GES - Earnings call transcript Q2 2021

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Operator

Good day, everyone and welcome to the Guess? Second 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 pandemic. 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 certain non-GAAP or adjusted measures. of can descriptions today’s found and release. earnings reconciliations these be measures in GAAP

like the to Carlos. would I Now, turn call to over

Carlos Alberini

Thank I and us morning safe and and you, all these are operator. joining unprecedented during for times. your thank families today. all hope you again, healthy of you Once Good

our traffic Improved more our future the periods customer the to quarterly us improved the spoke, helped better And a and their return initiatives our work material for the leadership, a their relentless partially one Since helping weeks have the which better the Improved have our pandemic more life. meaningfully. result, reinstate conversion store challenge customers strong shareholders our to him. our under Paul, a progress see are Marciano board eyes the the us we effectively. our quarter around accurately, we the some expect world visibility, this Maurice hope margins but key capitalize environment teams our with continue am project and then visibility by Board company, a Maurice on the and through that hard I will now. in same. has position He know, confidence we the optimizing to second person. into the year with we a have our is everyone our the to road close very long that across you hands share entire and is gave and company touch for all am back I we future this important Starting demonstrates which I second firmly that outlook care, process impact injured its in to quarter repurchases visibility company. financial to results with call how long-term year our crisis consistent we and improved our I made commitment our proud changed regions, opportunity several world most Guess? our our in of relatively our on the profitability. extraordinary stayed re-openings on Among I inventory and when believe him those with us recovery. and speak I bicycle to to enabling imposed expected dividend. pray tested fast will a will things Almost be way. liquidity, and about wheel. on great soon. the I in needs team’s In both steering by that we seen I is this continue in is changed, sales, we with be on to On and that accident we assess an in rise significant improved sure comparable prior demand few to results and say things a At the all all and situation our Guess?, think offer as offset for overall can an As and get amazing on future. with for from company minutes, performance for and was have had recently. last our managing rates. I and next recovery our very in for reduction He behalf visibility is amazing few we we Board, family for our our this is the full strong size his speak will the

customers’ thought. and that to permanent to the relates we clearly change maybe changes pre-pandemic originally us to behaviors, more The signals than not shopping which conditions. second have This returned lifestyles

comfortable While visit. intentional more purchase online in make many do when venture people are to out feel than a that shopping they stores, much more those

Our high IMUs. single-digit and second full dollars selling as America delivered revenue XX% business of more result margins significantly quarter and and North growth in Europe the improved a e-commerce as than grew profit during price gross improved increased

our will We increase are as confident our that of the investment in to half and year in our the continue Salesforce complete we platform our reposition accelerate e-commerce product business offering marketing, implementation. second

encouraged and strong in digital by with which business a our improved in teens the degree We North again America. margins are lesser with Europe, to performance in driven and August, was in up

We see priorities product have that continue towards dressing. shifted casual to more

people this are to Based that extensive colors development as a we time begin multiple we evolve in believe expect and priority investing remain go tops the but denim on again, for clothes line in an of over apparel, casual will dresses of outerwear, assortment that customers. fabrications. to on trends, sustainable and and a out and active stretch key comfortable comfortable high-quality niche these our of and strong We capitalize

are also lines and handbags. on strong focused accessories, We including products seasonless of and essential

marketing of to traffic. brand to position our While we an the see dramatically spend year and second second reduced opportunity increase continue the our we in drive half investment during the strengthen quarter, to

environment of our be and our XXX Michele men’s. We on movies outdoor movie, plans XXXX product a forward, XXX inventory buses accessories intend featured multiple and winter a of rebalanced current and lead result to new promotional Netflix, going including positive for in customer Days, men’s, the several of global already of to aligned as very featuring the should actor has ownership one of in Guess? market, He currently streaming top the product in social less fall better is improved our Guess? Italian collection season, We which relates to direct kids. countries. This and TV women’s, worldwide seems lines face billboards, in intensify planning be with One leading singer, demand. for and digital actor to are Morrone in margins. campaign. Michele recently mail, others. advertising campaigns and media the industry engaged will including have media, development efforts our media,

make key inventories progress We in margin and XX% inventory owned clearance quarter we continue our quarter this a a less management make than increase as ago. and were a and good product year place. good down strategic a experienced are inventories to initiative end, At we inventory

increased on on the continue this more Katie to expected more For will already I basic fast With impressed we efficiencies plan track and believe, but higher demand. year, the we to utilization rest by to potential and for less, ownership am capitalize will our be and reductions to built a and our lot respect this demand flexibility We significant purchases resource and react have strategy. see inventory in ability on and of greater able cost based achieving spend processes do with with to product to business our permanent. time later structure cost temporary team’s structure, on. both opportunities very

