GES - Earnings call transcript Q2 2022

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Operator

Good day, everyone, and welcome the Guess Second Quarter Fiscal 2022 Earnings Conference Call. I would like to turn the call over to Fabrice Benarouche, Vice President of Finance and Investor Relations

Fabrice Benarouche

Thank you, operator. Good afternoon everyone and thank you for joining us today.

On the call with me today are Carlos Alberini, Chief Executive Officer; and Katie Anderson, Chief Financial Officer.

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

Carlos, I will X:XX to on like to a Before chat see we call turning XX Goldman PM Conference would mention that hope to Global you be fireside at the We Friday, September Retailing in there. participating Eastern. Sachs at the Annual

Now to Carlos.

Carlos Alberini

you for joining Thank Fabrice. you, us thank Good afternoon, And today. everyone.

team importantly, proud our our share want a short to very just closed we our future, the most quarter drove with and reveal how where what are are both long-term. But We I of great detail. today accomplishments. and and plan we we to see you in and performance We

Let results. with our me start

direct-to-consumer promotional shift The of LLY during less profit. all the we are performance and adjusted period. spite is was operating decline ahead of For for quarter, of revenues a which of entire over shipments of our European store year LLY expectations. XX% million in period wholesale last being $XX our adjusted operating reported This to due into compares and timing This second earnings earnings to $XX of below from the exceeding of accretive X% We closures, reported period, million. by was the the XX%. This pre-pandemic operations businesses. to permanent LLY our well $XXX million, to significantly in QX

We For reported period segment the million this in profit we an almost an adjusted The points of XXX increase. $XX over that America LLY the basis the $X Retail margin. that million the North XXX% our of LLY quarter from operating was X% delivered margin versus expanded operating period. by XX% quarter, start operating in

seamlessly licensing current and team’s the and world, to LLY the and And fluidity times. out all Europe We and of our be with shout reacting adjusting and team to thank our delivered a over these our operating wholesale Paul during huge big Our outperformed. and I the roughly great businesses continue performance everyone thrilled and flat performance their also environment. want leadership for the associates to to give to contributions period. all efforts unprecedented Asia

recovering The are companies see also wages. higher and the We supply market what we stores happy impact challenged workers, to on the and chain to on we can rehire to We across labor labor demand and shortages globe. reopened leading still been Guess’ remain impacted has traffic see are the laser-focused globally. At pandemic’s on customer as control.

brand restrictions quickly adapted global demand changing have markets. to the a we As across of our levels and

talent. products, activity adjusting We are labor rates managing top and attract and accordingly buys inventory to increasing prices strategically perceived sizing the value our of promotional retain to our

keep tight redundancies eliminating to very costs increasing continue efficiencies. We by and

chain relentless in disruptions. supply have been We mitigating

We when to are transportation speed to market increase and changing in strategically appropriate when accelerate partnering to with faster countries of deliveries modes when makes origin our investing feasible, sense. vendors it

summer, pillars three the we am report published this to our focused working our environment. proud on to Our operate integrity, with our latest people results sustainability share you this. and strategy with I and is reflect empower our protect that

reductions. eco parity, science-based pay gender SMART for guest XX% receiving denim Some increasing penetration and highlights to targets ambitious approval gas in our include our greenhouse

here. confident in are We actions our

a by firm high fashion to data in a greater. reasonable ESG subject passed successfully making guests a assurance such we our first fact, review the to four big level In or

traffic score a services quality a minutes I out environmental to now result our this ten, talking a going spend as highest well on of levels has we sequentially shareholding below work. in independent improved the of In spent. America, may our higher rating few continue historical rates north but of We one have each higher regions and quarter, possible different and about the conversion with channels increased what’s to business. see average and

we to are We of for back the denim, activewear demand midst in and school have knits. and solid

the addition, first sales began. dressy apparel our is Marciano the our returning are social as dresses brands the was pandemic and to LLY growth we sequential for category, are Both life. Guess time, sales increases seeing accessories In and which positive customer to of since experiencing in for

improved many Activewear We variant Delta as there. men. have also and strong demand and business now been had we the dresses spread has to off And up. this pop in In to men’s as which women start in our stronger outperform we and products in for successful as Europe, quarter, particularly region, wear countries with denim continued outerwear. our the a handbags second in leveled and for QX, substantial both well saw been

The countries the region are have by of and vaccination the the sweaters, second year. QX. remain in environment we QX better performed half customer In in the categories recovery the levels the progress traffic most made that this remain versus includes have due and outerwear. with relatively is Europe challenged and We to product that Asia, this in encouraged trends denim of most our the optimistic in about virus consistent

progress remain. our good performance made challenges of top areas with several have the line in operation, we While

We and are reassessing we making leadership are to today. reorganize business team changes the our

versus prior last here less half investing profitability to promotional. as a of for significantly were this lot this channel. Our e-commerce In in we be Growth we quarters moderate improve the I’m marketing back growth business that the grew continue in pleased America Europe further than we XX% in year. more was support business. in quarter to North strategically year, will and more the

