GES - Earnings call transcript Q3 2022

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Operator

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

Fabrice Benarouche

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

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

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

call be that a.m. Carlos, The Details to also Stanley a to Eastern. our live to participating in Global like would hope available December we at X:XX Wednesday, be webcast chat on Investor be X chat how to the at to Virtual mention fireside on website I webcast. at Consumer Before there. the investors.guess.com. on fireside the Morgan you will will We turning live Conference will available see via connect

to Carlos. Now,

Carlos Alberini

year the operating and strong that times. and margin profit during our line vision us Revenues afternoon, have operating world, amazing strong thank adjusted the operating everyone growth, you, performance report results. driven Thank versus $X.XX increased wanted and Paul and for of teams adjusted Good I we Fabrice. bottom and teams of particularly per and these last $XX to product for earnings and expansion challenging XX% thank am versus by executed you today. for an very million, last the the strong in pre-pandemic XX% Guess’ momentum quarter. reached almost of this the margin adjusted delivering their quarter and expectations third brand. This quarter, revenue the our for transformation work, joining performance I contributions, $X.XX was business another around of to dedication pleased which our hard the year and share exceeded $X.XX

We to better distribution, of share all its strongly gain is ever and of than very you. believe our expand positioned increase market company are proud profitability. I

a have sheet generation strong power shareholders. support cash cash our and balance business to return We growth solid and to our excess

commitment previously announced stock with plans our Board’s Our double approval authorization repurchase today’s value intrinsic trading dividend. our plan its firmly our share is the million to execute repurchases $XXX below unused and to believe and We opportunistically. evident share to is

last the than successfully strategy executed double Over operating X year, what where better results proof our this working years, levels. from and profit of margin we guiding pre-pandemic a And business. our our fiscal that have we are transformation full to our is

teams, transformation piece merchandising, global elevating of they elevation our the customer our this quality and creative enriching visual our And together have the launching selling, and product the been The an led product, full-price with doing this brand, experience. line, of initiative. job. critical the Paul fleet our incredible first marketing of including upgrading remodeling is store and and our optimizing first sustainability has

of the of model. reset piece second the our business is The transformation

more result line. by our our removing and our in both productive We to have and from retail distribution optimized reducing simpler global product SKUs a wholesale in offering accounts, unproductive with stores business

business intra-entity U.S. Europe. functions from property transfer aligning intellectual rights margin of quarter, with from with lower also IP closely focused certain expansion consolidation of we to this improvements effort operations. reductions, A of the IMU our remained more completed our certain and on in cost have including the rights during extension financial laser the third optimization, occupancy We Switzerland, coming an

turning way, and inventory the are transformation of We change. efficient shareholder strong Sustainability superior operating significant repositioned to less future. deliver company’s returns faster more non-productive are we committed brand climate a solution to growth, part assets. the has being remains profitability to ability This with focus our a for and into this in capital key

corporate have to We internal gas net by by greenhouse XXXX. XX% emissions by zero supply aggressive chain emissions and XXXX targets to reduce by and XX% achieve

In leaders goals. fact, policies to an with open GXX for align these last month, letter we signed calling that

the We youth also of to negotiations is Youth Nations climate Conference United on collective ensure supported the voice heard.

efficiency I roadmap that our action couldn’t climate way investment of to a on produce leadership and very our working create prouder actively in store this area. important be product. renewables in measures, that are the We includes we changes and

Let me add some color results. to our third quarter

and operating profit wholesale with in North have performance increases remarkable retail businesses period, and America significant in the Our expansion. margin in

business quarter, momentum driven a licensing strong all in also reported by Our is brand enjoying the strong our the marketplace.

growth that for business positively Europe performed to Our proud say a due segment LLY are with business to well, our to market by we share. promising for Spring/Summer These up book shift gain is the am continuing sales the wholesale our closed orders to of for this quarter, impacted inventory well. order looking to results receipts. campaign as double-digit season signal in clearly LLY. pre-fall/winter And XX% And I timing that European we the

by in course I a the sweaters, Europe and and We starts momentum dresses, and which that had brand. and America performance the region. as brand in really mid-tops, a including our remained strong countries, Taiwan. our that impacted situation our of well had saw restrictions our in with while Marciano quarter and product. denim challenging as am high-end strong to outerwear third saw line, Our pop several by top North COVID encouraged global Asia in quarter the continued in we Japan China, segment be in

capitalize same-store in been drive the brand watches strength levers on to stay, sales consumer to denim, here categories continued us a will which current and North in growth handbags, growth. bodes in is America Marciano, future trends. Casualization to key accessories, Guess’ for the outerwear dresses is sales as Our believe true men’s outperformed like help like fuel both lifestyle poised and is we handbags these in business solid provide of denim. regions. and categories have seeing well that and I in were

