Earnings call transcript Q1 2024

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Operator

Good day everyone and welcome to the Guess' First Quarter Fiscal 2024 Earnings Conference Call.

I would like to turn the call Fabrice Benarouche, Senior Vice President of Finance, Investor Relations, and Chief Accounting Officer.

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.

company plans, making and strategic long-term the comments statements short call, outlook. future regarding initiatives, today's will forward-looking be including and During capital allocation,

in on materially actual adjusted and release measures. earnings non-GAAP descriptions Comments quarterly today's filed and current may will company's reports company's included of differ GAAP annual can the The expectations today's reconciliations results the be based these or with risk and press also factors in certain found from release. measures SEC. reference

Now, turn over Carlos. to I it will

Carlos Alberini

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

pleased start model first business power We with are year highlight our fiscal of the and with the very results the that our distribution. to strength diversified new of highly quarter global our

revenues, driven product and results operating segment, Americas in business. than offset share. This which stronger softness by expected Europe, our with earnings from controls helped than per Asia, strong and better our improved our retail were profit, Americas wholesale margin in more coupled expected performance delivered than performance to businesses from team and Our cost

against last performance continued reoccur currency increased the impacted year, was that did earnings Our not occupancy, COVID this trends. negative and by subsidies year

everyone manage the with our what team's With that our our their I very pleased very expected work and for are thank team hard contributions. continues can customer effectively performance focusing on said, want on control based business to and we business funding and demand. valuable to Paul I

increase a QX in currency a different offset in our last the growth US region, in year by due during our quarter, our segment shipments in in to outperform by Europe look revenues dollars. the at sales comp of globally, driven collection. store constant decrease the increase business X% wholesale a in continued of As spring-summer partially early double-digit of parts revenue was X% The business our we and posting to in

primarily are environment, business, a view performance remainder customer and Americas year. Americas revenue spending in with the traffic of the XX% managing decrease a driven reported conversion. business we by Based now our the cautious retail of the consumer for the We softer uncertain more segment on slower and

wholesale We due year business were to the the heavily over to our down year Americas shipments be timing for have revenues to first year. the in which planned of weighted prior quarter

was While expected. this XX% the quarter, better revenues declined for than

the reopened also a we growth Our ahead sales as consumer of XX% post-COVID, achieving increase quarter in in Asia performed expectations, stronger resulted a drove revenue and in which region mid-single-digit Greater the China Korea and increased business business South comp activity.

business our Lastly, of our business The in watches, performance handbags, with also footwear, the was and licensing fragrances. eyewear, performed driven by line expectations.

quarter levels, success by were cold as with including territory. products Our Marciano, dresses shorts, had product and such sweaters differed performance weather In we normal Americas and as business, this below and knit seasonal tops. temperatures the outerwear with challenged denim, were

posted all and being with woven men's kids by In saw sales including achieved jewelry. the leather best Europe, goods, across driven a pants. with shirts, outerwear results strong activewear, product accessories, Marciano, by growth in the and men's strong Women's, board the handbags, dresses, stellar categories bags, we best performance performance small and

kids our footwear, products. categories Asia, women's, included accessories, In performing and best

rates, confidence, industry. higher inventory the across As and to different we look at by interest are most degrees around debt environment increasing impacted high the consumer and markets costs our consumer operating world today, lower levels

to past, have we those operating continue Consistent business focus times are with control. our the uncertain how in our teams within things the that approached on during

our brand while growth business. that and managing the see elevation, work we we controlling multiple relentless In opportunities maintaining line with aggressively, tightly, costs on to this a approach, also for on are we capitalize inventories focus

to products a deliver continuing First, assortment across a teams to focused categories commitment regarding with all and our brand high more productive sustainability. elevation quality are our and strategy,

representation through consistent is deliver Our marketing a all extraordinary across here our global markets provide and customers. our value global products to to campaigns goal to brand and line powerful of

our to maximize activities. minimize strategy goal full elevation promotional is in price Embedded our and brand selling

We expect to its value. accomplish carefully on customers product every this based pricing perceived by buying and

Turning inventories to with we reducing XX% of to a about inventory year. year ending fiscal are our goal last management, committed inventory investment a below with

by made the during year, pandemic an inventory disruptions last experienced delays mitigate that early we investment the have period. supply Recall in to chain created