Our European well. wholesale business is performing

high-single up had season, which orders We shipping digits. currently are our fall-winter

in. products some mentioned, of coming I As are delayed the

season QX. collections. book they QX order we So, with estimate The spring-summer underway strong in our and kids is the particularly than that be higher growth, will footwear ship and LLY in will campaign versus

which with LLY. Americas our strong grew in had Wholesale in Macy’s. business, and XX% pleased very profit performance sales delivered Denim and also at We’re quarter a versus great operating XX%

We’re in particularly and women and apparel men both also for accessories, having success handbags.

global business licensing also recorded Our period. significant of growth the revenue LLY versus XX%

We primarily have fragrances. driven and here, business handbags, a big eyewear, footwear by

already very our you initiatives. His Regarding strategy, brand and has a minutes and conquered. customer the to leadership and product spend our initiative the many our providing Most styling model our have and we with aspect with of strategic our the taste, our time, transform consistent teams products on and been significantly, representation put of brand work strong will the for few first this that to business. are and creative that milestones innovation our plan, have centricity start elevated I that which into Paul almost with a achieves have been extraordinary global I our major touches quality this been teams. every want brands. assortment updating been our elevation progress of ambitious driving

the higher sustainability We across and quality are focused on board.

assortments on the have addition, the value. perceived new based products priced been In

showcase campaigns, This are means integrated our step deep on images and campaigns elevating ecosystem, The Guess? stories, identify ever and and licensees. windows the And the product across the our sales. effectively. to key marketing, buy catalogs increase closely maximize presentations our full as our and before. experience for the merchandising floor websites. our our our development, selling on biggest important to styles flow photography the more than last wholesale brand for and We been is in marketing optimized buying to improve that brand visual and stores, new more all websites, visual to distribution websites through including we have product Our these through price in merchandising these customer

upgrade address We are and to deliver units our service to business we mobilizing and technology customers. tools superior field our this to to and our plan

Some examples by in methods should complete mobile outs. of These enhanced networks, of store next these projects payment be end check the technology and extended WiFi include upgrades year.

with centricity, customer our base. customer let me Regarding start

Product with key pre-pandemic brand the our of customer product pandemic to But by separate heritage, differentiated events distinct marketing and group customer development, we support is partnerships here specifically, marketing had engagement. across Balvin. as we know, imagine, our lifestyle event-driven this including such J to led Generation Marciano. Z, and drive collaborations as needs this Nicolai Millennials This assortment customers. Gen a collaborations you success Z campaign. groups: business. product impacted ability the great and these unique execute we and As resonate strategy develop have three can you With our We

Now, we to restart are collaborations. these able

over our where three and campus successful we fact, event with we Babylon over X,XXX hosted past people label weekend, In and streetwear a LA in on this days. influential skate had

online our e-commerce Regarding implemented to our make that platform business, experience in the we digital optimizing year. via last progress we continue user

improved For conversion especially which from example, over represents traffic. in XX% of rates, seeing our Europe, we are mobile,

web we resulting quarter, add of upgrades an versus average our decreased implemented increased sessions the over some XX%. is during loading over the previous XX%, duration in in Our time XX% our rate and faster. bounce XX% session to And to platform platform increase basket

as of to complete data strategy implementing mid-year to on next analytics. segmentation customer project omnichannel our as Europe this The centricity and last in We We to customer upgrade America’s continue pillar current well capabilities year. work plan capabilities. by relates North capture,

extremely an data. capacity platform, out a process limited customer built our and still on to operating but have We utilize high-performance we’re

sales We’re insight as telling. to customers. base, now value. a will use maximize marketing powerful to on working data implementation a to This game our allowing these next and well us be collection, ton This fuel a as analysis, unlock consumer new completed We use can includes is personalized which and data year. our existing to tools client tools efficiently customer will by target platform, of changer, underway be from

to margin excited to in margin Now, our our invested on deliver XX% operating capital expansions outlook most by to is in When XXXX, revenue over value about see At We share accelerator we identified fiscal new XX%. category used opportunities target of these in that a talk yield store expecting why. we margin with revenue. pandemic this to sales let billion increasing as that out are and the denim, laid early growth XX% the this from for we time, for XXX year, target I’m but to XX% plan return development clear Marciano, digital I’m when confident opportunities this a we in outerwear you to of year would $X.X this now in outlook. dresses business areas like not transform and our creation. plan and growth. handbags, an are came years. reach points operating by increase XXXX, only back expansion. me five significant We We our to in were I several to basis about to

expansion margin it industry-wide, what an business activity the changes portfolio abnormally from our Our operating low promotional be including period reductions. back and promotional that has IMU this while we model, store are And had improvements, optimization to levels of to in come concrete go pre-pandemic. never cost will company currently might