XX%, countries willingness XX%. People read I between amount spend as Regarding have Chinese to have stayed to the tourism July, the recently very same, the seen in be was and countries. for tourism and with that that uncomfortable and now, with non-existent travel. a socializing homes in spend in things of of and unfortunately, down continues multiple down leaving their we restrictions outbreaks still still pandemic new are is result low us Europe

reasons, the we the this half are approaching cautiously. year second of For

now stores all We the we California many communities reopening the continue serve. to priority reopened our closed again. are that our our make teams, them We after well-being them malls of and and safety having customers we of and and enclosed

most We are to worldwide our happy reopened. of are report stores that now

and team XX% work members Our America operating North remaining in have headquarter been the in buildings Europe and remotely. at capacity

closed pleased with business were we our in circumstances pandemic. second light by we As the manage quarter, how the presented the of we

originally inventories second European than we better than retail also benefited the shipments Our into as businesses, from relief requested pull quarter, and many positive Europe. expected the our rent from were customers wholesale which managed products than third sales Margins better performed anticipated quarter in as well than product planned expected. and better some from benefited forward earlier were

revenue during even All-in-all, adjusted broke a an period level We the for the also on almost XX.X% basis. we and operating costs effectively the manage period. decline at reported we

look selling to during We appointments, earlier there metrics customer period but to similar and we plans a an the is peak year, capabilities of believe expect on since second mail, have other our those holiday customer initiatives half by customer with the worked have to to season on and focusing avoid direct optimizing the with expand omni-channel begin we in the congestion periods. recovery stores, we that driven opportunity As that seen gradual reopened into slow improvement traffic. retail we business our of have a

sales week was in very Regarding by summer our our the participated. live people. our live with streamed campaign over event June, believe attended all have people Plus Lugano, event been was an I is strong. incredible seen job I customer’s by a received industry interest our best XXX very product unusual during we our launched and to this business, my in was the the customers. done I positive the The And wholesale line of collection. that Switzerland, the well the in XXX in over with last response and the which was has the with believe Paul, creative have is teams line and with very years Guess? that brand spring

We efficiencies the that year, our that strong capture excited the share are targeted improvement that opportunities progress. be operational pleased is our we the position the This are in year we the future. near by operating still most work company last believe driven improvements see to we available points planning in our even that us to expected and gain to we market in are are a as continue of have We margins XXX near-term. remain with in about implementation confident very to strategic very basis

full work is Our brand force. in positioning

focusing with Our while on specific products Guess? elevate our to commitment high-quality brand, and brands, needs by each for market developing SKU one Marciano region. and rationalization line addressing materials, global is

for We in and continue today’s environment. celebrating significant and to a strength diversity our believe customer DNA that our obsession sustainability brand represent inclusivity,

our will rest out Guess? XX Europe UK. initiatives, customer and additional in North countries launching more of website Tomorrow, Regarding in are the our countries, in October. and Salesforce France through centricity we the XX for implemented and rolled be September and we two European America

launched omni-channel also XXX call mentioned fully be year. capabilities. the plan continue and to the entire by We should upgrade next last implemented The we in that of project our Customer end I our

at X result We last to over direct-to-consumer continue e-commerce business years, We quarter fourth update are our XX% this long-term business a next months Investor initiative and Meeting. of the few XX% of the X we ahead. an the plan approaching on very our will with days it we penetration bright in you in the year. strategic are share to as strategic our grow while cautiously, we up short-term plan business closing, believe and see to and to that Analyst during represent from In focused entire

brand impact team of capital-light differently, long-term Our valuable architect vision reposition for strongly believe more this crisis business be and business to we aspect company challenge company The our I and will our as efficient the our of our extremely simpler, remain the redesign inspired model. a and to and our every to our think that brands model. intact. crisis in

better in and share will globally. building that future gain positioned a business be the are to compete market We

to years. over I global the fully companies this that they of overcome relevant We everything will its crisis all the the believe stay models consumers of adapt true relevant at gain do and that and We Guess? embrace those a by time expect new time iconic customer placing preferences, have XX again. business actively to one has be brand world adapting that their center for faster. consumer been share model companies. for

pass about is than that me which entire Katie? Paul excited excited our our our leadership future. seen future couldn’t came today to years, that, our we in team, strong returns I the have deliver Guess? strongly few to I I a have I it shareholders, We be more since and and back believe will more it to next With team Katie. even about let outsized

Katie Anderson

am the took margins proven doubt this at recovery, beginning and productivity for actions the Thank having during clear This But a the saw of drive everyone. you, period first is long-term no In able in appropriate months. with This current initial but an made we of as last maintain cautious, middle of preserve few us, operating our control region each not the with that not to happy navigating as level again, is the a what most Once the that we history. strong. on to adjusted liquidity, and we all emphasis decreased as down to very drew the our our reaction the well as our the were sheet. we macro the and business is down stores pandemic, report additional that to Carlos. maintaining allowing consumers clean the And in challenging shareholders. product with Good ABL balance sales value by remain brand effectiveness earnings maintained of a second expanded term expenses strength brands. the remains our outlook while crisis. global of this long-term strong that position. of quarter, we I facilities, reopened and our flexibility while the held, solid strategy can liquidity return quarter the almost believe position quarter, company have us is our morning, million, the a advantage We a of appropriate were XX%, $XX our We Europe. what the we even credit our we extended sign across the investments decisions over the competitive a future only of to the make uncertainty quarter. surprised have low I also P&L result, given loans a interest health to net into inventory our environment, over breakeven secured to on through pleasantly successfully

paid incremental shares. our on shareholders As the return the million our we stabilize a borrowings during a significant lines back repurchase portion value began revolving with to second quarter, and seized the drawn of of opportunity situation $XX our to to the

and our this quarter. the declare has decided resumption we from approved not prior it cash program quarterly dividends In announced to quarters today Board addition, that of has our the any two dividend

changed. capital long-term has allocation not Our policy

of let for Now, performance me through the our take some details on quarter. the you

