GES - Earnings call transcript Q2 2023

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Operator

Good day, everyone, and welcome to the Guess Second Quarter Fiscal 2023 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 today with me are Carlos Alberini, Chief Executive Officer; and Dennis Secor, Interim 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 description of earnings these measures found be today's and can release. in reconciliations GAAP

over to it Now, turn I Carlos. will

Carlos Alberini

Fabrice. pleased second you, expectations I which you challenging and everyone, for joining thank impacting a Thank of earnings, our environment Good markets. and to operating several afternoon, us exceeded spite our margin for operating today. quarter am revenues, our in report performance, of

in XX% million and ability our We difficult over and continued delivered dollars adjusted the demonstrating an grew a in margin earnings currency, gain momentum revenues of $XX brand almost strong X.X% market. in operations. share adjusted in Our X% from our constant to and U.S. operating

financial margins was meaningful through our navigate am strong I environment, team's performance expenses. our solid, most to with current impact revenues, continues that impressed to ability headwinds macro which present and the our While

opportunity inventories, cash territory. Paul what and on can team to thank product and dedication. work channel on by our to continues this and category, all their business Our outstanding focus expected I flow planning based to control, and managing the we associates and costs, great free carefully customer take for demand want

performance strategic close outlook and commitment difference for our our will Today, and an will and have few appreciate brief of all first by your with initiatives years key then I I the update regarding contributions provide last work. year. will the business. the update made I a Your review our in hard we

start me by business. our with performance Let

X% the in and revenue segment U.S. currency for a Our period. in increase increase constant a dollars Europe reported XX%

region, the drivers the a weaker our momentum the was main in in impact brand profitability on and to continues this results for major having lower euro the our While gain quarter. is of one

Retail productivity low quarter and during decrease This reported from spending Americas year, we conversions continue was this checks second operations in Last our performance business stimulus customer were weaker with Our due small the almost to revenue benefited Product then. in in run performance healthy government. by an the lower earnings lower year, store greater and position, distributed full business to the the a our XX% a at period. from margin and sales period. availability contraction cadence promotional traffic extraordinary and price a and business inventory our impacted while U.S.

segment was revenues, due though period Wholesale Americas Our increased slightly the margin accommodations. declined customer to in operating up in

double-digit dollars a increase China, were Asia in Our constant small once business increase by while able revenue reported U.S. the and the reduce a in from restrictions operations. was in we loss to impacted currency, again business COVID

handbags, from watches Several Lastly, successful up solid results by categories quarter the up our quarter in revenues posted operations and business another with XX% earnings and X%. led registered fragrances. licensing

great Marciano to engagement. current is forever, not product quality, time, our the best offering been resonate, and fabrications that and is by to Regarding and Guess has prints our strongly sophisticated customer the customer brands long if elevated a performance, both superior our responding driving it I repeat continue very collections. in believe product well Across our far our styling,

outerwear increased appeal, assortments customer to appropriate and continued and saw interest leverage dressy During adapting brands men, purchase flexibility the woven shirts customers' pieces. buys offering for skirts, the socializing occasions. special attending and pants product events, our out, products, meet strength including and quarter, and our women we and and their non-denim going lifestyle and in traveling, our dresses demand both we our to of for in With men's blazers, engagement

accessories was handbags. the of quarter, in outstanding women's driven sales by very strong business Our

watches. delivered jewelry, women's also and goods, solid We results in and small accessories, travel fragrances eyewear, men's leather

strategic key I Regarding areas a supply initiatives, on consider management. critical this in and with to will start win we few will I chain inventory that focus environment. our our

supply have that responded chain product year We strategically to we last the experienced disruptions ordering earlier. by

delivery In are supply global chains improved. addition, and recovering times have

that been second demands a meet very of have dollars. product result, we to is U.S. in due and of with other The half the inventory and in the the reflecting effectively. of XX% inflation. to upgrades quality We the in $XXX and half deliveries growth warehouses, roughly About in our of costs, this received million, transit. effect average increases quarter increase anticipation receive As our represents business XX% early with of of the able up closed remaining XX% unit

the pleased quality and the We business increases, year. freight cost to ownership respect inventory to our seeing relief year's future our are some mix of we very peak of from well during with the With are and service last inbound remainder orders levels.