This our that of not and have four alone to in will turnover. contribute ownership we inventory to and six improve weeks about lower represents inventory to goal will that year this supply our levels inventory

are In order with to placing avoid demand expected product addition, in in buying. line customer we excess strictly orders

focus Next, less, more eliminating to infrastructure automation. continue working closely our do managing we and to including variable on our expenses increasing across and redundancies with operating

and pleased and see we management with of the remainder inbound costs, the improvement cost we for We others. to selling reduce store environment our inflationary further quarter the for are opportunities expenses performance those considering in first year freight, navigating including in are the

previous the the our capabilities, and and leveraging I the big that brands. and infrastructure Marciano strengths guest the opportunity mentioned long-term, we earnings our business During call, of grow see to

by four We growth see achieve an time key to opportunity this prioritizing over initiatives.

direct we to channels. network sales productivity own, that licensing, including of consumer, and wholesale First, the our increasing currently the

in markets ones, existing existing new opening and by expanding organically Second, stores, new growing gaining and new clients.

extensions and be infrastructure brand and And capitalize wholesale looking the guest that of further network our global Marciano our leverage that fourth, of and the exploring Third, we'll brands. on opportunities licensees for partners. strength

point network, capture efforts productivity this are increasing of them, Among casual we of increase number price year. to underway to more the Speaking market penetration of products items and we opening that about initiative our current share. sales our collections first a have in the increased

buys buy to seller our earlier with tighter each maximize customers We to wholesale best on product optimize among open greater are are also so order the we conviction concentrating our seasonal we pre-collection product. sales. time so floor of item offerings, assortment can strengthening and assortments, our for And each

previously to identifying are by run we are stores internalized currently Finally, that South licensed. businesses a already that We opportunities were Korea many third-party. retail in internalize

strong. been have here results Our

We are business in development, represent at dresses licensed now of and annually America. GX, and businesses with to $XX distribution internalize million design, These consisting that wholesale. our North of are current outerwear planning

think represent that businesses run these for can We developing we categories profitably internally businesses more distributing are already they and us. currently we're that these and as and big

coming renewing not result, a our GX, expires December. be As which this will with license we

our for directing time to elevation, flexibility our financial and shareholders. the value that effectively and return provided same we that we future are capacity ensuring convertible support recent management, At ample of and The our debt. with also and towards invent extended efforts we our cost growth have opportunities, brand refinancing maturities us are bonds business to additional

We have generate to a structure million we capital about $XXX free of and year. strong cash this expect flow

leverage to diversified our per cash power share confidence from quarterly we of in the to shares business XX% in XX% to recently Regarding Board our and stock, investment repurchased model This X.X $X.XX share. sustain $XXX ability dividend of increase million cumulative our approved a and of of since shares we in has of flows resulting our strong outstanding the today, its shares million. that our to shareholders, demonstrates we to over repurchase representing the a $X.XXX that million XXXX, have then over cumulative XX returning value per early our an future. announced And

the rest the we year, to business are out remain confident the Looking executing and we plans our of in again. that

we are fiscal As for year. a outlook result, positive reaffirming our the

quarter Dennis profit generation. and will dive in a We single-digits, the continue strong the cash and into of low to just flow the our half solid see second topline the performance moment. growth details second of in for the more year outlook

Chief the Officer transition. on Dennis, to over want Before I to turn comment call I Financial our

that our we new announced recently join Markus As CFO. will as you Neubrand know, Guess

are experience the career He into to Markus We Hugo to Boss. from XX-year successful background very strong our role at a excited his relevant and welcome brings team.

you As company his a contributions I our March remain us through transition to team. and appreciate smooth will to our next and Dennis all of support know, year with

very also expanded congratulate to responsibilities. execute We're moving like forward. team to promotion have continue opportunity strategy I we take would and his growth to place a on finance as on Fabrice to in this strong fortunate recent our

the would to brands As the and and I global close retail like consumer strength today, the our in market. business of reflect position of the on I

of first XX my During exciting journey evolved significant and part value the XXXX, an with where steadily business years grew and was for shareholders. I Guess profitably, between XXXX creating our very and

like businesses, we leverage the grew a puzzle business became As and the success to piece and helped rich of very each the where mutual contributed multiple into synergies. whole model products, geographies,

I couldn't operate how that when big we very is in our ambitious imagined envisions and reality. years an much four But global ongoing. the work continue to the Paul to execute teams business Guess change. plan puzzle I with this that worked world this and returned make would he vision a to hard to ago have first

Throughout the team today of way our has on and company, head we adapted and history our prioritize change and new the a team has new of of to live embraced working, world shopping, a our how lives.