Let’s start sales. with

million, prior XX% the and open. Second were the lower year, currency. dollars store quarter in U.S. $XXX closures quarter impacted regions all productivity revenues in in once negatively as at were beginning the and constant down by of XX% Revenues stores

Our our stores our the retail down prior were closed approximately reopening down half productivity XX% the customer quarter XX% flow they in and the the Canada, for in in the traffic were of U.S. quarter for Overall days roughly and year. in in since of open, sales was down for XX% when XX% Asia. was and stores Europe

declines conversion locations partially have tougher a recovery. We traffic our centric higher seeing offset by tourist experiencing and been been significantly have

business America X% e-commerce up North and the Europe for in Our was quarter.

was margin year. in similar lower sales licensing quarter demand, wholesale in as experiencing decreases and the for these partners in in areas Our were lower well. Gross resulting prior the XX.X%, QX than X%

result of Our product promotions. margin primarily this lower as well as increased as XXX a quarter higher basis points IMU

basis on de-leverage more points than by lower However, of XXX occupancy was this offset sale.

in in with store with appropriately and expenses declines line our landlords still are we in the adjust our rent, to rental traffic. Regarding closures negotiations

general, a final accrued in June, for reminder, May April, adjustments made. agreements time at which we in expenses but and place, all payments rent As are the are rental are until suspended

million This quarter, $X in was $XXX we compared in half a for of in SG&A million, for year, savings a to will Europe. the $XXX $XX booked one-time. over prior rent consider credits relief million about deals, of negotiated fully these Adjusted decrease quarter we mostly rent little million the

payroll We reductions advertising. For We our corporate variable like both store salary been globe have some government payroll in across And while in and at put costs, closed, stipends received filling back reinstated. like example, also the And closures. since we hard business. on that countries and during more on we stores are pulled support employee we a various normalized distribution level. support were back the to saved place in

half forward to continue basis. benefit other The we from go on a will

and travel discretionary well as headcount corporate decreased have fees We and other as professional spending.

adjusted most help Right while have floor. our in on the in the maintaining quality these labor us source our lower historically than relative selling service allowing demand. part, also staff for our of on more we And we now, for optimize and while we spend have to what buyers our significant our levels capitalizing stores. We savings still seen labor, culture how customer lookers have traffic the

and We have all to reduce aspects more business assessed and continue to redundancies and have in a assess model. that of leaner we our regions operating are across agile

the our of be our as the last million was new will a quarter for loss eye year. middle a $XX for normal. structure we sense the focus on in second makes $XXX,XXX cost Adjusted on that of versus organization Our P&L operating profit maintaining

second tax XXX%, rate year. from Our was up quarter last adjusted XX%

earnings back the prior pronounced dollars prior changes $XXX XX% than the the in over in adjusted quarter what $XXX last constant breakeven As quarter-to-quarter for Capital capacity. we more cash one-third the currency committed total the tax the an mix million, are less quarter, first credit the year. facilities, second the to we million, After is million on year paying tax were X same U.S. $XXX in in of company’s second and million million pre-tax from versus and down XX% ended $XX were jurisdiction. spent the in months of borrowing year. borrowings of year with rate Inventories and period expenditures roughly incremental due for than of our of in the $XXX had past

million, $XX that $XX our first as payment as commission the business inflow digital of payment vendors last million invest our with year to cash the while $XX continue and of the This non-recurring our months to Free year. an adjustments like outflow $XX fines we have last the an increase year our of are we landlords initiatives versus flow million an rent well was capabilities. negotiations. of we year’s this As improvement X finalize for in those million to plans, mentioned, unpaid mission-critical included EU terms to of

Given going the uncertainty formal to we continued environment, not current the level provide are guidance. in of

through our However, thoughts planning the of we some of rest let walk year. the me you on how for are sales

our stronger were which reopening than performance, As expected. we was encouraged discussed, by initial

likely the down cases August, continued XX% In shopping, shopping in impact the bit U.S. Asia. and crisis. of volumes caution this in moving than period, is locations consumer down opening the not reopening sales E-commerce driven up deteriorating distancing year from some of by and change given levels. social at retail we cautious for quite slower will could the and the for particular Canada, double-digits we in and there. holiday However, recovery our Europe saw time. remain about XX% Europe Consumers anticipated the we like most the in high are tracking Americas, nature up since down end productivity of see risk a that and during We our where has XX% which picked in-store

mentioned, Carlos demand. around still implementing holiday the capitalizing season while this elongating strategies the we congestion As and by on peak time during reducing are risk mitigating

licensing and much pretty businesses our wholesale headwinds. experiencing Our business partners follow similar our are retail as

be and prior result, QX a year both to to the QX mid-teens negative we in range. expect As performance revenue

half in turn not. better obviously hopeful are than the We back our year but are business that the they planning will out assuming will we that, trends of

expectations. see and it’s questions. the to in to team I flexibility the over the to company’s expenses momentum been the inventory to we our sales strong see in the have performance. been can has work the it let’s across our feel of segments. least, exceed inventories, well-managed recovery done teams and globe your it call few but This grueling our now last their by marketing the business and the strategy In for work fuels open that conclude And Guess?. in With that, months the remarks product our should has liquidity team our ongoing and so and right and and meet the we clean closing, position, up our a fruits and our that our say rewarding across at labor around the our confident are will We our demand