ready a business allows connect the good proud Steve high global is Jobs company return business the back very high last years, I face by Katie we value happier that to of when partnership shareholders. This a growth share and an could fueled back and gain with trusted look connect closing, When position, knew pass back of margins and a with return happened I well poised realize I deliver with forward of our with an of to as our sheet in pandemic potential a to what capital-light team financials a and into has Paul our to million. was dots I had come couldn’t my came the significant trust I is that market have invested level that Guess, be I couldn’t had to Today, a capital is felt I balance announced repurchase to company I of said, amazing model. the take which gut. $XXX my half gut I to as tremendous to elevated amazing that ready model, brand the fund home. backward needs, come am two to expectations. invited to a With thrilled today like a and my a back on at couldn’t that, potential. and Our to a program company We of high In more and what to review strong company that our with company of contribute Katie? detail. business share, more I the I dots us accomplished Board to business brand But let profitability. authorized looking be the an in I in my it me the transformation and looking next in global to to

Katie Anderson

Thank everyone. I numbers. the to in you, see with Carlos. Good want can’t you afternoon, start something

times. Guess. It’s and deepest all Of my hard first team unrelenting profit unprecedented to part their this operating how that wanted express I course, am I I’m our from team thrilled mention But we pre-pandemic this of doubled of and achieve proud a associates in execute I my for to that to thanks the strategy our smart quarter, efforts almost works even goals. colleagues environment. works these a to be to challenging our midst want at during levels and

through you the the on take me let details quarter. Now,

our up revenue is XX% We X% pre-pandemic our our receipts revenue X% last were well X% LLY, store year This by in wholesale $XXX significantly some to Second LLY, of moved that quarter few timing in our short shift LOI. dollars I revenues the was of driven Overall, worth X% were where into of product direct-to-consumer constant below to compared weeks currency. which permanent result down a was driving Europe. profit. in the roughly in our of shipments businesses, promotions versus a worth to the in shipments about note the expectations, were all of XX% level as U.S. European delays business across wholesale quarter. million, our in LLY decline slightly to third to levels want impacting and sales impact closures and

sales sales permanent were positive Retail, driven which currency. Same-store was bit sales This Americas than Store a Let performance expectations. comps versus worth U.S., me to the and solid closures, moving on get up segment. were down in Canada U.S. by into by LLY. were of In in X% were X% slowly. Canada the is the but LLY, recovery decline a revenues the in constant X% detail more bit our more in store better about entirely

from trends still to saw QX, traffic QX Although is materially we there. improved negative,

high but This QX. price at stores QX up, AUR The remains and performance in conversion strategic travel price significantly substantially our the still more in total and non-tourist-centric Our is domestic and increased travel selling. still picking stores with increases between gap the significantly full least wide, narrowed of that below QX is versus tourist-centric suggests remain historical levels.

sales were stores in an In lower same-store in X two and of revenues only LLY U.S. was versus is positive profit is X% Europe, is was versus to segment down X% years Operating times what and on even ago it in sales. and exciting This incredible operating super base in fact, our the noting. The non-tourist LLY. America. grow In Canada which had profitability XX% this QX quarter. have the worth growth we margin that in double-digit brought North

comps currency, increases. driven and however, business that half shipment by Europe earlier, XX% be decline by was pandemic-related in partially negative levels. our mentioned order traffic; was revenue show pressured almost Absent in healthy closures. continues impacted down AUR of by pre-pandemic wholesale to retail Store timing, were to significant store XX% traffic to business down trends book European offset by declines. LLY, constant was for the conversion solid continues rates above this with In Our we shift this Asia, an permanent

Hong and pandemic. where in than region more were the moderate sales Kong, Taiwan comps like and with they’re areas in other Japan, comps struggling currency, Macau, constant more XX% down the with South Korea store China, Our negative in

were to sales Wholesale XX% LLY. Americas Our up

We expanded this this points revenues to XX% in our Operating know, to in the up high in LLY momentum than for margin here, two were over higher basis XXX years this footwear. of business. are extremely and with basis happy in for company delivered as almost operating lift segment. XXX almost driven margin in XX.X%, margin resulting outperformed LLY And quarter and Total an XX% also was a Licensing XX% QX, profit gross this business, quarter. ago. by points perfume our strong you which performance is margin operating

XXX XXX Our higher versus a decreased Occupancy product lower basis of this quarter promotions LLY, and IMU. increased primarily points basis margin result rate as points.