depending across operates multichannel different XXX and in wholesale company on capitalizing and over an global our numerous and XX,XXX licensees, associates true selling categories, exceptional developing amazing and of Today, XX team partners. distribution, products landlords, countries, a on

capital. is on and highly diversified invested capable delivering is Our of model superior returns

growth to abundant make strong have see brand the puzzle Our momentum and bigger. for much we opportunities

exceptional an capable, leadership excellent and to results. greatly have team, delivering importantly, highly Most we committed

with We the incredibly this in once will partnership be of have done Personally, it great it rest leaders, Paul, again our part I and again. fortunate feel exceptional dedicated and our team. team to we do of working before

before confidence continuous deliver to the determined are in combination in be strong And about and highly of model, chapter together and me is strong diversified why to potential we future. journey more wait business us. report gives this progress our Together, our can't the the This shareholders. drive of ability that our our returns on excited strength that I you to leverage couldn't realize next our to lies growth, to

Dennis. pass let Dennis? the to that, me With call

Dennis Secor

from Total million and good constant dollar X% a Thank revenues company decline. you, the X% Carlos first were $XXX quarter afternoon in a quarter, and everyone. decline last

offset that had and In recall headwinds. North than wholesale continuing the our may comps sales. and due QX to currency You comps net international quarter, US decline in in two changes expected to along we America strong new store factors patterns negative sales those Europe more the both revenues store with and shipping

where X% our constant negatively to revenue relatively impacted dollar retail quarter mainly wholesale US quarter, a stronger The and performance driven offset comps, last starting a first compared Turning revenues. to growth also US dollars in increase partially posted strong The increase for X% shipments. revenue store with the US regional by Europe, dollar currency we by lower was year's

strong continued growth, Our region posted modest traffic constant currency offsetting stores XX% and than a increase by AUR in in decline. a the conversion driven store comp the quarter, more

in been quarters, increase As past that had on hyperinflation the would excluding the few XX%. Turkey's comp have outsized comps and Turkey, impact an

last $XX In million Absent as of the single-digits. would wholesale benefited fourth wholesale, the last we shift, shared by this on in quarter year's roughly our call, shipping have quarter first the changes calendar European at expense European grown revenues high the year's dollars. that in

completed for We've to our collection expectations. year's compared X% our aligned fall/winter initial with campaign, campaign the down also fall/winter XXXX where prior finished orders

did and significantly that European first expense impact or revenue million in roughly $X was COVID-related $X reoccur subsidies of operating that most shift wholesale year's the million decreased were by last to XX% the quarter impacted recorded earnings this operating earnings year. million. $XX in change not The by

operating items, that flat two estimate those QX. to year's have delivered the earnings that Excluding region would last were we

the margin product of significant selling given resulted COVID improvement declined those currency were pressures of elimination a Also operating and which from retail in higher substantial half expenses margins, structure points, our in cost European subsidies. XXX affecting which offset basis nearly operating on headwinds margins the IMU quarter.

AUR. decreased retail, experiencing in traffic conversion, constant that traffic In and in US by offset and comps a in XX% currency, by and stores, XX% XX% dollars constant on our In pressure are conversion. we US revenues retail partially higher lower driven our declined Americas currency. American

gains in have lapped restrictions, COVID fully stores they all from strong last of emerged enjoyed which Canada, post-COVID tailwind. year Our traffic as that now

Our performed business North similarly fleet. American the to store e-com

$XX expenses deleveraging by a store a the margin retail a occupancy Americas lower to earlier. year driven of expenses, full higher XX.X operating points, price Operating $X posted compared mainly profit mix a million loss sales given of the operating decline, and declined selling. million

by XX% declined we timing last QX in In Americas XX% revenues currency. abnormally wholesale, high and this yielded US The year deliveries dollars anniversaried of level quarter. in an revenues, constant first of which

fiscal expansion limit and declined continue in year the move on as flat receipts, cost margin we the and structure. their tightly Operating operating partners margin inventory topline profit by gross own this US XX% offset their to to was our through wholesale manage While remained we levels business year. our last do headwind as abate deleverage with expect

XX% XX% store operation In revenue of in comp sales stores well Korea driven dollars in currency. and in impact constant as by the Asia, The primarily China. was the both grew Korea our US direct as some in and positive of growth of

for from million, was in as year's Licensing sales currency. Korean constant of store stores segment, $X well XX.X Operating as X.X% an an our region to $X last improved million. profit XX%. Comp million structure. the X% points operating $XX declined decline profit in operating $X our operation the new those million operating over revenues loss from And margin direct increased increased leverage $X royalty a million profit of Operating of finally, QX. to given expense Segment

In which higher XX a currency product on the company of margin negative markdown total margins. level offset contraction points, quarter, our sales. were impact basis the XX.X%, was gross by Improved a approximates IMUs of