We silhouettes, growth. jean denim the key fashion-oriented and have business which like zeroing mini and diversified future consumers and this key is offering, and leg, other opportunity flare of for social with straight time, as dresses areas we mom Marciano. activities including same see At to a our skinny, returning see products, in

fleet, specialty we Guess’ Z concepts XX Gen concept but with which accessories, store so originals. stores also like year, most factory our and far pop-ups new our stores, Regarding Guess’ kid’s activewear, and were this of opened new Marciano,

attributes that to embarked elevation and space markets our roughly many a new a stores, we and remodeling In fleet our white of substantial that of represent believe in new stores our continue have to the ultimately represent program are will for brand, we stores. We of tool on XXX North next Including in customer provide America new experience. the by Europe entire a end and large the stores for connection pillar brand, with touch this will XX% complete year. acquisition omnichannel of of key the our

enhance to We efficiencies infrastructure continue the upgrades drive store to including our in customer and invest experience. technology, to

LLY. Europe brand the omnichannel and including North with profitability opportunity we ship-from-store both card America Our are This quarter, a last a gift In to in for we a and capabilities And our we us. up represents and e-commerce and third revenue continues initiatives, analytics material of business Europe, on holidays. and launched sales for is in and new progress customer growth to XX% for segmentation. our out to advanced rolling year continue XX% make it centricity all omnichannel data grow, and in source the countries application to capabilities customer go-forward and have

year of Regarding can million leverage marketing customers Europe provide with customers so XX% have home in customer so contactable nearly America mobile X we with SMS over have number we databases customers North in new far. Over XX% address, phone us and and our X their analytics, these and their added million mailers. and this

which and and us strategies. XXX is early promising. launched year. XXX-degree will The are As improve our Europe very application us implemented part same of we marketing we CRM fully enables personalize customer recently a promotional and view be our platform, to This the results way gives in project, the in America implemented segment and communication, of next our Customer North

in drive continue innovation and investments to in area this and technology customer We will fund analytics.

the Regarding the world been no is inventory cycle and that on as surprise the will the come that supply development it facing chain, logistics challenges impacted unprecedented side. and supply by product our has

mitigating extent to is challenges team these an doing incredible possible. Our job the

to leverage which production. consolidate XXX enabled XXX of volumes work going by push execution to over as us has Our as the well the our around to over XX%, line, from reduced SKUs to global through higher vendors

reflect lead to globally experience product We times to We levels the and our of which extended areas disruptions. have advance inventory ordered strategy, when QX maintain limit diversified at this. us has sourcing helped in impacts a for allow end

of We exploring times investing faster to to are cost versus China move sell. year usage our get air certainly in freight and in closer about when to year, the grown product down X% final are sourcing we locations cut are also XX% And and X%. distribution roughly we a like about as transportation prior to our methods Europe. moving that to well trains products apparel between have to of makes transit air sense to alternative as average time This of it a shipping

we the costs the as in rest of addition, increases industry, experiencing like In are with cotton. material raw

for at QX like made options cover products. looking We certain simultaneously recycled of contracts alternative year raw into us that waste and post-consumer have are materials next cotton

which this into elevated costs, built outlook. is resulting obviously of have in All our we

our having have increasing XX% the increases XX%, our impact and we with AURs quality on to alongside been these mitigate up cost are prices to successful product profitability. Importantly, in elevation

primarily season. business, this today plans of As our business, in QX, for our for ownership representing XX% our demand QX. A of million our transit, of wholesale and compared completely our with XX% support I strongly feel inventory holiday to inventory of the over service holiday our $XXX expectations total the in we product end post-holiday pre-pandemic will about aligned to lot of almost on-hand business. the is European upcoming had

have We to stores. of lot coming a newness

traffic the seen by in we is elevated America, our in by tourist AUR quarter and are strong with also material clearly U.S. start sequential our suggest increases as resonating Our improvements remains conversion a our quarter. the AURs. of quality of change trends In good is assortment also comps recently, the restrictions that boost the in getting month. have In implemented the strong. momentum positive as at driven traffic we this from we Europe, travel product sales the in in our Recent earlier to are customers gaining and and locations strong momentum experiencing in North product fourth evidenced

we than As we year, in be past, to especially the with have done less all discounts. promotional to plan level continue storewide

marketing are acquisition. to fuel We increasing customer

We the sites. marketing catalog to X.X are out investment send expanding pieces to as in drive well our and pieces, as the quarter direct use of million digital increasing planning during our traffic mail to

have in campaigns key featured significant marketing bought our in depth. We products