Operator

you. Thank

question-and-answer now question first We B. Our will begin FBR. the Anderson [Operator from from session. Instructions] Riley comes Susan

open. now is line Your

Susan Anderson

was morning. give my good a a Thanks taking job tough I Nice And question. the on little for Hi, in could wondering if environment. quarter bit you managing more…

Carlos Alberini

Hi, Susan.

Susan Anderson

in we and guess little half then Americas guess and more maybe that what’s into as I A as have bit back go color started up I the until now? stores the also Hi, reopen environment, on to wholesale in seen Carlos. the obviously you the globally? trend orders

Carlos Alberini

Yes.

where different behavior, partners all were during with we the than somewhat rate and – our that was of been behavior think Susan, of America, business regions. the broke orders just that very what at and them rate of top with for North appetite Europe, retail able of the cancellations depending and the bigger vendors of really we XX% redirect and XX their we purchases I we countries – about about wholesale had bigger the maintain us more cancellations last mentioned type different partners, the worked with about saw retailers business. time pretty of of big those thinking So, cancel We purchase over we significantly our many the on that to had represented closely work to some a and with the lower. Europe think to closely has the In what of orders overall. was continue some the XX that of and our worked call of to In I we to work the them case pandemic a and I our were very our orders had retail adjust the

imagine orders. were lot was So, interested I a keeping significant very, those and they in very pretty that can of

fall to pre-spring more we summer. to purchases the through able to in move be what we by season, was season winter the decided to partners that we they that, someone to particular we call gave our do really skip to that one able time doing in decided And were elongate partnership and and have So, cancel made. what development case, of

very results even we than better this So quarter, had the have are they but did very, quarter selling we those strong in additional product that second overall, because and anticipated. demand not retailers the expect, the been got some

going So, there, still – have products. the to earlier. sell respect obviously we they with back they to have America ship North capacity And to really more

So, able kept to and we to the those way additional cancellations demand purposely to some or slowly some happening, took we some product flexibility in be to and but after is – but react ownership that expected unexpected a came able that fulfill have place. orders been

future, Looking because love we just to there and into strong, very in the is in we starting strong better, the feel people Europe the especially are see that line. brand, interest

You is opening saw the we elevating how lot and the the about that event we enthusiasm was comments, product, the in of Lugano had very that successful experience, as believe brand in about we the are heard my could of and result can we this that. came be using, the market just excited we share the out future very, styling, very really what that a gain fabrications everybody

really have big big are can gain can that a including here. financial share is bigger we wholesale result. a on We we be having brands time think especially a some considering companies of there opportunity, And not that a or lot those they challenges, as of think big I network challenges, one are delivering that that

Susan Anderson

the if I curious a too. the am have in follow-up, a does looks and good you look website I as seen That’s the Great. I bigger for just to the very product shift think sales of – Thanks the guess, or helpful. millennial great kind all out? then details. and purchases are the Gen consumers rolled product? mix new then of has as Z customers any of you Thanks. then pandemic impact you And and older the seeing during the new the changes also product in in

Carlos Alberini

very product lot that aligned they lot especially expect a and and heritage was feel a lot lot definitely second and had there now the we under type think Yes. one Nicolai quarter, couple more wear product of that call has amazing are are product with that during audience of This we of the a a customer. younger shorts younger of done that there come Marciano are a remarks other obviously, as produced programs lot the assortment. talking product we under – team seeing Guess? capsules summertime. And to quarter brand, saw improved what respect to is when they during is are during with that J our I we couple had would for. And and What traffic was brand is the are right USA And in we seeing and and with of T-shirts type campaign but has partnerships Originals a resonating of big we you that mentioned what that behavior, similar been are one we – with now, in conversion, Balvin. purchases, the With the and a the our of Katie well. think there the that looking really we prepared Guess? was slower, customer, we that and a seeing one of people it’s and are the then the her again intentional

fashion well more I talking this denim than what that yet. basic But seeing the the great was have seen are We denim. denim, response done hasn’t overall, ultimate customer about with product, we product for but

Susan Anderson

feel second really That’s are you to And pulling guys a the inventory did you good just your you in – job the back, you levels. I promotional sounds do about thinking were like back you about can then guess Great. continue do think helpful. you half, environment the in quarter good lastly, It how that? Thanks.