success have may reductions, future, meaningful pressures in on We subside reducing freight freight while in the air year. this we not second are the of for our significant cost resulting focused improvements half with planning cost the experienced we

benefit and have systems it Accordingly, applications visibility, to productivity new investing made and planning we our experience availability, inventory our and improve Our been that data during to effective increased analytics. several in clear efficiencies, can information pandemic from very more upgrade processes. allocation the business existing

results of to already good the rollout have mid-next in North the plan very solutions complete We Europe with some in by implemented America and year.

the improve into We stores to sell-throughs. accelerate have cycle delivery our re-architected conversion and processes also replenishment to

which to with two to key of would our our focus the elevation effort initiatives presentation on focus continues every also ago, of on many merchandising. groups. our of sustainability. have an product multiple quality, customer taste, product phases inventory, job marketing for touched on Paul our strategy, all This a update campaigns, e-commerce categories design Since a done with line development brand strong an over aspect Next, drive years target global and like impacted our provide strong launch that I lifecycle. teams They product visual and product including the extraordinary the pricing, integrating style and impact and

ultimate to regardless globally in the goal brand. all here is we in, choosing a that presentation seamless do of deliver business with XX products the customer the our our consistent channel Our of engage and categories to is

significantly improved every perceived have across We board, respective fabrics, products the priced we its have and of make based value. the quality and on our trims, product including

prices recognizes raised these have the so but are warranted. thoughtfully, why We increases very customer

story buying optimize are We now on big the groups significant conviction to levels. focused our assortments sales and and with tightening service further improve

exclusive sale. and upgrades direct-to-consumer we in leveraging ecom countries long-term priority channels, model to proximity big speed-to-market and which our we our strong believe ease a to anchored us is best-in-class a made offers customer a plan will towards analytics to us. have store remains building remarkable the experience data the on increased new develop omnichannel for implemented of improve products this where a be infrastructure also and opportunity sourcing In for this progress for regard, platform, shopping several also We conversion. capabilities. to and for product customer distributed We that are Enhancing

platform, project make We new a marketing tool, with implementation and includes new a a clienteling continue our new This XXX to CRM tool, in Customer segmentation good app. progress a Europe.

to as already, are rollout speak expect we early In line by plan timeline, been the this released going we now next finalize all process While an which optimization modules to North we America through we in Europe, year-end. finish with have in year. these

customer delivering the a increased opportunity outstanding believe service as on to focus great environment conversion. current differentiator to drive and presents also a competitive We engagement

our field assistance ambassadors customers the and knowledge. in complement always Our sales and best teams are brand product their

and customer schedules teams during have to training our high improve coverage, our periods, holidays. labor for increased We associates are investing and in product our traffic including and process care store especially

a and collection. Our they critical engagement be center the for acquisition stores and continue to of strategy, our customer venue data customer at represent

We elevated meaningful that made of investments U.S. Europe experience. customer the stores remodel in many last a have more our the we several a and few feature much-improved years and and to design new store opened stores over

store, as this generating. continue outperform, dedicated stores. we those opening we And XX year, XX such with accessories year, new the this the have reallocated is categories and pleased by locations. early product to Last closing to we very are certain categories for productivity opened and we results sales to XX stores sales initiative optimize Our space are additional

touch the inclusive have in last social we America a North impacted two regarding remodels, years to plans ESG XXX our very to efforts diversity our which XXX and this Regarding inclusion, focus, now additional sustainability. on culture. locations have between would Guess, At we diverse and like and responsibility, we Europe. now an And year. I includes impact and

managers are report pay this globally. our Guess offices will XX% are achieved over As and female over executives also and to XX% corporate on our our of parity we senior of and monitor reported, continue gender has at U.S. we metric last female.