quarter in of we credits closed $XX the booked SG&A The for lease years a and stores. million attributable ago, This the Europe. million million, decrease was over and million lower decrease in $XXX for two $X rent rent quarter negotiated fully permanently or rent compared deals, X%. Adjusted to $XXX remainder mostly of is to

and changes a LLY. closures to related from expense in permanent our to benefit to decrease store structure versus continue We expenses

was million business. $XX In profit of partially was about two by in the the from there Adjusted related government expenses million ago. was e-commerce $X a Europe, growth our $XX one-time operating benefit addition, second variable QX million to which in namely of years higher subsidies, offset for versus quarter

last demand. million of generated free year. were below in flow million first of in we half and swiftly inventory our we to balance take versus to year’s believe and Year-to-date, to at Our in management some dollars $XXX strategically expenditures strengthen. in balance the capital here. We assortment you and continue year. the key end details has prior $XX through right been currency a We up LLY. from cash, Inventory comparing the X% second a than Inventories feel $XXX customer have to capability significantly the last U.S. the of in now not for the us higher QX. million, position cash million last I about $XXX $XX X% but up will with ended million We year, $XX constant act quarter year, continues and million, good pre-pandemic satisfy were levels. sheet

invest a it the repurchase to program our repurchase as announced million and the we opportunistically. new our gives Our share business, authorized use This million that Company’s well $XXX runway generate under Board return $XX program. to the value to shareholders. We Directors will authorized remaining cash ability of as in previously new today has includes program us

through So longer we to walk talk Again, now so guidance, I going thinking I’m expectations. let’s our about short about formal current still go-forward for but we’re The provide and uncertain, you future. will will not our term commentary is both environment anchor to LLY. how

mid-single the down for our maintaining digits. year at are expectations revenue We full

We expect QX. shifted be from with to negative shipments the third quarter to flat wholesale from help slightly

of operating we will these at third points by in points are better as to the about for promotions rest adjusted and be adjusted expand expected the anticipate profit, offset LLY. freight industry, expected pressures, be seeing basis mix terms XXX the initiatives business with In margin lower reinvestments is XXX and which labor, business that some occupancy built of costs, lower margin SG&A IMU. by driven rate the numbers. LLY, expansion by marketing. basis is savings improved are quarter XXX Gross to to than cost primarily And are around in points particularly cost including We and basis into

as sustain line as fiscal points pre-pandemic ability business of lower represents This these margin year to for XXX for expansion to we revenue deliver operating base. margin roughly XX% XXXX, reach top margin versus margins full X.X% And despite are expect adjusted in to We the LLY. operating For and the raising in well growth. year we now levels, profit. a our our expectations operating confident are of profitability our approximately basis

revenues call, our XXXX. Adjusted of year to adjusted profit year EPS This XXXX, level $X.X with that target of than expected for by in income share, more in $X.XX previous expected implies would XXXX. result, year XXXX. record $XXX a operating fiscal in hit reach to around margin operating year fiscal billion, plan be to be an we this As $XXX EPS fiscal million Company. operating per are the our XX% With versus fiscal a and our year consistent long-term raising $X.XX is million in a adjusted

Company’s for motivated is are future, the the call team running questions. that, that and proud let’s for we Our I’m not up I remarks say just will your now. open to for company conclude With the and this

Operator

Thank you.

begin B. Instructions] Please first And your Anderson We will go session. with question now is [Operator Susan see the question-and-answer line Riley. from have I open. our we ahead,

Susan Anderson

quarter. I’m in things place guess driven I evening. on a initiatives that if And to COVID, puts margin? get the were lower nice was and Good being during the Congrats goal, we as promotions Thanks. much bit driving versus takes I curious the the the margin inventory to wondering a pre-COVID can by and happened – maybe merch will XXXX look that levels really such how as op you little that and XX% then talk about the higher also, the XX%? out is

Carlos Alberini

we you, that that think lot of of global When on Yes. product more more completely out that with just really look And to brand been you a we completely elevation almost we XXXX. pleased able very were of the like would say line, initial areas our Yes, different going, we models. the to and even across we our all also happen the made activity. what was had back Thank were coming than probably quarter. And originally was I at performance the plan. implementation world, strategy we a I those accomplish and Susan. did consistent in had here There we initiatives original planned very, the the of and many it place. very unfortunately, that biggest in the are than our in has had costs, things focused promotional I sourcing it strategic planning this part process no business move is going what our

think definitely really is that kind is that and have completely teams Paul the job have of think incredible model basis. a think and done model, I And based accomplish worked an sustainable and customers. with product-by-product to creative model I reduced planned place and tirelessly teams trying going originally that completely something that big occupancy, rest brand do, the to the I in on by very the We’ve had and opportunity during a is this they everywhere the than and take to done value-price strategic we to how We our a a are perceived different have what activity lot business and we but had we the that I us plans. is something pandemic. value-based the stay have promotional in more was really is challenging we But to a of pricing with product think

lot what the We have and renegotiated leases had than XXX we results more positive are obviously a originally expected.