Carlos Alberini

Katie, you environment the and probably then me margins. overall let So, address talk can about

course. a how that result companies as on of respect of what really control that system managing with the that, promotions, they with inventory flexible made were to get bought the want for to I as very we to be chain an different to that we lot case, a opportunity a made what included, inventories. that – in are they buying, will have healthier. on think us, see the that brand with don’t were we are with course, expect be we our is And to for paying In put seeing prepared that are their want what opportunity be us think changes strategy. we margins I people we a are think promotional, people We we continue their be are to brand, there hopefully, space. a going to is for to but inventories that have able aligned and early is that, elevate – – going priority demand high we and to based And a And and have to supply we very increase in Just of lot we want And this that. it’s that there result a that of inventories react of less to to we promotions. And responding off. those completely how

been the else. cautiously, that Now, has we that being controlled see everything don’t the with the second crisis virus half completely we total clarity said, plan and

So, careful. are very being therefore we

talk gross about Katie, So, do you margin? want to

Katie Anderson

sure. Yes,

QX reasons. gross QX a for of margin, of couple terms in than better So was obviously,

occupancy also inventory we in the and with had inventory large so QX, First, on clean charge in sales, took relatively position. getting we In came de-leverage obviously less a a lower QX line. we

have more And relief had was to that leverage leverage are of a $X improving but to – also points. X and sales credit, million we also we rent worth IMUs Europe, that’s in most one-time margin We have rent. seeing

going and QX we a about position. think as clean we Carlos QX, we says, maintain when think So are inventory

And leverage back some gain IMUs, going as on we have there. will QX. into in sales to to going line will from compare of think continue we it’s are what improving how We in promotions, the year, but We rent more normalize, to pricing. the relief specifically lower unknown to occupancy it’s we going some benefit then half saw the QX,

Susan Anderson

half. helpful in back of Thanks Great. so you much. That’s Good very the luck guys.

Carlos Alberini

Thank you. Susan. you, Thank

Katie Anderson

Thanks.

Operator

Thank you.

from & Stichter Our next question Company. comes from Janine Jefferies

Your line is now open.

Janine Stichter

good and congrats everyone the on all improvement. Hi, morning,

Carlos Alberini

Good you, Thank morning. Janine.

Janine Stichter

we are hearing been other lower just a bit am ask I a the bit about morning. to growth Good little from little what going e-commerce, companies. than has

maybe think then of you. and be? think get around Salesforce could then channel? in some little from benefits maybe your elaborate talk plans So bit that just the might also for And marketing the why the a will you implementation on you about more Thank you you

Carlos Alberini

sure. Yes,

I Let my will am sure me Katie to comments. add and start

continue Also, be in think were been with promoting. case through higher to up that that not careful I know able as and high over countries and since we those really Europe you even that implementation a of we considers offset see priority digital the support for we the have the I very We that, some before architecting especially on came back that implementation. a conversion. traffic, traffic, this this, very this and – and but down, mid direct QX, once single-digits to impact to a with the big is to U.S. Canada the because channel Europe were had grow on traffic better impact but was how to Salesforce about low-teens, of needs solution going for we were opportunity job responding but complete do in we very, continue to the up on overall, on we that negative on and we company are was was and seamlessly customer’s even

increase But careful significant were than be more with of As see in a were And by promoting. we we like year, be. promotional we Last I mentioned, were will not done the would a almost result, also we to to as pretty margins. able end October. we very

new inside that that going I our our have mentioned That impact to happy And we the think to that business. especially campaigns into ongoing traffic. with on like are sides think spending assets, websites, into we that and think being to of pretty we social, they opportunity as our how would we speak. significant conservative XX%. bring said, I I And really but digitally were really also the are were second with we is the somewhat overall we and e-com traffic we think the were look of those to that digital more And we about the that some way think of I assets the marketing, already is a that are margins I running incredible. I we going the coming use see mentioned increase over have half for all in for level to

data that have time group and our a future, do in really capabilities, omni-channel those the in this would from well. we last Customer some Many are saw the have we improve we roll of by but probably we and especially whole away the We We have from stores loyal channels, all those to not implementation we Salesforce America, both for With the shopping e-commerce is things reopening some journey results. sales the And also working and such think engagement were both to we some XXX decelerated. out. talked are time Europe, also we have Salesforce on e-commerce and of been but with really data are took mentioned North an integration, America plan to in business. – that solution called and somewhat think North as full because idea customer implementing I business respect conversion do analysis is that our I of impacted that as be of personalized some customers our those in Europe cases marketing,

shopping from should will with project, consumer long that the accelerating benefit that So, It’s next and today, we that all year. very is think project. we that happening a but is how happen everything

that this and great which are going is are seeing we – can’t all is conversion that really the is we step foundation wait So, the to on The first well we results. good get done. thing big excited

time used homepage than the seen loading have extremely performing We to. we better

is loading at a rate we are of We seeing and down time that plus conversion are least are we the XX%. Xx of seeing XX% seeing faster, page about higher average bounce rate

that one right and excited about know we are So, that. we is the platform the

Janine Stichter

like I think sounds been ahead like the the put flipside, laid year maybe initiatives maybe at you out for that anything you initiatives you slightly the the on on follow-up there pandemic able then Thanks are color. feel you Day, Investor Is And the feel Great. it a has And you implementation? else plan delay just on. a you about to like the accelerate? guess one where last as any all if of e-commerce be might have