SG&A million. significant expenses reoccur we $XXX expense A as a $X to Adjusted I mentioned quarter earlier. not COVID-related increase government in increased subsidies to Roughly this reduction the the XX% of that year was quarter. first the million last received did for driver

on We're our expenses retail pressures Europe. also and in cost in experiencing investments including inflationary most making higher are notably selling in stores infrastructure our our structure

ago. higher Partially factors those impact. quarter a performance-based a In million was $X offsetting current favorable addition, versus currency accruals recorded year the in we've compensation

XXX For the increased rate to quarter, adjusted our points XX.X%. basis SG&A

As $XX declined year's operating profit adjusted quarter, planned, million our first first quarter from last $X down to million.

adjusted represented operating million X.X%, last negative headwind margin Currency points and on quarter basis point lower first to a operating $X basis profits adjusted impact XXX margin. than was operating QX. the had adjusted XXX Our year's a

includes non-operating quarter, net revaluation and SERP and our charge assets market. last the first In of plan mark net plan the recorded This we our $XX comp and US of dollars million of $X in deferred assets million certain quarter. to subsidiaries expense net versus a on charges liabilities to foreign charges

quarter. yielding in In adjusted benefit, zero. diluted an a quarter, QX last recorded year's was the roughly minimal tax to share per we Adjusted tax first loss $X.XX compared $X.XX adjusted of per share rate earnings first of

significant in $XXX on Moving include over million year sheet. quarter We draws ago. $XXX various ended $XXX offset a million, credit million net We million cash a $XXX now flow, that with liquidity. nearly facilities the million of to $XXX of $XX available drivers the facilities, $XXX cash borrowing total on of the balance global million ended free to with cash the so most quarter of million $XX partially our million capacity by our The compared quarters build last of four of dividends. in

US in million, constant were dollars in year. X% and last up versus currency $XXX Inventories X%

North down against QX. inventory our international with growth markets levels American inventory last our our Regionally, from comes being

strategy Our recovering With of primarily reduce few have supply last order residual year's earlier growth reflects over supply to product begun last to we chain constraints. chains investment. this overall the mitigate inventory earlier inventory to effect the quarters,

well-positioned return forward we plan feel to we're levels our to this we're our and plan business to orders a more inventory receipt our our Carlos further with As traditional forward. mentioned. composition pleased as and reduce moving Overall, year, is inventory support

decrease $XXX a a million. million, receivables about currency basis, Our receivables year's constant were On X% X%. $XXX versus decreased last

the to mainly remodels, in stores. For and quarter, $XX expenditures technology, by $XX driven quarter, capital first million new in the were compared first prior [ph] million investments

$XX resulted retail for of lower cash a million where change consumption is The first cash quarter. expenditures, by partially for cycle capital to earnings. first order flow $XX offset consumption lower higher cash million prior a and a the quarter Free free improved an from the flow investment, inventory in was versus the cash the shorter, mix

$XXX new the In maturities extending refinanced another XXXX. in issued referenced, As April years. in maturing million of convertible we its majority notes $XXX this four transaction, the company convertible notes, outstanding for Carlos those million

our bear retire The X.XX% of interest of carry of our per $XX.XX an and price maturing majority million to which $XXX notes the We proceeds April common convertible of conversion at in used initial notes, million $XXX the XXXX. those leaves share. notes of existing stock new

of a per share future These spread addition, dividends initial also call into subject prices future, changes the of are including initial up agreement, entered beyond to price of In effect in conversion effect our we the stock. dilutive those any will $XX.XX which $X.XX notes of an share year. per customary adjustments have to mitigating common to

increase those prices. we dividend impact further conversion today the announced So, will initial

Concurrent our million $XX a price company. also we in repurchased common transaction, roughly of to cash yielded $X share. stock per These note of convertible shares transactions with X.X the the million various at

are maturities, We transaction this with in the now next pleased structure established transaction, very of European and years. the our year, capital we XXXX with put a with last place With both facilities well very complete, carries sources and that the several US for are which coupled modest capital coupon.

talk now, fiscal quarter. So, about let's second outlook and our for the XXXX

performing our we leverage the some see business us Our that model to of well allows are business strengthen the diversified risk. offset areas where to of parts the the business

year. further see performance we over the of opportunities Europe, In strong for balance this

and well, a of still business, small relatively while Korea. in business Asia, particularly also is given expected part our China's reopening to our perform

is that pressure current impacted environment that very some prudent more the last Conversely, persist We business to well US expecting year, their appear In business, had spending. continue their even headwinds in manage inventories challenging. wholesale persists. our been to be the US traffic American as carefully. customers retail to there our wholesale and remains markdown risk but to Mexico now of perform recover accounts continues American if to

we improvements are feel chain however, we that recent further make pressures more in abate. can our and freight supply there other Mitigating that as cost cost

any the not provided outlook to that we year. of changes therefore, the material All-in beginning the we do see at