Regarding sustainability, recycle industries, exciting to customers. we their program partnerships returned launched with resourced, to have brand clothing and a facilitate Canada by homeboy

company to absolute we certificates to fiscal precise a in Climate of will carbon develop Regarding XX% purchase a zero Last, a development XXXX the solution Edmonton a during eventually emissions to to strategy. optimize carbon the the reduction from ahead carbon emissions, emission start-up Network allow carbon well offsets achieved product level platform cycle. measure goals. at our net value a with of This we analysis called a product our path in XXXX begun collaboration baseline, have regional just of creating

other brief results, manage can for dollars outlook. what We we trends in as to single-digit We even and currency revenues reach softer share continue on growth rate rate consumer macroeconomic effectively. a continue of well year weigh single-digit control to now high growth our U.S. currency. expect low in update now a to a as business we headwinds the constant and and will me demand our that the our Let anticipate as control

also operating and how we assumptions to to year. This last from that outlook our reach call, due key Dennis margin explain our have the down will share is We XX% you currencies primarily for expect with our in one the changed. adjusted

of expectations months plan next this update and XXXX, the our is changes Looking on macro forward to to underlying assumptions assumptions year changing conditions long-term complete. when in any for expect to work our few our the you we review fiscal we'll significance, targets with and

shareholders. Guess what dynamic XX% and environment outstanding of all beginning on In challenges to began, year. as lived closing, at have reflect quarter purchases in In to our during we together with year, commitment I we that I our with earlier completed line and this, stock returning to repurchase share this our the program, faced the have the at Before conclude, team using I we we through our our other pandemic since by the value executed has want retired accelerated our strong reiterate shares the all of to leaning advantage.

have transform more that We the of I impressed long results be term of positioning with company the business a our and completely result more this the delivered work. our team couldn't as for our in and confident

are high favorable Today, for we and the years, transformation portfolio today, three the in presented closing consistently our last in global achieving executed invested long collections. our our and momentum contributed customer across margins operating our for the we analytics very company. data well a product customers capital eliminating and double-digit renegotiating time improving underperforming strong markets. transformed This strategy, brand first lease And the history, our is During to we capabilities. strongest our have digital the return And our all brand and initiative. terms. We We delivering platform, optimized including elevation redundancies to store and company's reorganize assortment line efficiencies model, stores time responding experience our operating our globally. on

structure. a have model capital powerful We our business robust and

Dennis? controlling at to Dennis returns, and gain me opportunity Paul and that and it and the it profitably. aggressively we of future. our With market and discipline, to let are make business excited business jump the proud ready now what and can deploying this we to a capital review our deliver is to outlook share great better, detail. couldn't grow more the more pass managing We that, highest our have with where be financials in control more can I team team every about our

Dennis Secor

an Thank everyone. business, afternoon, you, In mitigated Echoing In to in long parts growth, their and of team commercial our is as some these reacting evolving well are areas, by there Carlos, markets delivered environment. We and strong challenges remarks, Carlos’s regained restrictions. we our managing after good business as softening pandemic traction sentiments consumers global economic tightening inflation were spending. other our significant persist. And we financial before challenges provided I exceeded reducing currency quarter, in Overall by financials even headwinds Recall to the currencies on our that revenues spending. want operating our both we a controllable currencies and ago, ways. for that three quantify first results. delivered as are outlook impact performance, quarter earnings I review the affect our having adjusted material the that that

we where convert profits dollar. sales expenses translation, is into currency and U.S. First foreign

Second is subs in transaction, need, in buy foreign among to changes. This form And Europe, products now mark certain buy It inventory. example, their is in liabilities inflation. market for more represents last an when U.S. assets and in and our essence dollars. euros product hedge non-operating changes foreign They things. of is contracts at other to values additional

points. negative the million currency $XX points. percentage XX full on was top-line margin revenue million, basis earnings negative quarter $XX and on growth on was was second by impact the For The operating reducing XXX about it impact operating

of $X.XX, currency headwind the was the impact Finally, EPS mark-to-market year-over-year including also the headwinds. adjusted about

program While I'll provide full-year in share a moment, quarter we hedging is context full wanted a to its give currency have impact impact. to the first but ability to to this limited the overview it second results. do our I in mitigate