Katie also fourth operating quarter year period color to a have represents in in us our year, attributes an minutes. We few growing put more top and for product it in line we capabilities line this you XX% added profit on all excess versus to previous top million. will $XXX last exceeding outlook and the This both increase the When bottom effectively. the give more video of and see show together, in

in of be confident XX% accomplished I Looking operating has say year the been to team longer not remain past prouder let In this I’ve our XXXX. what revenue during year, reach closing, since fiscal that could billion term just we last in margins and years of $X.X X.X back. our of me goals

deliver. who have to share to purpose. this highly commit elevating team, committed on passion dedicated pursue our we incredible when to We We people And we our brands. an something,

We are delivering.

our world we and And I the consistent all work think the products our and have for very in delivering. product the Guess’ the line history with this. have business, Paul they categories, with across highly been product entire brand. are one done extraordinary elevated, teams today, quality transforming we We to best the have DNA great our committed of and of company’s are of

model, business and We portfolio, our business, digital infrastructure. operations systems our and sourcing have reacted of store to every aspect logistics including

and XX% are too. X margins, year, to well double and reach committed We ago our delivering also initial We’re an now this margin of here our to our we plans. expect operating margin of ahead years expanding

are all significant to is While that come strongly accomplishments, the I these us. for yet believe best

in is here I’m it. We an future to the to generate are our at well positioned confident point superior business that Guess’, will returns be in and inflection prove and results very our

to more me that, review detail. You to our have in Katie let Katie? pass financials With it commitment. our

Katie Anderson

going afternoon, the you, win, We financial momentum performance both to tell being of the to everyone. this And levels into a Carlos. team. chain, again, adapt despite The and which passionate our the organization’s flexibility exceeded our raising line brand to truly holiday are, about our demand. expectations. are Good strong supply the this commitment These Thank year. you have excited for I volatile and times challenging testament I’m season. support more and grit. bottom our this earnings to to product we top during quarter, love pre-pandemic tripled pure is showing part outlook of results

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

growth European exceeded and as Retail, revenue and pre-pandemic licensing LLY result Asia. Overall, last in Europe to This driven our Third sales and was as were same-store our permanently businesses This quarter QX to up all QX the X% X% revenues in expectations wholesale, was to offset XX% increase including sales shift million, of Americas compared LLY. up by by a wholesale our closed $XXX outperformed. year stores business, as e-commerce. negative European and into from partially to a well

And stores are Excluding you million sales that since accretive have rate to would been by about have profit X% a over QX XXX let to revenue that from basis. $XX the LLY. on the stores pandemic, remind these up just run operating me closed we

in positive worth up XX of were over despite the last there X% and in driven sales. permanent and store sales with sales negative versus year remained increase In traffic bit traffic better LLY our over a I’m as are to beginning versus conversion positive material quarter, up talk continued that AUR than in Canada that in in this wane. LLY. Americas revenues Again, sales substantially, by and entirely Store Retail, expectations. down our X% Same-store the improved is have constant happy report in XX% Let’s currency comps roughly versus Canada trends driven growth XX%. were LLY, decline segment. to U.S. performance about was closures, pandemic the X% to a by by which region stores the in U.S.

on This transformation. didn’t like an to line, wholesale increase business. versus impact LLY, this the was sales a LLY. and can’t is on year, a quarter, business profit were our Labor of events X% less versus result that lapping increase on revenues which sales. lower of margin X% help prior The holidays brought Operating incredible trends. benefit lot X we to growth it What to In versus Day is QX allowing in that over than promotional, XX% operating was XX% we and out our line. up we to but Europe, point is profitability last a primarily an top less LLY continued in the I course, but when bottom positive pre-pandemic in year be have on capitalize that XXx all do in store in segment to our had even our years this us