We margins. shared revenues expect to previously to a higher of with deliver similar slightly what we lower operating profit on slightly level

year, we and now expect X% revenues full the grow range dollar For between to X%. US a in

For between the X.X%. we expect X.X% operating year, and margin range adjusted in the full

quarter. We of shares reflect the associated higher a to and both with lower given have in outlook refinancing notes adjusted count, the share interest our convertible the new expense our repurchased

in full the EPS we per For and adjusted expect share. year, $X.XX $X.XX range the between

second revenues last exchange range US This flat tailwind rates. a of quarter. to wholesale the dollar in though X.X% based prevailing QX on quarter, another expect in For delivery into decline includes the modest European shipments we currency and a versus second shift smaller

We X.X% and the to expect margin and share. $X.XX $X.XX adjusted EPS X% of in operating between adjusted range

QX highlight a QX. our to want prevailing and become exchange impacting and most should significant significantly that translation reverse At rates I starting growth are currency in year. rates, tailwinds this few headwinds finally items in

The most headwind turn second change in year America, but with a in Europe, of significantly first North wholesale half. modest will delivery in this represent in the timing in strong the a half

finally, revenues. the in week growth, fourth tailwind should to half those quarter. collectively five headwind half a revenue to extra a reversing combined, All second And four an first year to roughly this includes point point roughly drive

roughly a week the tailwind the should benefit For full currencies represent the timing one changes. with XXrd wholesale offsetting year, point

most selling extra opportunity anniversaried fourth profit we growth quarter and significant for should have that pressures. and given respect our to week already the margin by expect represent cost operating then, that we With expansion operating significant the to continue margin operating inflationary will trends,

inventory flow this more are million. and plan on capital with with generate of we cash lower we chains functioning with outlook plans, allocation, Coupled are CapEx improve year's now on our $XXX Lastly, normally. well-positioned roughly turns to free to supply track our

I and for company once thank be close, the a And I'd Carlos before like of Paul opportunity to part to more. incredible this

diverse, strong different You teams and many flexible, this and model so deliver have so able resilient your built environments. amazing results to that's business in and

the the strong future. the deliver four results of last power model flex in I business to over a the consistent to performance this years is incredibly testament think challenging diverse and

understand the to Board the the capital feel confidence with shareholders that the strong next with and now for increase. in place dividend you years, And several a I reward

forward you success look transition this Fabrice I I to in the wish you, great and supporting and during the future. company Marcos, and

we your And can with call now for questions. the up open that,

Operator

Thank Instructions] you. [Operator

And our of Jefferies. line from Tarlowe first proceed. the question Corey comes with Please

Corey Tarlowe

hear me? you Can Hi.

Operator

Yes.

Carlos Alberini

can How Yes, Corey. hear we you? are you,

Corey Tarlowe

for Thanks. question. doing taking Thanks I'm my well.

about the maybe you Carlos, just consumer if could the your level consumer, talk health the some high firstly you of in globally. comments about So, made remarks prepared

if high regards consumer just well, more digitally I little provide what from How and to consumer? you a and but helpful seeing brand, the the is maybe view to bit you're you're responding maybe the from was get detail wondering as could the to the really a in stores seeing of regionally what consumer? health with about level

Carlos Alberini

Corey. Well, in think we different the customer traffic different of I performance Yes. Sure, seeing what that different are and so is levels regions.

So, activities -- and inside traffic of driving is and obviously, stores the a what's lot the even customer online.

our the was business what the So, closing seeing with to expectation of with we customer also have in was with healthy we're and that structure. well year, starting lot seen and an pricing responding the came be reasonably to consistent a with both customer which into going that strength America, we traffic was very year last North

pricing accordingly. significant to all and adjustments have being made We that embraced was

last into was challenging we more coming best strength. a February initially a it comparison came into we we February, of year's to year. month but pretty with last was our thought situation that then And February and had the And function probably traffic, customer

business, the we little the bit into recovered in never we the month that levels March to had then And and a anticipated. of got April, while better it

consumer in approach the cautious a that and cautious we're we are way So, America being more are the to reason, the we outlook. very taking in for seeing

feel is and that right we Just was the right. product

of outperform. we this played role like weather think the don't in saw to particular colder a product here. we anything, normal more blame but and temperatures below case, categories that weather for We types the Unfortunately, the were

that weather role. definitely the played confirming of, a kind So,

plan stay thinking both being what a about the key We improve to and really place commitment increase that represents to very units with to it's have our per highly in can without being want do at we and conversion possible as strategy looking innovation and promotional. transaction future big not we rates promotional. And

see that So, in price that beginning customer is of and shopping. traction price similar -- just online saw the right as except are but it We our can a they we is well. this way now, as more more but business the recently, difficult sensitive is think we trend now, for full online having very the quarter was