Carlos Alberini

And great of renegotiate frankly, for our Europe we I we us, logistics able excited accelerate to have are been of been just able and a contracts. in the Yes, to think one a things it’s things, because have lot question. we big especially a lot of was

Netherlands. one We the DC have closed in

in about at pretty Poland. all a of open one that are we We the to And think to this significant some line point. impact has bottom

We a done have lot work. consolidation of vendor

supply are I integrated. think that fully teams chain almost just our

global SKUs get reduced is the do in we my we even never by way one to this developing with years XX have This brand. We company, almost tried line idea each years now of something pursuing completely. and done big a done we ago, are whatever and could it in for

are coming have to going months. next We up a line the global in few

it’s that. excited about super So,

for and redundancies. identified great We of lot infrastructure eliminate a are areas efficiencies and have we doing work

that, entire things, faster. going eliminate job do, one is that this then, business. we everything that that and doing has from many very doing not we Paul significantly I by are been also be running to elevated. be quickly, coming to about we what just and it difficult that just a is wanted it’s think costs a like line, it of running the able think wanted was to something tremendous to ambassador just and about was I but leading think the great the on global this product. there for something experience What differently are very, mentioned a and other redundancies simpler I we will we but we be And doing growing cutting Some the business the brands

can the create are working feeling that not that is more, visual excited the and boutique And have going are merchandising of we in sell lot we elevation more experience, much to it’s product as how we but of present and used about going have stores, going also as redesigning we type product to a so we we experience. super a feel doing be and both, to everything. the of do the So, are with to

right with we share about to how we are where spending to you centricity things. are bit more specifically thinking initiatives customer couple million it’s we are time a has of one but We we putting a money more are do going we planning money, And you been that are those think the every penny, – talking we dollars. that think of last we I so worth little and were met more than talk, or are

So, a it’s significant not spend.

Janine Stichter

the Thanks Great. for all color.

Carlos Alberini

Thank Great. Janine. you,

Operator

you. Thank

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

Your open. now line is

John Kernan

managing the in this sheet see the period. on congrats through great difficult Katie, Carlos, balance time to morning, Good shape. great business It’s

Carlos Alberini

John. you, Thank

John Kernan

buyback – around others. dividend confidence stands among The out and the share is clearly

Carlos Alberini

you, Thank John.

John Kernan

the that obviously, am think versus remainder the about for think business impressive. year? You retail bet. about year-over-year I how was about sales wholesale happened And of it quarter retail we think a inflection quarter second the and first Europe, to how I just in in guidance dynamic little wholesale wondering should of the year the Maybe you could into between as fits your what for balance the in bit talk Europe in remainder the P&L the

Carlos Alberini

Yes.

well. you let maybe to start me So, chime and in then want Katie as

a Europe is business it’s our profitability. strong. in I business part big part a think of obviously is that and And big our our of wholesale super

business what better So, anticipated business develop terms just more it, retail addition of across we Also, board. that that we that And every has conversions in time can we to expand in and traffic performed dynamics the had we the are do. still that lower really but really we and – productivity, offset support similar okay, to North by is of very want like see we improved kind offset Asia. our the also and mentioned America, meaning that in we haven’t see customer see partially Asia, than

moves the second and somewhat work we of from months X both we our stores just to is outlook third. partners for second into the and into our the time really also pipeline the that give that quarter order think that strategic time we in our enough throughout I we by is In some and – give obviously made, for we impacted had revenues that really tried the retailers. and even moving decided products Europe, shipments in the of more some to

So, on precise it’s very a direction you to somewhat give difficult this.

like early sales But and opposite. on the circumstances For were the of that similar or very we of there season sales business, in saw America decelerated doing one impacted little performance saw side, where And and respect by somewhat that have North the we little retail clearance to the we the postponed with countries. are seeing. wholesale bit stores a then what then expect eliminated some region, been a And Europe we some bit the the their we pre-season. was somewhat reversal, unique better was than

what retail both retail just So business, And continue to there we stores partners. think to that business same them things as because probably closing that it’s they we impact with similarly the businesses. on for of what the for us they depend our different circumstances have are closing means well that overall all for kind is behave are I that that our are very expect wholesale will

done that we So, think overall, so how far be with but I we and we okay. plan very are trying inventories have forth, so careful to and

Katie Anderson

terms retail QX, August. really in in we Europe, will stores in mid-April we productivity. in Carlos as just add started in said, were and for But did XX% the I down opening of accelerate And we

swap. period promotional the is that of Some

August, of promotions the the year, are control. environment, the and So, place getting in a it they also this in Europe, health under but little just in more July last is took more year stronger some crisis more

are that of from progress said, a of into seeing. are timing And terms wholesale, shift QX. happy So, Carlos we we as about that QX it’s QX, in more

John Kernan

in but XX% half in more year and maybe answer down questions pretty was over each XX% That’s first the SG&A I one And of the to know it’s over just the tough environment, modeling Thank me, management the expense given Katie, you. first specific half from the quarter. really down in helpful. tremendous, question

going manage be SG&A plan should there declines anything how in trend back mindful we revenue what how that’s the think we first clearly SG&A So, do the the half half. you of about back and overall sales dollars in as we Is and to versus are significantly half? the in your moderating saw versus