As from for with quarter, the delayed chain. season were you challenges recall last shipments might a due fall/winter to few the our supply weeks

had positive even sales from momentum, business the this are share shift, gaining So shift in we we QX But into here. absent had market QX. a and

continued down down to X% Nearly we to of Europe X% business and constant currency LOI. closures. significant from XX% our improvement retail versus year for In last AUR. to result was quarter of continues since LLY, our decline pandemic-related Asia, Store While a last comps XX% XX% traffic and was sales improvement permanent by quarter. in in improved be as a sequential increases saw this by decline, pressured last revenue in driven down half traffic a the store were

lack consumer South more in sales were with struggled resurgence constant deeply China, region LLY, as has COVID-XX store negative down region. QX well sales. moderate X% is and than as confidence, areas comps comps the Our impacting versus the in in than of This other XX% our with which the better currency of Korea

perfumes LLY QX, Total more performance to shoes, watches. gross basis the to XX% strong U.S. X% than last sales XX% in in for margin in sales up up last wholesale and XX.X%, ago. and to to higher higher was LOI XX% and Americas X outperform, Our driven and to driven years by company than the revenue licensing XXX year year were continues by quarter points

the Our product XXX freight, points worth ago. lower costs as $XXX points well to mix about SG&A The versus primarily closed Europe, increase performance-based increased stores. XXX basis by $XX business to result XXX% which businesses the margin and lower for of promotions million grew and points rents decreased higher is X to over both rate increased profit levels. years compared which ago. partially the result year this an e-commerce as third a XXX operating a is and million IMU, wholesale quarter years million basis X to higher quarter in XX% pre-pandemic for the as year This mostly Adjusted Adjusted compensation. LLY and variable offset for quarter materially last $XX $XX mix, LLY and last was this Occupancy business of $XXX increase quarter. and million driven was basis by million was increase permanently versus

sales of million quarter than Our strong. $XX with higher last remains balance the million sheet $XXX year’s end at in QX. We third cash, ended the

U.S. was payment $XX in IP with Carlos that the an million by impacted transfer cash made Our connection balance tax mentioned.

next and stores, elongated light $XXX This LLY. levels, in down XX% remodels Inventories negative in $XX constant goods versus advance and X by the previously tax the amount time. chain supply the in U.S. up was $XX pre-pandemic to to year currency mentioned. from driven $XX prior U.S. new but were recoup in first year currency technology. to our transit in by holidays driven payments million, three mainly in constant up XX% secure of increase expect and and flow X% $XX reflects over last disruptions strategy Year-to-date million, the in to global million million and expenditures I million of the in XX of year Free the quarters Switzerland capital dollars We that below the this years. were cash for investments down QX

payment, flow have would $XX free cash tax this positive our been Excluding million.

Let capital me touch on allocation.

We profitable are ability cash in generate our and confident sustainable to free flow. and growth ample

As we also shareholders. runway a only return incremental result, growth not the fund initiatives, our capital have to to our but

recall, expanded from repurchase Today, program announced increase you quarter, our a in share to last $X.XXXX of As Directors approved our $XXX XXX% we that $X.XXX. quarterly Board million. to our we dividend has

fund As XXXX. share a $XXX note convertible the in was dividend we reminder, repurchases before to executed April our [indiscernible] million of

now, So about let’s talk expectations. go-forward our

fourth raising outlook and are full the for our We the year. quarter fiscal

fourth the fourth offset and timing stores, I wholesale by in digits wanted quarter, mid-single driven developments prudent built e-commerce LLY, that we assumptions revenues closed the permanently business business of the in partially more pandemic we expecting the retail have down our to European by Europe, note For for for in growth light versus revenue be are our recent to in our business. in quarter. in with

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

for points of to operating lower basis adjusted comes margin of we partially operating XXX basis versus and revenue expansion be occupancy from mostly basis the adjusted channel mix margin by over and and X.X% benefits. in points of of doubling down low higher lower reach it to of this points year, increases compensation points of margin points year expect lower pre-pandemic XX% expansion revenue for XXX versus with a margin D&A, freight down offset about a break in just over XXX single represents points inbound This now XXX year. in onetime This activity, XXX despite XXX our the digits basis business IMU this was XXX promotional to of the you, basis To For base. of basis about for points LLY. expense improvement, higher basis and performance-based LLY

potential the availability significant are that limitations the come broad demand improvement margin but in confident has and sustainability with Carlos We and top in circumstantial increases from environment very in model margin combined We line of not In that improvements. concrete changes margin our are Guess’, our This in very the have business our these of at earlier through of future in you margin our nature. more triggered growth case, current powerful. is realized walked industry. expansion, for in most product permanent

fiscal our open we remarks, will these year we up For questions. and report conclude term for when to the in your the QX. next let’s With with to we sharing longer forward our the call you remain and goals, outlook that, look I reasons, company’s confident