So, we think price that also is digitally. sensitive the same consumer

you then great situation into And and stores. traffic very We is to move different. Europe see the our

are of comps year. in lot back the continue the super see quarter the grow of and we businesses We the recorded strong -- the as we to a were grow that first opportunity we've into

Of did that that our business, is to true and sentiment, thing experienced businesses but what our read grow. grow consumer risk that -- for and course, is rate we it frankly, online same of consumer the but we which the the not the our did in saw haven't at we stores,

course, the market was we long in very huge. we are in had seeing is there, very then And for and and has more in of what good South exceeded did than size China. a terms life of The expectations traction we was surprise markets. better ago Korea our China are a surprise significant we been and too I magnitude anticipated, in lot excited multiple not about the Asia but one because that also us, a opportunity

that that with we think do brand well-perceived we if to the better have opportunities is we think products. and And

The ways So, we to looking very on for And team think non-stop get see can we can working there is a momentum market. and those. that some hard are to the really that on we and opportunities working that. they we the team in are that capitalize

our business to slightly were overall, And also phenomenal a it's about. our be down. And line opportunities in of it Dennis pure overall, a feeding with pleased million was much expectations strong generate our spoke pretty flow. flow the with then strong. cash But performance, it we fortunate free Licensing We thing and have, our to very Licensing continues cash is $XXX business, this that that was

Corey Tarlowe

you're And you at could second then from in a costs? And it's tailwind. then like what freight cost sounds been seems pretty an considerable great. be headwind, a better. the you flipping it about on What gotten least commodity quarter, That's like bit seeing seeing also it inflation to they've little standpoint, are like had actually a also, FX very which sounds the talk

So, if bit maybe those dynamics you little talk be just would little a about and more that could color, great? bit a

Carlos Alberini

knows. impacted I'll rates freight been freight that factors. other we far if capacity and the in continue as see touch then significantly was can on on you major first Dennis, quarter as year just just touch that we has But or and coming for last been a down everybody the benefit will us so because expect has impacted --

very are we things saw and balanced a finding pre-COVID. situation to more similar relative now And what

are are So, we we that. benefiting that and with from pleased Dennis?

Dennis Secor

in you Yes, that year to unusual see a different a ways. is us currencies on this in little remember going that. if currencies, We're of couple affect

the So, now what's is impact. turning translation

revenue should affects also start expenses. that So, tailwinds our in seeing our we

we're in have the will place. margin by year, drag that this we affected because be contracts a still largely The currency

point overall, So, expecting XX on there's margins. for on the we're about a impact the currency impact basis overall our year

sort that in points. structure this about If think quarter-to-quarter, the though year we we basis XXX margin were this see you quarter down are expecting to of the -- trend

Currency still is the benefits of we headwind, had to that unique the a move should year. subsidy quarters. is like that still last that quarter but to through the the is narrow of loss start Some as we

our the of about and is in the in margin expansion headwind growth. margin narrows first. fourth the third overall and even quarter second for half It opportunity The both quarter profit more is

of we that seeing is year, we pressures get our some lapping Some the been already the of base. of the the also cost driven time we've by to the will that into by end that fact be built cost

it and fourth by goal quarter. narrow see is it turn will to So, the the

Carlos Alberini

prices your a to back coming other commodity of about forth. question, And Corey, and part so

the X% of and were end US constant up the inventories quarter Our X% currency. about at dollars in up in

And the due which increase, product But increase that some US. were down primarily we in was have. of average that was unit of increases the that outside in to cost the US, of part we

course, nice IMU. beneficial like we moves been of that. a currency that is and pressures that inflationary as have in impact the our and else to of of weighing But are sourcing see also our the are reflection in expecting a seeing on result, And everybody some we we experiencing is recovery that

increase Also, reflection of that sustainability. I our think in are focus very putting of and tight we it's a important is cost to the improved on note the a that quality into lot product

take those then increasing you quality increase item-for-item, think two and factors XX% we're two cost, the from coming in about factors, talking those sustainability. is the investments about and of If big you

overall, model we in we we lot the and a becoming seeing as balanced global markets more are are like more a where much reasonable. are So, now things

Corey Tarlowe

and That's of very luck. so helpful. much Thank best you

Corey Tarlowe

you, Thank Corey.