So into let's the get quarter.

reached increase constant in $XXX currency. X% a revenues a dollars U.S. quarter and increase million, XX% in Second

stores revenue U.S. the performed and in partially last In the our European Revenues was positive strong this in well new Comp by both U.S. over currency. business, region to growth our wholesale that been increase increased stores that year. driven stores in by offset in Our with dollars segment from Retail constant with declines sales Europe, for constant added comps, primarily the our wholesale European and XX% comp stores last a primarily our sales, business wholesale over shipments driven store our along accounts, growth sales year. we've XX% currency Revenue higher higher in performance and growth. in retail added was customers. the X% have from new

closed headwinds the shipments as U.S. increases, the Europe so similar in decreased Conversion also our store quarter first dollars constant result retail, X% well COVID decline, the X%, $XX be than year In from the in in XX% stores revenues At permanent year's Canadian both delivered the earnings higher over to were million would increases a overall XXX an Revenues continued as they offset growth. as includes retail traffic AURs metrics was European quarter, Our in these due store quarter comp of operating the stores across decelerated points closures. quarter, margins down. Conversion in second by also margin by about In third as customers benefited European restrictions, anticipated some both were traffic growth last from driven than be abated lower AUR constant operating all currencies. by of of we and revenue in a our and levels declined were decreased previously wholesale from and that both Americas strong sequentially. by their decelerated basis channels, and to new reopening levels. that to last well had comp offset These QX XX% store partially have gross to leverage. currency as quarter. been expense more ago.

tourism. increased by of margin operating mentioned lower and selling revenues likely one wholesale in U.S. drivers relief Our were increased X% Americas in and impact in tourist The the the lower operation we did from quarter, operating basis acquired due In declined the mainly declined had some stores Americas dollars in XXX constant our outperforming at grew we of and revenue the year. still declined main of XX% points, lower XXX dollars margins Carlos first gross X% retail X% dollars seen retail profit this strong product rest South the Operating on while accommodations store the profit from and the In a the the margin of costs basis points, of customer XX% in our U.S. by constant to by declined U.S. operating currency. locations, XX% level increase which COVID of currency. partners. same and affected not fleet outperform higher driven Asia, margins, wholesale earlier. direct Korea level

currency Asia constant also in growth delivered of stores retail the XX% quarter. comp Our in

driven year’s strong X% pressures, expense continue we stores given favorable came to million, many level. impact markets. in versus the million, down the quarter at segment While same improved recur improvements second $X with headwinds second Europe, in and mainly Americas year's operating costs global currency roughly from from compared segment and our selling nearly increased business, driven the second price inflation lower different increase in this of ago, temporary which the cost full XX.X%, employment of year XX%, SG&A comp the of COVID points licensing both of operating to due driven currency to was These increased a quarter expenses global total our including both by both contracted driven and by profit SG&A China. million our the margin related $XX AUR a compression. of strong growth. revenues occupancy in Segment was increases million. where level experience for quarter, to benefited offset retail conversion some year. in year. $XXX decline COVID in handbags. were not traffic That markdown by finally, increase The XXX product The primarily In impact gross quarter intensified by compared in to in the the margin in of drove last a our And our company Adjusted Last stores partially by of a expenses royalty in SG&A primarily mainly $X by basis rent quarter. restrictions did increased loss this relief, our the labor which closure along to mix largest

in we a $X that year at addition, related this subsidies COVID of second quarter the compared level year to operated with million more In recur ago. second stores fully we not opened benefited quarter retail year's also this last did about from the In same year.