Operator

question first from Anderson Our Instructions] FBR. [Operator Susan Riley comes from B.

now open. Your line is

Susan Anderson

seeing I Hi, new customers Nice the you like about existing this just the maybe you guess come I also well, very or your very to of was could also, the women’s? there off, – talk job U.S. obviously evening. product get customers margin growth quarter. in categories, that was more Maybe front, op what’s back? there come store, around versus And on the too, Then very, doing drivers retail terms start if thoughts is would men’s on strong. into the are strong. good to just

versus the in more margin drivers kind just Thanks. about talk could you XXXX? flattish of there like if op the So,

Carlos Alberini

think has levers present the been transformed transformation you, the pretty we when that a way. about a are of to our the business. Susan. And Yes. you in way big referring in of been Americas in of significant business most makeup that Retail Thank significant have

consolidating integrating the have really we optimized a part our of So, we been that starting supply a sourcing Cost sourcing to margins as with really vendors done countries. doing improve better pieces lot and with from and best more are of well. are and what chain less to deliver margin, and the has that

So, that’s thing. first the big

thing about The lower second big is promotions.

We have done a significant lot to reduce Americas promotional activity, in well. and Retail as this has a impacted way

We have prices, increased and have we done this strategically. also very

opportunity We deliver here see that have us. and the having on we customer really an to that the demand showing is

driver North has big traffic the Our of most occupancy in what improvements in our a we that done too, footprint. our have here, optimization and on our of profitability well. is and But America, thing our as important improved is

We underperforming have closed a stores. lot of

We have leases. also of renegotiated a lot

as pieces, a the these doing are renegotiated. And in have that with all XXX is less. of Just result leases number we we like more globally,

our business GBG the business. factory integrated outlet have We into

think and I compelling. together, that eliminated very, costs result that has integration. it’s be The are better, significantly a proven to move. significant Put very of we good have it as all doing very a stores also

very were The a business with omnichannel stores. but shopping level what it’s the America. new relates global, share mentioned about a customers, and there we with that of North pleased we customers more numbers fair our number the e-commerce of asked with provided the were is integrating that we that You how We have seeing Guess’. that to with are seen we lot

the everything referred seeing to, think that things I together, So, just a are the all you price are many that like here. we put are of partial it very, like when this being about is year other those. promotional, very beginning we we started for because happy seeing we less that we believe you or with just many levers increases And that

the so some in have it’s but we impact you more year, So, once it – to the important even very, a will saw very activity, on happy going quarter, expect this that third annualizes, overall.

a mail. are in doing lot We direct

I the doing I about think during are that lion’s the Of of America. – remarks to, pieces as X.X referred the we that in And I North my what well. North mentioned impacts delivered share America. prepared are XXX,XXX million biggest

feel in as effective customer this elevation the of we depicted the quality, is elevation new of well. product and lines way the reach is that images a our great, also the to very and the to So, present all the

we as feel well. that be going is So, powerful to this

Of course, the the fourth is profitable most quarter quarter.

So, we for for business our as have on we the have expectations sights we quarter growth. And this well. that is high turn now to feel fourth

think to back. produces Just were can business and margins, model, that America, is we where a in us great a before, and time, have the come we of great at places very we but we for we North feel grow are there lot been successful have we this that time a

in this surprised seeing business be you as start well. growth don’t if So,

Susan Anderson

for guess as there. countries the Europe, some given am countries that, down we over I could I up one summer how look lockdown helpful. that’s And there? performed That’s follow-up. you concerned increased are really could again, then certain the in this just opened guess Thanks I add winter, in I all if as Great. forward detail. those that Thanks. slow also, over curious,

Carlos Alberini

our incredible you we and has Yes. brand we right can And of think Well, lot that momentum win. a are in customers so are on reason as very growth. the know, the And it’s Europe, to now. us business an that have for critical big We the our with wholesale why seeing talking say growth we is confidence we seeing to a side. are we that and

digits are spring/summer we are we in And I line, and well. the line. seeing up were think us now a as mentioned, we market for pre-fall/winter there as are XX% we that with double

think all So, we when be that can answer, and think could there and up, is slower how market one lockdowns it gaining that activity, about, are you we that and only we these okay, share. is be with

very We haven’t and them dealt which during for way. have unusual. We the took very with these is reserve in times. care effective a seen we product tough them, We customers of cancellations,

and then Yes, there see we shop – saw on uptick well. in but we round they capitalize think about very is weeks, which can were are do So getting are is with what next virus situation, three just to that of that Austria the really deal people in weeks. the business for back, that, going really holidays. our to announced and can reopen excited lockdown for critical trying an an opportunity that anticipate we just XX we and so to region and another the for really as us But they

think that the Austria movement be that of is about going course, sales take that is us. XX there we only to And us. we may But for Yes. all think So, for No. represents it damaging some if that this is, stores not when place. be