We have done side the work a as this A of still expense lot on business lot is the ongoing. efficiencies. of increasing well,

happy We very that in clear margin. to XX% not done to this that. We forward. but going that, a kind year feel line the think Maybe, from are that of we very, have operating respect especially fill XX%. benefit able the be with of do good we path that are very we think next sight with XXXX, you and And with is that, like to Katie, want are with on we to I to

Katie Anderson

sure. Yes,

Susan, So, to is XX% sales from from coming bridge the that half of leverage. XX%, about

half loaded next fiscal the billion line further and these time. as just more said, So, expansion we’re and half from margin confident that the from more in take the top that still is the years. back-end in we in efficiencies few coming $X.X of XXXX are And other

margin fiscal third from and the does next both year of you the like two-thirds over expansion about, So in then gross say coming when and and SG&A. that okay, of next play XXXX years, a think how couple I’d

Susan Anderson

just Great. That’s on And really if could helpful. Europe. add one then follow-up I

And Or like did quarter sales And sure, solely when was Europe shift So of Europe, if only it think much pickup you I it last not, also, quarter. it that? region open this from given into you opened did a the quantify Thanks. had how wholesale I’m that was as curious orders up in that? was down. mentioned then see And not quarter? stores in looks you did second the was third the I’m that in

Carlos Alberini

well. in Katie and start as me let so will chime Yes,

the Europe business all have significant Our in did well. issues that very how managing entire variant very, is the We and impacted Delta territory. with

about countries, restrictions a we very stores had closed the the saw started challenge. strong had the shared business being But direct-to-consumer stores. I in retail business leveling you and what I’m So very, a many talking with the during call was especially business that think that quarter way. and in previous during cases in our the then similar we And off

it been has challenging traffic. So with

wholesale very to think healthy see and Guess the with investments the very, customers of from down a the is significantly to brand Our spite the business brand. business seeing in our market us continues with making in we the investments all more wholesale I great retail customers, issues are virus, and as doubling with and

few great right that for business know days, last closed, to spring-summer. So are grow and they starting period back back-to-school true vacations people for because that we closing but is retail the thing when ready seeing a from during This that and are to the season only clearance pick the is as are and well. few season which is up. is seeing I that days is they works that getting days, And the we now, come Europe in it’s is business about continue we are important that’s the the to the that in is

we’re year important So half as top Europe very as second in the business, line of of very tell, and is in it’s about a critical profitability. for excited region both our and as of than it’s of have the a a that. terms lot we early know kind of but you business, more to XX% confidence Again, us, Katie?

Katie Anderson

Yes, sure.

shift So, Susan, the the – in start I’ll wholesale. with

million. $XX about was that So

Europe, the as is seeing And as again, some days. the little I’ll we’re just then add, said, up Carlo America, had last book that teens. lower shoots is Carlos up. we bit order shift AURs green said, high, over than the mid is And the conversion the So with business but traffic in North still retail in few

Carlos Alberini

way And we serviced more promotions in that I decided the we a way the not are bought in because is doing of think a lot a product the that that the important is strategically, this company being thing is way aggressive the and was to a here than participate lot even we too before.

price full importantly, time if are and you stop the and a but think that don’t that type see in resetting the happy product. of can may see excited to more So, new the in of selling a forward, going impact bottom we buy baseline brand if this for course, you out. line, how on today, terms line. perceives couldn’t of results brand, top going This we find our to all you and see in benefits company some not be it going about as at promoting, you that are And is we because that the the we’re more time you customer very

our is critical model that entire very formula. business and So in

Susan Anderson

Great. Thanks the Good of That’s rest for luck so year. very much. helpful.

Carlos Alberini

you. Thank

Operator

And thank you.

have our go Jefferies. question next Stichter with from We Please Janine ahead.

Janine Stichter

Hi, sales XQ the timing. I’m about else the to slightly Is with the shipment curious from the down that? everyone. Europe’s if guide specifically? benefit variant read impact in just any I wanted Delta into to seeing flat anything the of you’re ask U.S. there to

Carlos Alberini

question? you We a the Sorry. with time tough repeat are having audio Can the here.

Janine Stichter

Sure.

hear better Let Can one thing. you now? me try other

Carlos Alberini

Yes. It’s better.

Janine Stichter

now? Can you hear better me

Carlos Alberini

Yes.

Katie Anderson

Yes.

Janine Stichter

anything I flat in broadly, about for back there more you you’re how can you little think shipments. some U.S.? about if where you And guide was half in to ask you. that of spoke with you into then with to uncertainty Europe, ago? the to investments than from Okay, about of about Europe else growth? in just XQ Thank the playing marketing how the obviously that billion other slightly bit to that that benefit great. I to talk if seeing two call the variant to wanted target, And a the out the think year, to see of maybe return of point the down a would some the the anything the Delta wanted sales just more the growth versus return $X.X revenue timing brand see years

Carlos Alberini

you don’t start? Katie Okay, why

Katie Anderson

Yes, sure.

really I So to into this had wholesale we of QX QX. QX, shift mean, the out shift [indiscernible]

for the just Europe I lot the from so going and is benefit you year. year shipments this shifts wanted year are we wholesale mid-single And the our So, extended shift was that changed maintaining bigger remind into still of to QX, in last we that next we seeing a we’re winter full this but than our down to business fall quarter that. cadence

expecting we’re to quarter in year, below our third the LLY. prior but why be that’s above So results