related For adjusted last and profit XX% XX.X%. to compared to XX margin declined SG&A QX in the operating subsidiaries, charges operating net recorded into XXX basis quarter, the points certain In liabilities of totaled the points and million rate assets our net quarter, decline adjusted than foreign of a to increased U.S. year's million $XX dollars. ago. our lower year a Adjusted basis to non-operating $X of revaluations we X.X%, quarter, primarily

quarter last tax rate from was second Our the Adjusted $X.XX XX%. up last versus QX in quarter XX% adjusted EPS $X.XX. rate QX of was

Moving balance to sheet. the

as the market we March authorization quarter, in year. initiated accelerated During We leaving this $XX we that purchases program repurchase our Carlos finalize of noted, no share $XXX made our the million open remaining quarter, million. at in

our call, are to by more share with year's various extension expansion, million capital quarter, as facilities, tax of Europe. We million believe options of the quarter EURXXX million subject in certain financial a years global an availability transfer ended on borrowing to a IP driven payment we total the the goal supporting quarter $XXX decrease position last cash The Europe, our ASR, the constant ago. needs borrowing in credit both and our an $XXX up facility to a with last excellent well million versus to on return year was is ample the we in primarily compared executed U.S. at structure, conditions. strong the our and the was related $XXX $XXX solid XX capital capital to and million We capacity. and $XXX last doubling a in XX% million, finalized currency shareholders. to including $XXX months, operating of that ended a to model is year. flows, dollars and generates repurchases cash, in were operating as in Inventories in investment initial in year million access for cash XX% first million shared five As The our of term revolving we facility provides two last than we region's EURXXX the

reflects primarily the better As Carlos business. expect mentioned, inventory to earlier order year-end trends year this we and our our additional strategy inventory investment with in do align to our

million. constant about last $XXX Our roughly flat currency to were a receivables $XXX basis, XX%. year's On receivables increased million,

capital million stores cash $XX and $XX driven expenditures the half of in flow million, versus $XX first prices new $X.XXX, and million also year, were For the Board mainly year, the net first source prior a Free from in by quarterly capital inventory a investments cash this higher year $XX technology. year's by stock of our which announced earnings. for net up our remodels, Today, reflects the this half an the we of over million lower investment being net this dividend annual recent acceleration, at change prior mainly at spending in driven of that yield X.X%. approved represents year,

into I expect talk This plan how give the of we operate first manage. So product and countries different multiple and to insight XXX diversification flexibility that of second our the I rest XX now in reflect goals. our deliver in to with earnings on balance how We provides want what points business, at let's will the performance we year managed brands categories. feel and about for quarter price tremendous on the over to our year quarter. good model, we business next and our as

different to reopened fiscal different agility quarter significant how business their parts last impactful We in also manage year tightly. expenses and first, half. advantage our Canada, of recovery. earnings pandemic the and of of year business management are strong should the while less much we diversification market points only that and at second second unleashing this this, of in however, population that, top that demand controls are monitors and An and revenue Europe achieved for half recently year. results that that pent-up with an of team plan and and the in in expect occur all we took The U.S. growth reopened significant our the pandemic fiscal first carefully in delivering that centers and much reflects post later down operate we demand agile that opening. Beyond of business shut this drove were we Asia,

to current macroeconomic previously expect compression to will persist. to that strong we about including our reduce And We a prevailing currencies. pressures represent expenses now we or rates adjusted and dollar to now customer price do further to At Therefore, one and operating operating our our the with million last headwind ongoing at those margin a year U.S. million currency. not and roughly ability nearly a expect outlook sensitive updating U.S. revenues inflation, adjusted a over mitigate. and $XX constant is for over in basis exchange we earnings. headwind percentage X.X% it and exception, million more XXX operating was X.X% mitigate update, to than it negative certain expect factors, $XX planned expect dollar point currencies impact $XX very to year defer will to X full full point revenues, use worse an that are grow

share by of these Based compression, further in higher increases, reopened. higher mainly share now earnings margin store fleet full we expect margin the primarily modest approximately for and the all $X.XX. adjusted decline supply roughly with an nearly per of costs assuming product on by of margin chain our year planning adjusted gross entire no declines. XX%, We're assumptions, full increase repurchases, an operating driven year price currencies, retail by gross occupancy rate offset a expect markdowns We are our as as has driven and IMU in