Operator

One moment proceed. Advisory please and with for Dana Telsey Please from our next line Telsey the question, of comes Group. it

Dana Telsey

accounts whether difference need And promotional? and order about and are afternoon, and you Carlos, everyone. about placement, wholesale mentioned seeing of obviously what's it's versus do the retail in you think chasing? happening the How the two from sell-through, the terms side. wholesale between to Americas traffic be channels, good the bookings what in the Hi, on order you

your to lastly, other this was and what then partners licensed of that for licensing the elimination also? mean the business you. Thank important And does GX, with how

Carlos Alberini

Europe. you also you are with How versus but wholesale, Well, don't starting just America, you? businesses your true questions. very retail for the in in Dana. Thank North you, different is this especially, and Thank are

business is accordingly. years But we and we ways and our And has contracted a business about the always has still wholesale the over grow. terms very of base and think customer profitable to continue that care contracted greatly to it's in about

We have good their and with partners to to try in optimize that business. are we working business them

And is inventory, is some are orders. very, once been is to in Unfortunately, the cases, these through that with we the many and careful painful. a buying of see inventory that have at own very difficult very just accounts they cancellation navigate way wholesale cancelling very to something

way order. the we in So, we are being very careful

even to types to type live inventory think some don't are that making we those also ordering products. be and battles orders of tightly is investments and demand We going have still we pick our of on trying the in if just

that what With approach the buying have We times our demand been during where accordingly. always using then want we to even don't we continue respect are looking obsessively customer for buy to like excess. look and use to same retail COVID would expected business, we the

to can and position to trying factories something respond pursue such And as our close are chase. shoring way access we effectively. and or that who that can are a vendors more in we near We more by, having fabric we that's businesses

opportunities So, of business we just of take more overall, I to think it the bit a want little significant also and offers challenging, but is those. advantage

significance the have that about size the GX, Frankly, outerwear this few categories. super business. With That something we two years. talking I didn't and was respect expertise the addresses when I'm developed came in are tremendous these back surprised where the have to was years, with expertise. and my to I earlier we of that expertise outerwear was last over Guess,

value. of over units we $XXX wholesale sales do, over at globally believe million But now make million a year, if generates can outerwear of that X you that we and

So, it's easy, completely would feel there's these very that us on big we this things, are but for reasonably a a practically absorbing challenge additional very business and be but we not capable. business always

wholesale over And over at more a generates then X dresses million We in on is year, dresses, extreme that a million even example. sales. make $XXX

is the that definitely absorbing categories going dresses be one. easy So, to

to a course, should impact that, transition. intentions on that we normally, business that can you I we note do knew respect about the mentioned have you impact was the about million numbers. of that the and so about $XX if X% exclude just outlook our at wholesale this of With already the think licensing, provided rate we the

Dana Telsey

Thank in talk are denim about just at you. when seeing is categories, all? improving you And What denim? Carlos, you

Carlos Alberini

of not the improving really businesses, effort denim, lot a of better it's Actually, our assortment assortment all like in a capture across think I lot powerful. And the huge put trends. that looks but new trying and to a trend we

success, And stores full seeing we are especially America. in in North our pockets freestanding of

seeing online well. denim. are We're good really as seeing with We it success

our in of impacting And is also some business Europe. it

like like styles. a about not rompers, as some it's just few pants, other seeing products but or and denim we're -- well in denim So, with men's success also jeans jackets, great

we world is with whole response excited category are younger and So, casual this reach we it's the -- in -- customers. we that this the this can think our expand that just think the beginning about because we us and help also

denim. we're super about So, excited

Dana Telsey

you. Thank

Carlos Alberini

Dana. you, Thank

Operator

it moment Please All of the please. our with proceed. right line Beder from comes SCC Thank and question, for Eric Research. next you. One

Eric Beder

afternoon. Good

Carlos Alberini

back. Welcome Eric. Hi,

Eric Beder

Hi.