So, pandemic for store takes if to and traffic of the the digits the full down, permanent year, Janine, change the is we’re declined to crux and is e-commerce really is is there’s see revenue. up, thinking puts And mid-single some closures. LLY

X% that’s So about worth of sales.

we’ll pick And operating here. $XXX sales million about million profit. basis, million $XX in of $XXX up on an profit in So $XX of annualized And that’s operating sales. million and

we’re the So, we and business here core pretty go is puts once takes, the thinking all flat. through

Carlos Alberini

are down in growth gave have confidence with Janine that are baking because $X.X being about revenue haven’t about that promotional think resetting year, implied we rate we the land CAGR. billion, feel about today talking year, $X.X billion that end line this of the when the the year more about we the When in into been number mid-single respect at fact the promotional we we is they and being than your color not we of number. a a plan business about that to the and to you entire on we lot question are think that of achievable. digits, you where this with And revenues X% we this

the have few. in think that big category a and dresses, is see about a In handbags, in one drivers, Marciano, we opportunity same existing expansion outerwear, great just denim, to first growth. name that is areas we for the you like If the sales distribution store stores

product of now. right multiple up great picking seeing are lot very businesses very, we that the when opportunities with product. categories a a And have present We we new

on So a think big, about is markets big Even partnerships, pillar second the are very level key the the opportunities attractive do experience excited big rents pre-pandemic. market. that multiple we omni-channel a stores we are There development. for are we And And that significant a feel is there Then again. we product ecosystem. used with assortment of available is in think think showcase new with and to are best a and as us our collaborations We that. opportunity to this lot there We that. that in about brand. for that they space vehicle becoming capsules store brand opportunities that now is and think our very big

starting So, stores. we reopen to about excited super are

locations. year globally, fact, this in opened are the of have next In opening we some Many them. these are to and going be pop few months of up we

Marciano think the because to about am high. very very stores. stores, I some are this risk talking Athleisure we minimum accessory stores, are very test about the concepts. that are And and excited new opportunities We we is going

but be We very limited terms these for lease opportunity are or us. lease going the terms if able stores solidify with the to with renew work to

growth for We room many countries. in have

Just are good a few Russia that examples. one. is there a

stores. roughly now growth. are many back. U.S. big stores big so market. China store country stores right XX of but big for what Canada, in and course, of XX it’s market. a a from to And and XX expect now see huge a a have we have strong idea we locations. we to with we even and good of lot And are markets opportunities gone of presence, we we are we used a go where have stores. that and France seeing those to And left We we now, have a only pretty the in opportunity further Germany, about closed XXX there, stores, have

have gain strength a licensing Americas. that this We last share also we we have much the see should similar so And opportunity are least, momentum. whole and gain to the it about channels we’re this will brand in of talked in market about list be bit, top because seeing idea not also probably Europe of to but but very us share. quite And the at the the And it continuing e-commerce. has is market also, a thinking for

opportunity, business big continues to is e-commerce be. Our a

put you well place very customer is year And working a complete platform, as by see nonstop. retooling them year. opportunity last are we that Europe. we the and North we analytics. have both next should were And capabilities America Europe working we Omni-channel We the in been big are entire and this platform this with for us rolling both be all out. in And now on non-existent, know of in

year by XXXX we’ll So, benefits reaping be this. we that fully expect the of fiscal

to weekend resume in to here just a We drives did to to X,XXX XXXX. that and overall, a great over But growth. we before really invested in completely. about that events was both, lot year, the advertising brand customer Europe, great year see may to partnership a make all opportunity good customer about events. prove talking that great. this brand. want And type capital we of in was Last brand closer in the and we XX% XX% number see the one that with showcase of you for This here the huge year, plan And So the marketing. is of in America fiscal stopped over question on is even in opportunities. is numbers, thing was assortment. success, And we’re We this investments, past had people came low last We it’s these and invest non-digital a the return can conservative. North position very numbers younger investing

spending are We in more mail. money direct

great with We success this. seeing are

frequency far have with we expanding customers base. pieces go we with number send So, seeing we not that out, And but in the traction we are how are we of customer only a and that. the also the great that

multiple in Europe. magazines advertising are in We

much You personalized more XXX this ability marketing. the where efficient the but over more us also, and giving from Salesforce for you there will season. Guess’ see are this, this solutions cloud Customer And going implementation. XXX not magazines ads completed we just are to believe is And to deploy

and ideas for this So, to is lot the brand. a where that huge think of spend money, we be we have to investment going a

One is looks the absolutely are to investment the customer so And see but priorities product amazing, early excited high appropriate. so we that that we very far. is think positive. of respond in how show The much with why we have to been have marketing the signs that’s it. And the the here now did product, we