detail We a arrived have adjusted of in that calculation. EPS included at table release how our provides we today's

dollar the revenue roughly quarter, X.X%. For we roughly U.S. constant revenues decline increasing by will currency X.X% third expect by with

eliminate drivers roughly currencies. compression of now great currencies basis much I'd of and like over X.X%, been grow relief. operating complete bit We points. business. done masking that of XXX COVID last will be currencies expect work five I've the the about so and thought and margin Since this operating growth currency that per with year's currency months, adjusted over with are been doing. reflection the billion, this operating a $XX The team for things million quick and X.X% down full-year with total year outlook margin the much and XX% year's if reach operating impact all this this I of charges million headwinds, is noise. a give excluding nearly instead $XXX would headwind, other to $XX share. over operating would context, Unfortunately the profit $X that To masked being sales so close compelling back years be over have currency genuinely work that on biggest $X.X million mark-to-market A margin been I've to the by profit profit a exceeding so this along a to team story transform great has impressed equal,

for conclude So open with up and I'll questions. remarks that call let's the the your company's

Operator

you. Thank

question queued up. question-and-answer We that I will now have a begin the session. [Operator Presenters, Instructions] show -- do we just

Telsey Advisory Dana have Group. from We Telsey

open. now is line Your

Dana Telsey

-- Dennis about everyone. the the you Carlos, and macro spoke environment you as as about afternoon, -- Good spoke

Carlos Alberini

you are Dana? How Hi.

Dana Telsey

doing are Good. How you Carlos?

Carlos Alberini

Thank well. Very you.

Dana Telsey

macro given inventory As that's of do the relative get the you're about both U.S. season? and how and in of of of currency it? fourth And of you. handbags, in are and shaping thinking then, product you how upcoming the you about spoke what how about Is quarter in environment raw the we strength you as half you wholesale, lastly back promotions, as core material in And of relative the third levels the the you think seeing Thank on foresee Dennis, the trending holiday what pricing terms you're headwinds denim talked impact, into to in dressy, the currency? in the -- the the fourth to price the quarter any in planning you as then quarter the how to terms seeing Europe, relative to and retail increases? year are about in through go we and product accessories, assortment,

Carlos Alberini

question Thank first with you, you noticed. Dana. start about the your macro environment Well, let me

and that the a I where depending -- has those the we think Dennis been is prepared see looking with talked I that the you markets that think that each lot to in world recovery this the remarks, and COVID regions a about are his of bit different but through. on this has do of little going

And and supply intervention strong a of and from type U.S. lot was put the put this stimulus demand inventory chain year. on government the lot disruption in first was had was business So, with of huge the a limitation drove of the of into the available. very pent-up on some there significant money at and that checks same time obviously a amount last

of selling very price a So unusual all I enjoyed the access the sure. didn't was And we demand that think that a inventory all extraordinary was as fact extraordinary full requiring. and have to result that for the margin consumer increase

inventory cycle, many that against two as lot and will lot price way when system very hearing it we that experience move I a significant companies impacted a is COVID type and full we just then last there also but now and we of those we had are impacted our reissue and very of look a Europe but that The of growing, were a good had are course, in seeing to year, things inventory. are So both in so of is that up the different at are there inventories, unusual margins. said, have and a selling a

our really pre-pandemic. of but some than lot We we what clearance still business, or have normalization healthier seen had versus seen price full a promotional is

the And think were we what of very a we normalization very are very, is how is with line that business we promotional much in So expecting full with the the what future. we expecting for price price are pleased and versus evolving.