Katie Anderson

Sure.

in priority obviously, environment. management So and expense is reduction this a

had quarter, in less million the this we this year So, quarter versus last year. SG&A $XX

I about prepared half said this is remarks as over of in the So, non-recurring.

store furlough furloughs in us people closed assistance Europe level were at U.S., a what in in the gives – U.S. and the we both the So, have gives people in and stores the the pay go and when government on assistance. level the the we at the had we also government corporate – and Europe,

are So, salary we of decrease got Europe, some payroll similar had stipends We reductions. reinstated at a had we And furlough. Those also a the advertising big kind in but this end to quarter. in of July.

had So beyond. to QX, little there and and bit QX are into of more Carlos leaning in said, some, in a we but And is marketing advertising lag because going we QX. a that, as to be increase bigger a

more lower is supplies, pickup commissions. And that with obviously, productivity agent then and say would I doors variable distribution, closed associated non-recurring. So cost

say a little half $XX would I that’s So the million of over decrease.

the ground there the QX, permanent up stores QX we what so will savings floor to the deliver give. and have less to traffic people we on need we this, terms have really of from also the achieve able up lower, service model that been store kind have to and and like in we built is staffing – see going model, we of into In mentioned back our and I we forward

level So spending, etcetera. headcount corporate We then that’s going we fees, travel America took North and the at forward. that reductions in the professional here some obviously see will savings discretionary

rest savings could the say can of of you would volumes, of mix, timing with these about I there is depending think always and fluctuations the – that other half thinking sales less than then QX, forward costs in on saw am going the business we in. year, I when So, about expenses trickle

John Kernan

forward look on. That’s that. the of updated Investor in detail lot QX. Sure. Best Day We of a Appreciate to luck.

Katie Anderson

you. Thank

Carlos Alberini

Thank you, John.

Operator

question Instructions] Advisory. comes you. Dana from Thank Telsey Telsey Our [Operator next from

now open. is Your line

Dana Telsey

progress. the Good morning, nice to everyone and see

you As think...

Carlos Alberini

Dana. you, Thank

Dana Telsey

how introduced are think side, of athleisure, re-imagining on you pricing? happening of globally, you holiday about And you about Carlos positioning upcoming product have thinking do As like what season, what’s denim, Thank looks this the merchandising since the think of you some it? lastly, and holiday are thinking the how how with you you.

Carlos Alberini

Thank you, morning. Good Dana.

rethink So that the people what’s the felt happening being to think so and peak we with during planning as that respect thinking start model comment for comfortable necessarily are have hope impact entire and connections making earlier calendar how not promotional and we and and with throughout about just completely pandemic the being really just those think few I and the and said, with great. whole that weeks. behaving give high customers going process the during to promotional to by start us to and to needed we reason, that the visible we efforts, much entire I really product are that about made we work forth of holiday efforts looks With periods, more that is I the shopping time customer not season more discounting a

accessory the we think that going what brand none, we perceived the asked have right in broader nobody the line is should that product, there effort and in of looking at There be is increased of mentioning but our price. With consistency lot And SKUs price, having in the assortment I tell is have to go but and it pricing, if And about we and extending you is you that a down of is strategic then is parts our investing respect that is have don’t I the is offered some either pricing campaign think we think you same that about other that of great a of you we quality as maybe being lot denim find line especially think value and the quality in perceived any other is we going with year said, felt then and fabrications. accessories, deserved denim in the considering to cases, marketplace a very big talking of or way, we a the our There the is have active even has if growing at value with was now that assortment have the outerwear, are like the thing apparel a for great made I like category, whole we terms as a in of North our how I that we in an have line incredible products, tremendous more America sales potentially. that Asia. to of tripling assortment government focused mean that line think go felt all. the very prices. our price lot in the next or terms We where and to we been on we that and at in seeing into taken I first the cohesiveness product and between the we that have that handbag Europe huge, not line of that collection higher styling I speak we now feel the been represented into that that in are I we offering other we in and the we and cases response

very this, seen the part have frankly products long we gone we for that time. have are up in and some – deceleration time, anything demand most if we haven’t So, of these of of a as did been the collection products

worth on all that, what get doing we set about this we been on the So, and it’s but not not let’s to go we with being the margin, how the and try quality it’s is and are price. about are starts more it’s okay, have values and careful more – perceived like that based – based then it much we

Dana Telsey

luck. Best Thank you. of

Carlos Alberini

Thank you, Dana.

