able and took US, to by the capabilities the longer business our forced were here. gaining we on a been capitalizing that we the little don't bit to changes have while the when really to has And and on the in business outbreak start be are growing, traction. capitalize

We are still big having looked the inventory lot at we into are challenges result. on the just funding be opportunity there traffic. was very we and have product that But that customer able a we a happy we're to are feed and and the demand assortment seeing side with with with more to product

want to depends. as think you're a be we I modeling see our and the Double to navigate realistic said to that numbers. here, numbers big continue So, digits. to way continue I we it But digits for right? double it's will going somewhat us number, be the can improve. in early So, are that, our year through we

Omar Saad

guess, Yes, XX can double-digits Carlos. XX. to I anywhere be, Understood. Thanks, from

Carlos Alberini

Exactly.

Operator

Instructions]. [Operator

from Our Advisory next question Group. Telsey, comes Telsey Dana

Dana Telsey

Hope Good Katie. and everyone's morning, safe. Carlos

Carlos Alberini

Hi.

Dana Telsey

Hi.

sales stores expect what by region, any to the similar can what in by have either you you're decline As which of should you quarter, a to you. second that think see? you commentary terms Thank qualitative put reopen, about first expecting as quarter, the channel mentioned behind you

Carlos Alberini

Katie?

Katie Anderson

one, this take yep. I'll

May, the with in of into think open really about going all starting June. stores first stores phases, we're think really, reopen revenue mostly So, June. you our said, terms retail, be second the We we as started in think And quarter. when quarter we'll we will line have the in in in to

is in period year QX QX, same. much revenue in closure about prior with why store we're thinking pretty is the about which the line So, versus

demand having wholesale closure deceleration. wholesale, of same store under and the terms we're the In that issues partners are

the So, with business, into and will in we the second our again some some the goes licensing. line shipments quarter, year, the think same for part be retail shifts pressure later in cancellations, under but of

we're So, thinking to that's after that, we'll QX, why normalize. start

Dana Telsey

this develop there? product? faster And then, inventory perspective? process. and turns do What inventory it. And how Got it development Carlos, you are go chain does forward simplifying supply mentioned from the the you And terms product you of how think about then, you seeing impact as in and you

Carlos Alberini

Yeah.

the process plans. I described impacted that the inventory, to that one respect with just our is inventory So, exactly

So, we that we will our how the channels, of really Katie about the and needed just that including demand, told in inventories to kind and and thinking most you wholesale we modeled demand way. are effective behave of we one every then demand what fulfill then took

extend to digest. more the situation spring more we give digest stores with did similar this them Then that, in season closed. their the And numbers. So, that We and were to to and because, fulfill second new or result sell that our sitting to quarter able all to had that customers to we had mention even matter, them the because they during customers for of some that the when quarter thought as have and give had the then a way worked to – orders, the to our season I was time own sell to into were best continue even what many look our basically didn't cases. placed our And with they deal give of third product adjust of stores you really the did room the product, time with vendors obviously, be wholesale some we to we canceling couldn't to the stores. we fall/winter to some time some then, in orders orders as on some we to

did we the with was knowledge that But equation to away what And from full result, walk of else. more whole weather for demand supply. course, demand. really to were Of we want right season opportunity able everything capture don't between and included a as to we this the and and balance

including be for processes, we be ready see regions, in with in fabric or many the quickly. and to to very a could need hold turn cases, So, do be able whatever ready good we in we're opportunities tracking working vendors then product put we Canada. both really that the and to place we're place We and, fast so think in US the we to

Dana Telsey

Thank you.

Carlos Alberini

Thank you, Dana.

Operator

We this at to have no questions the Carlos for now further will turn Mr. Alberini time. I remarks. call back over final

Carlos Alberini

just to partner his to to grateful I'm here you. in all and who taking us. have this and this Paul very call his talented to again have been honored that passionate entire support and him at to I'm team I grateful Thank honored you really today. incredible And I'm want with time. thank this we has for and And Marciano, through next Guess?. part lead guidance

and I here and than Thank And and next for navigate to you commitment stay please, have to determination. And confident a this I talking have I that time. continue to forward I'm we this, relentless will to The entire and people shares We business very safe from model that look crisis that. hopeful. the believe all team you and hope through well stronger again you the I'm we time. brand, your the very, emerge And ever.

Operator

and ladies today's you gentlemen. participating. you, conference. This concludes Thank Thank for

disconnect. may You now

Guess' (GES) 10 Jun 202021 Q1 Earnings call transcript