So, we seen close that, play on things how out. that think we have just to

business And we We have that growing a e-commerce is also a marketplaces. rate. with good have strong very fast businesses – at on very

moderate think have our together, this a do demand you the did storm. if we it inventory have we business. So, that But the all put as more can the mentioned, to we expectation in business weather is to there. for Katie consider outlook we But, more

Susan Anderson

Good this much. so Okay, great. holiday. Thanks luck

Carlos Alberini

Thank you, Susan.

Operator

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

open. now is line Your

Dana Telsey

on Thank differing? is in and everyone certainly seeing going price increases update with to And seems Good you benefits. cotton, How are how product It thinking line an the inflation forward? Carlos, the you. category the nice denim give you about Is the can us you progress. global see doing? are afternoon like anything now?

Carlos Alberini

also start jump on me then and let Dana, denim. Katie in Yes, can maybe

efficiencies we all regions, incredible So, line world, in a are of consistent position across that, just only to the of has global for us now we because more products never even are a over significant initiative is a result importantly, the offer but been an as which something we seeing assortment not all have.

have more we Now coordinated. palettes that colored are

We have of is those with the And Marciano. each very – Guess’ integrity. differentiation a a lines between of this lot in and of one representation lines,

in stores enhanced presentation and tighter a have We merchandising. visual

really we This I been think are balanced the on major of and bottom also well have based the has landscape, impacting We our competitive the that, it a think product each to to And across our that price enabled is product based activity. we we on have able experiences. and has been And advantage, value the line. elevated that perceived promotional really reduce that board. customer of us course,

us our also supply has So, helped optimize it chain. to

leveraging to down. are So, the we cost drive line global

We global buys on focused that are are key vendors. doing

sourcing also looking we of are on we very new are is the move lot to can. for to denim. we are With the But are that come. closer to that, product about happy are the They new in all we we comes the newer looking countries especially this new of we cost, XX% craving And is newness sourcing So, ultimate to of nice but into predict when and of for chain we there are have – issues, improvement initial They that it with They products with we resulting the that to coming. in looking styles, are getting distribution side, also now part prints. the respect supply are assortment. assortment, bringing plan we countries low-cost are we a what sourcing all in product, a are more that where customer read countries. and dressy an those But for to from have newness. countries that. see the And we that is

to you Katie, about you and want how denim mention do feel? So

Katie Anderson

with denim Yes, with we is see – going are capitalization, we I And sure. in this as forward whole this going performance trends I Carlos think key cotton And and mean you to continuing. seeing asked Europe. America North handbags, said, good outerwear, in in And then we to categories and also inflation, sales along Carlos bit. etcetera. our a mentioned well, some grow Dana, a that have other doing lever and that same-store about with pricing are little the be

two We in go are about to going it. ways

contracts – alternative for cotton, the next have for And we as looking We said, in year. also, and successful have sources been pricing. for have Carlos then we

saw that out strong that We Our quarter, starting and AURs AUR to continuing. this see we are XX% XX%. up

Carlos Alberini

there her stay. circumstances promotional of nature, business. permanent we that way, said increases, things being to because a some about the combined see think are in are more way abnormal of the is are changing not we by They from fundamental in coming But as more remarks. that to are components. with here of combination and AUR that of increase with And these AUR being are course, we yes, we and And less and fundamental that of changed those excited prepared we And today demand the Katie price each changes supply is with think are a lot the structuring we two balance. the that we increase what about a and have are that – XX-XX very the

Dana Telsey

Thank you.

Operator

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

Carlos Alberini

Alright. want the front the period are for year Thank you. us. in of just we say to significant most I Well, of

get. of that Just a business to expecting we have lot are we

great We have team. a

is have this so We we inventory, important are well and during positioned, and time. the that

we this We thank we to really to very you Happy and here. think demand, We inventory and talk want you in much. all to have able the well wish soon. bought you we a so we and positioned Thanksgiving satisfy be and to super today you to Thank hope for inventories Happy Holidays participating are

Operator

conference participation. and call. concludes Thank Thank your you This gentlemen. ladies today’s you, for

You may disconnect. now

Guess' (GES) 24 Nov 212022 Q3 Earnings call transcript