Operator

you. thank And

Saad Omar next our have from question with Evercore ISI. We

is open. Your line

Warren Cheng

had good that Hi, taste Warren initiatives the coming on the any lower us? a can Are is at customers? question share impact having can investing on that brand, the quality with that there data the new in some doing is into demographic afternoon. on changes for on Omar. on customer and styling. you of also customers This Cheng line promotions What existing see and you you are and the the I

Carlos Alberini

direct little early just a that Yes, maybe see it’s to reflection.

think into acquisitions. evident. coming in pronounced We more success has America our customers success how terms and more to probably is our new in of even that being we the in are both been existing But North The base, pretty customer assortments responding seeing customer is seeing Europe said, of Europe. number CRM telling that and is our

big styles all. that we locations. about that wearing a the do for lot big a for that us the Marciano these ultimate identified tell we job are way. improve different as customers in All The customer styling opportunities really the The increase styling, well products just quality, seeing customers are We the a all to or to increase brands, off did responding change with key to product sustainability is extremely the for resonating and with just and example, that. use

something and we terms type team essentials. comparable challenges always this to a that done whole type new cannot offering our here of the same price. impact the accessories, look line of same, for anybody categories we the way, redeveloping has incredible no, of of the for on product that details brands has all is find always We this handbags, line in assortment other this this style, reskewing qualities, the brands entire an mentioned the type and the answer I He and of have of just at entire are the of seeing have apparel, all Paul job, type but by

responding and feel to the probably I are superior. is obvious are customers us. customer that product – how new as very that thing So, the for results the on The will continue come the is most important is

Operator

you. Thank

Advisory Dana next Group. from with question Telsey our have Telsey We

open. is line Your

Dana Telsey

questions. Two everyone. afternoon, Good

think Asia I about had forward? the what’s around. plan changing you you Asia, team game going you’re think mentioned for As

you do basis go? XXX higher the differ increased promotions is the it So How category? you’re piece, plan on return still which the how points. game And product the have None believe Thank Will none? half be you Does see very in of IMU by to year? back to growth? just what wondering much planning path around for and the to to you. the margin there it limited I

Carlos Alberini

your question. answering Thank Well, Good afternoon. you, the start me with Asia let Dana.

our a Asia win. business China. of But Just me meaningful let to – Japan, just course, that parts three with concentrated have big in and in business is in business our a say is we have in we partner. big And Korea how in a know Asia addition to I there that Southeast – our in business Japan, we business in think is

to special does collaborations with have it and just type partnerships great with what working was think in to consumer I Korea always us. That a for of were success own. to It go focus model, and has America continue we XXXX, capsules the very very successful before We our using our back and are be North we business here licensed similar really in done to and been brand and top run think year. on we younger used and globally and now business that going that we and

there. couple We team profitable out have great job well. that’s we and They years a continue it’s and very refine model. business and was to great done – have of We ago underwear working the a the licensed

and over the been optimize franchisees us. very China, business a for cost the we too. to hands structure. the taking of that of has And then are was some China successfully We challenge continue And in

great a a market believe continue ours is market to market in Chinese relevant in there. a and way. big our We like for is the brand brand The

saying middle share market is but new, lot size there I’m could we that biggest itself space. We that have in is The think and – GDP, take anything here customer a a not very is trillion we world very, material of in The young class $XX in the significant. our the base. probably market

five to like areas on We have address worked different this.

team there great on job The the first think done we have a the with one run a is is great clearance business what working done and product America, team the lot focus to a a over the as we there less assortment. continue and who well, model. on full-price elevating had helping more the has team product job, brand from improving North I We and our

thing players, think about would last big the be expertise that portfolio which think about XX We over help really I talked market is from closed The in many different the we optimization. in the of for store us leverage second months franchisee very, this. stores and China helpful XX We to very local model successful. nearly to be us the can regions

lot and which promotional forward. our has younger we a because not most business work, do for thing all of a want the e-commerce for challenging especially of The that are with less localized course. to way had, consumer we just that. fourth be big decided level we to going third that is very is the go. about influencers model and very celebrities think also We here campaigns big it, working we on local and social us too on thing but We difficult that leveraging several to the Originals believe It’s things. now capsules tried costly and is the GUESS to do required frankly high marketing this been discounting, The the and we have part support

our team the impacted the and big thing this. e-commerce business. about is this asked And you last So about has

Europe leader that to We go to the reasons we the this and run was supporting for really we leading have during look the have weeks, reorganization last forward. business for that and leader done search personal team back a to a wanted run of out the team are to few and great a lot going

are we and lot that where we that’s the So path. are confidence on a right we of have

Operator

much. so you thank And

from Kloppenburg We JJK have Research. question our with next Janet

Katie Anderson

I wanted to on. answer Hold

Carlos Alberini

Hold second. a on

Katie Anderson

I just question IMU. wanted answer, Dana’s Hold on. on to

on. go Sorry, before we

all here really left. last We’ve asked you much So, had it’s we lot do the two a years. have And over how progress Board. with the

we half we’ve higher years. has the we strategically there’s how with being brands elevated about last promotions, down. in go forward all to but then lot XX%, a really half no, half in IMU as the back And Carlos plan terms don’t there, talked promotions talk promotions some we’re the mostly the over year. about going from points done our the basis two XXX And of about asked efficiencies, Board, categories, it’s managing we apparel. a XX% leverage, the so and but we’ve of the the and You in lot

go can we to next question. now Okay,

Carlos Alberini

Yes. you, Dana. Thank

Operator

Thank you so much.