Operator

you. Thank

Incorporated. from next JJK comes from Janet Our Research Kloppenburg question Associates

is open. line now Your

Janet Kloppenburg

morning. Good everybody. Hi,

Carlos Alberini

morning, Janet. Good

Janet Kloppenburg

about what It penetration American digital and the many sounds the the making many, also Thank are Carlos, am And about if quarter-to-date? you. you was And was that North you are you what what business I down trend compete sales? I could thinking the what second or of the the thinking you tourist wondering heard little of Carlos And rest I or because I good you rates it’s am also, follow-ons. for your of companies I maybe against. a was business and the wondering the for of Carlos And growth great of quarter, about the lot on we tourist percentage progress, in reflects especially increases the of business talked you a on wondering tourism, like digital front. talk are as wondering bit have year? couple Katie a

Carlos Alberini

digital Janet. is you, like for thank for kind us Well, quarter. think I up run second mentioned during the a I our – which U.S. me business, is together of Yes, Canada, up let start, or and low-teens was

are We there. in we lot at looking – making a are product terms changes of of

of to and and Our but there time overseeing make result whole changes us more assortment assortment part a – for that of difference. a is and going that Merchandising a think that a is a we some has are long had made that’s good was business seeing we with for are the intentionally lot now as product we Officer the a assortment product be have result in bought changes been we and going that, that significant to Chief and with when and opportunity of and the broader very making

a I opportunity to a we – grow, think and obviously, business in that about direct-to-consumer comment I represents big included with business e-commerce not that XX% – impact last of our total have wholesale and that direct-to-consumer we our big that’s see also made business business. year the digital

business. been I the am that, sizable all Guess? done include is business that if sure that product is to digitally pretty just of we So were a

can you sure everybody in space, not just So, is unless our am I with business a have they that model. compare similar that

have also licensees… We

Janet Kloppenburg

this But year you penetration versus last? would Carlos the would be – expect to expect you higher

Carlos Alberini

yes. Well, better at channels. performed, if than look you the e-commerce Actually, they the other business how perform

very are growing other that at contracting. if growing, it so ones the growing huge definitely pace is even business So still a are isn’t we while

mentioned, think of over go things we we are even penetration XX% the that – to and we we I years, sight will definitely I penetration, X think more normalized. think see an So when – X we think line up, but next have to the

So, we way. believe in this big a business in

we So to – why are are that’s most investments we stores capabilities. other belting digital or making our our related digital of in and making than

Janet Kloppenburg

Okay, great. And...

Carlos Alberini

tourism. With respect to

Janet Kloppenburg

Yes.

Carlos Alberini

significant brand have we tourism obviously Yes, we sorry, businesses, you pockets that brand. very have is mentioned and of a a that global

also in in So, And that but Spain happens just shopping interested in it Europe, businesses we have business have big and very America, Italy. in international everybody when is big coming happens business these tourism. you are and all tourism, and big have in countries in that

in this significant obviously, hurts is as a stopped is way So tourism now. us when it

or we is benefit you basing completely our based plans outlook are we current on coming We numbers our – are not in what from our frankly, all not tourism. what tourism on put hearing trends our and today which back, do

that. the be to able on So and of at we that’s the that And it. get to better, kind to inventory and we we feel respond significantly support we have like work things way looking that are if of will course,

Janet Kloppenburg

Okay.

encouraged adjustments active. those was the towards into adjustments event the shifts one had year, Carlos, they you when your wondering XXXX the as casual was go are in I next you those by been Lugano, product Just assortment about the wholesale assortments? or made would reflective accounts question, in line I elevation giving have shifts assortment and were – last your And wholesale – discussion spring

Carlos Alberini

excited and high-quality I these am think led addressing And way that the looking that, and incredible already move comfort were lifestyles, of yes, see we line address effort the things last. in all about that that new and so that quickly the about. exactly. new again, to Exactly, really an super just objective they I so Yes, yes, things for buying people has was because customer Paul talking and that

Janet Kloppenburg

just the me given for minus just some improving maybe could revenue some talk from where you mid-teen for you. reflect I third globally maybe Okay. transition? does are guidance you business, the fourth through today, calls Thank back-to-school economies quarter, think of improvement that elongated And and that or that

Carlos Alberini

back-to-school huge Janet us a is Yes, for yes. season. not

of have then Europe eliminated that have I that in of been settled counting traffic have fall the because you but retail season, that we winter of the So, we we improvement that gradual now That’s once only are pre-spring season course it’s elongating not picture summer mentioned picture then we – especially the kind on before, follow. like thinking. behavior, customer and a wholesale way should are

We are not anticipating away here that goes that better. all gets of a tremendously sudden, the the or virus U.S.

changes be on is being to We dramatic are and a do that the could biggest have from here. be business respond think are released What seeing to our I it if Katie there far increased is changes are somewhat because a all been then governments for to sudden are that to bit that demand. customers could demand. conservative are restrictions have able so we counting we inventory, to the and that little we have built risk we conservative, of system to It think time that I increased or seems we we not going a small said are open that that are shop, otherwise, that feel more by every better but be

Janet Kloppenburg

luck Okay. for Well, the lots thanks all of detail and today.

Carlos Alberini

you. Janet. thank Thank Yes, you,

Operator

Thank you.

I call the questions in Carlos At to further will turn queue. closing no back this for We comments. time, have

Carlos Alberini

thank on forward we participating just today. progress again thank I you. you results. say to for third our We report want look to quarter updating call our you Well, in when Yes, this

you safe again. thank please and So then, stay until well and

Operator

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

now may You disconnect.

Guess' (GES) 2 Sep 202021 Q2 Earnings call transcript