Asia, shifts be So, of you conservative now aggressive of that? Europe, such advantage that be that you have change the more flexible to to global aggressive has US, fashion you this when in and different How more have to take you offering. how or have allowed basically or more enabled here terms

Carlos Alberini

Yes. No, a question. it's great

we a the been not you if of huge these service -- this well with company, results had our as only to happy performing of global as for consistently source we needs market to we development product. from very because one across to we sure have know, years very been inspiration Just be of your struggle and were And with very, the territories. idea we earlier were it going line different has effectively able the with launching if design because

we today. course, could we markets one develop that that's brand have across objectives and the of line of represent what that a And, big had was to of product the consistently

when tremendous development line to We then -- also line the work goes there there to to are stores the at and of is line at is that that from launched. done time, going decide in wholesale. the the be what's a in the And or of collections that is the assortments of and during work are going being offered be -- a represented lot that amount

line in all And the the is merchants have and there designers, country want forefront there countries in have center opportunity the is merchants, the at bought. to be buy line participation that on the at and opportunity that are is a their the -- have significant different what from from the opinions exercise, the And this. specific buyers, that this is of Paul input to and of each lot we the they how to to voice of going they markets to into weigh those

we merchants why is country that at market. going is markets So, overall, are because for their I very, best. their to involvement very by -- the think assortment with experts the are the being a from this successful collection and there of with the up that the is These in lot reason people they that come assortment know can know work looking they that and markets

So, better from anything even performance if we are line. the seeing

market is And in some to represent address cases, required. our each additional and to the of needs voicing these groups there also that is development

campaigns that reason key So, marketing all overall, featuring -- the I campaigns stories the think for per also are that the Paul.

Paul after is those this going are how way. with be what says, at and completely and the product is stores okay, in we in developed I in even wholesale. going a believe launched And campaigns to are big coordinated and presented

what and what in and they pictures, the on see the the just see then images, between customer website. they So, can a complete in stores correlation the see

Eric Beder

look of you've as you year even that? same efficiencies be on relationships a Thank are here That's in I pricing the cut potential this driver time cost, raw we down should able manufacturers some seeing that for you. materials. to at terms And that look and you freight -- When you better of know with. that being number Is a leverage more that that something now lower point. forward, also lower have great to able upon from going if you get for at

Carlos Alberini

area. done have we Eric, Yes, lot in a this

have these and of all Lugano this product team in And -- based categories, group, they're doing of is Switzerland team as line we also a a global all a global now job. activities. for Just also product global we out have great that drives

And vendors XXX probably first the vendors have to to this very of XXX coming sources few more about recently. contract We distribution we're a product. vendor the distribution the we to slightly launched where here of really to a just lot place were going vendor project this the of really may and one came close went over to base. were We I from -- initiative because exercises big have was of when

number stretch we are base, bit huge success product vendor how I over all So think may mean, on that a to we units we our place. business complexity a the of XXX by a do vendors to think of count little considering we handle, story. to internally doing be be categories able really in the able slightly the many great to and that with do is that that, I we more but

right absolutely as much have enjoying And as are that a result, production, better increased and global we consolidated vendors you we of volumes. been costing result a the as global

Eric Beder

but from you you physical taking as one store last some opportunity there's talked you terms believe taking -- expansion grow where the me, And GX to but territories, terms Okay. of store do in Europe, want not where do base base, you to of expand in that licenses. an that's look about at Thank maybe opportunities you. back, Where it?

Carlos Alberini

you, Eric. thank Yes,

using capital capital. the targeting use very return just invested way on are careful the being capital based of Just are we we and potential

follow and come we country can those and strong in well-developed that new very pretty proposed managers a markets, each a are internally do there in with is in We very way. talent markets but openings, plans, the countries several this we have process of store disciplined their we where

then there make through And go we those decisions. process is whole that to

region. So, across of known the well great countries is just and those about is there so all think markets. and highly fragmented markets pockets the This that several very there are opportunity. many is When brand you Europe, a are thing different

careful with are expand. But So, to there is opportunity very we being expansion. to further continue

Eric Beder

of rest Great. Good luck for year. the the

Carlos Alberini

Yes, thank much, you so Eric.

Operator

question. moment our for One you. next Thank

Okay. I'm Please Jefferies. showing with button. proceed. Please check Corey Tarlowe mute your

Corey Tarlowe

Yes. me. Thank No further you. for questions

Operator

will remarks. sir. you, pass I for it to management final And right. that, with All Thank back

Carlos Alberini

believe that you and thank thank with future. We're we us results this model distribution for also joining few today our brands our they our that past quarter, Well, over have. everyone they the of but the excited and I about global start and and years pleased the year our of power your the operator. we highlight diversified highlight participation. you, are of actually, strength the last Thank you the business for highly

and very plan our we are on capitalize we well-positioned a that. believe and I for good prepared opportunities think I So, that to that the have growth year we do are many to

we you weekend and Memorial for today. to a you wish So, participation thank speaking again look you forward want your and great Day to with soon

Operator

gentlemen, that, and you. for with our and now disconnect. you Ladies Thank Thank may participating you program. we conclude

Guess' (GES) 24 May 232024 Q1 Earnings call transcript