now the is that sustainable. business think model we that we running So are very a

faring companies especially we the how they inventory type other of to and during second just plans the said, what from being the that are half holidays, but our are of positions is promote very to difficult we do have game. are Now know during year, playing

disciplined We concentrating which how on being buying. buying, are is, just very that we things are the control, we we in the can are we way are and

on we future demand expected at -- our very very, carefully. looking are always are buys We based and demand that adjusting

expect something from way with that our for not on the all based very product retail which orders. are being the based business, in retail wholesale but are we business, on buying very, which for careful also obviously really We is our buys what is we just business, that's

being that that you today -- I that believe business. are share we orders from very have customers are by we reflective that or versus And have is the business. with the inventory we just on full based because the really normalization either well that pleased with with the are very price where of that we current is all we trends And So our disciplined justified promotional inventory we of as with wholesale. think own that our just position, at outlook on we the

just very dressy a in that, at you because has I this. business center and result about are seeing business we a we a make type one-third just more as into from of from outfit big this to have we driving some half more a represents And very, move been part enjoying all can our represents of the Guess. and about primarily formal just are result, is second teams. in And driving of lot -- Dresses that activities assortment of and a our business most assets of product. there mentioned. are women's they're your customer question me but the let brand our And regions, of and for definitely what differences strongly, out It interaction. going is So about out with attending very as course, is among can the new of clear go the part this just going and categories our the success of a we takes can yes, of that casual and lucky, is social for design very looking Marciano. easily. our of and that events most And effort dressy and Paul that a determination

picking, is can tops categories, mentioned, The and making that you win. winning the key big teams doing category in are plays Paul imagine whole fabrics how we and Woven big of us important So another the that a we’re really is the category us very role thing is are again for this really prints, product well. handbags, this big. textures you

just of I areas. assortment not wins casual as you year, the these mentioned. the the get the part to of we categories are all when are that Now of as in global winning some more But still

that. very don't women the that elevation investment in to, Asia feel a that increase on referred significance. increase phenomenon there, Denim is which unique have an warranted has in is we the an been category category more of The we costs example have quality very seen sustainability done price the increases type strong And making, the ongoing we both that based down. a of of in also and strategy that in clear a slowing for brand men. our is and we're pretty because see you is that we case of cost

quality two So no that represents we two-thirds those are cost quality the and other and purposes. sustainability, more of that, sustainability exception increase forces. improving in to also for upgrades denim related the because a doing to experiencing, inflationary the is that about And is third are between also are lot we we

are, increases cost our very are I So reasonable. think,

are We And that are inventory category again, a demand. here obviously expected promotional very similar may But the to the others. is related this on in excess Meaning, we be the this from system buying seeing way this treating activity in we're some category. everything. based that in

and I'm So address there If Dennis currency. the stop you want going to to

Dennis Secor

Sure. Thanks for Dana. the question,

are guided So right rates now. are the about way to they we've currency where

the model million talked that us our but we about the -- I'll euro, see controls we've -- through and that the through $XX that's So use run we that's average mitigating cost of the last fourth of headwinds what about The don't sort about additional about, gradually the quarter. $X.XX, the half time back second and to was got best the the a last just slowed because of year, it's example. $X.XX we quarter over average is by average that

now expect headwinds, we're assumed So to expect at as $X.XX up still part. against guidance, in the translation going a parity our here significant still fourth with quarter, going a euro and we've this we to in sit we're right certainly on the

do cushion program we that so of buys makes that Europe a some in all. U.S. but Now hedging in not have place dollars, the

headwind currencies the at for So a of these I will rest -- rates expect should that year. be this be

Dana Telsey

you. Thank

Carlos Alberini

Dana. you, Thank

Operator

show time speakers, I no queue. in further questions this at And

back So closing I for call will Carlos to turn the comments.

Carlos Alberini

just right. participation to want today. All thank you Thank for operator. I say your everyone you, Well,

proactive we We are are excited again. acting is managing agility, control company's you we really this. I forward Have business with our and I look for are about very we decisively your appreciate a and on the And we And a your believe participation soon. Bye-bye. of our very as pleased company very that are with interest we team momentum. on speaking our think, are great being focusing our We lot can and well, we what in future. to thank And day.

Operator

Thank and you conference. you. this concludes today's gentlemen, participating. Thank Ladies for

You may now disconnect.

Guess' (GES) 24 Aug 222023 Q2 Earnings call transcript