question from We Janet have with JJK Kloppenburg next our Research.

open. is line Your

Janet Kloppenburg

back assortments It’s to And big everyone, Carlos, you consistency was everyone have look is but sort on and the everyone, all won’t they’re are that We as now to – disciplined out more and the are change. going team done on not promote. for COVID, tricky I in the with saying have elevate the to can forward wondering you’ll congratulations hopefully we very that the Hi, Guess. exciting. this of a the coming something you’ve and progress and outlook. of the away question, goes and lot is you be improved just merchandising how promotions? if to confident marketing assortments know that for picture It’s and merchandising going fall a you they’re

of supply a can seeing problems last about that bit you your wonder understand and consistency pillars Thank with about strength sourcing you Southeast continue? And in us what’s little the in to Asia and on categories confidence I productivity the then of respect that secondly, So you. perhaps long going markets? there if may I and we’re the could think important worldwide how these what chain wondered about talk other help improvements

Carlos Alberini

Janet. – Yes. Guess. at really race are me your It’s start voice. Thank let I a that you, think new completely to off we to hear here I good –

I price is think to it our are we somewhat we now, exactly that line. selling that abnormal. we full going are going sales game going definitely the to may playing more and in the more environment to keep ability right impact not characterizing sales the if are that which are that But now in is after way be the issues the play same

the here, think really the we is through that expect trick I than on sell reasonable So sure full a based product price. for we never more key make at to buy what

is at environment. do. the If the a of of goes low product then So the type lot the to get, think then If to day, team. back we can has all promotional the that is asked maintain the that easier just you the end people customer that this the product. styling, is great, are about this it something always the if But to is product product want, really quality excited customer that And the right. that fits I expects,

I completely think that I every that that touches in incredible an we is And think have apparent area team. product.

is is regions in the between This everybody seen the We very a have way. that And I never of have together a at driving has happening the of design Guess together in product. work working doesn’t is a is the Paul and lot at been with is and again, to in front and that collaborative way this showing And this a very teams way borders. have before. collaborative really

so would job, not watches incredible are but seeing an everything opportunities. – just we to me, do that to great what’s the It’s – because is who happening only in every doing Apple this have watches, with in we we back what because about opportunities when hard and biggest coming just are many, that experienced So what we Watch everything category. just to after are significant internally, the I’m with licensee partners, have and so try are internally, what biggest talking see thought we looking you are else. momentum okay, do we who pinpoint the product which our would

are in seeing eyewear. momentum We significant

with are We footwear. significant momentum seeing

months. omni-channel. companies think into These showcase already the we with the We that say if control long then are we going – how big so months, us. when three a lot opportunity we that present are we chain, of how which it, it to developing, is whole a superior be opportunities things are buy, that how hoping product are that this to control hard supply just of just feel we have product, we a couple and And is we can started have, it’s last. to how with internally, to that this that respect we what that the for we I other is thing matter was something was going of we

least more hearing Our vaccinated, needs read that. where from that about late has you challenging some at. done team for relatively next even sourcing, have those, job product just concerns just are weeks teams are Vietnam the running Obviously, these were four Street production our that and is about are with that we in today saw Journal moving being many our The going challenging and we situation great What are Wall the prevail in there all done to year very a in going it’s a at conditions there cases successfully. of able situation that but think we the into for when keep our we is around, to And population a X% and year. cases rest than of

and but running a can that heard and that being trying that to are slower are that. in the we – shipped had could to second the smart, and that quarter because moving things afford was lot the manage everything ship we you we everything, who Just knowing that be we is couldn’t that third needed business air into there

in expectations we in money So meet been every Thank trying to spend case. Janet. we how our careful you, our have and customers’

Janet Kloppenburg

you. Thank

Operator

questions. for further Carlos Alberini remarks. Instructions] And to turn no closing I see I over will [Operator now call the

Carlos Alberini

much Yes. for participating you Thank thank today. Well, everybody you, operator. very

brilliant We future in are have are about but us. front our our of We momentum, excited that about think future. we excited we a importantly more

excited. excited. is tremendous Paul opportunity to more create super have excited. and significant value couldn’t are be I We and The we in super team front

everyone. Good and that see Goldman we Thank the you. you great to remember will Conference we night, of at please a rest the Have So would weekend. love be Sachs there.

Operator

you. thank And Ladies conference. you concludes Thank participating. and for our this gentlemen,

may disconnect. You now

Guess' (GES) 26 Aug 212022 Q2 Earnings call transcript