Earnings call transcript Q2 2024

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Operator

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

I would like to turn the call over to 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 Markus Neubrand, Chief Financial Officer.

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

to Now Carlos. turn I over it will

Carlos Alberini

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

to pleased exceeding and team in extremely and We almost second sales the margin delivering per our beat XX% are results with earnings for guidance an last period report our year's quarter significant We and growth the achieved ahead results. operating operating our share. of expectations earnings a both

segments at expected results and what we our revenue strong of management. beyond performed gross had performance, or effective margin solid with All cost

and well the the we global saw strong momentum model. our to leverage our with continue business managed brands power diversified business we During the highly of quarter, as

to their world across work. strong pleased consumer changing our greatly and controllable well adapt Paul teams control I the contributions. for hard value continue the Our across performance. want our I teams are to geographies. with commitment and very and environment to your thank We the

support increase to in million, to our X% for than anticipated ahead a of earlier quarter company's that adjusted In wholesale good was revenues grew their $XX we sales partially businesses. second accounts welcome operations expected. the This achieved reached XX% by Our earnings last revenues by higher shipments momentum X% product from driven and Europe, than year. in

our with performed in growth direct-to-consumer well very stores. also double-digit Our comp business

our a increase, Our XX% expectations. operating of earnings Europe segment ahead well reported

the We are momentum in this outlook our region. with have half for and very the robust of second year a happy

we and line our were with effective cost revenue margins our reported however, Retail solid X% stronger management, team's operating that than drive decrease Americas results Our With had expectations. business were gross anticipated. able an to both in we

better-than-expected operating improved decrease a good reported business our expense XX% Wholesale expectations also with Americas beat and revenue Our gross margins management. and earnings

grew our business our we had quarter, XX% earnings strong business both was operating a by improved with And ahead increasing operations This expectations. fragrances, footwear in handbags, watches. well period, Asia, and revenues XX% driven line licensing revenues by in terrific In from by of earnings XX%, both performance of and plan. and by the

were best-performing all travel were Europe, footwear in differed and in Marciano, region Turning and men's to we accessories. accessories strong which and belts, including denim, again kids Accessories with women's, what with small and our product recorded posted In consistent woven leather outerwear, quarter. down first sales performance by women's, healthy Americas growth. Retail, jewelry, the strong. dresses products, performance, In saw shorts. sweaters, sales knit the were particularly The tops, shirts, by eyewear. included best and Europe, watches handbags, across goods, also men's products

basis a traffic, to first the While results. reduced we improved experienced customer quarter sequential on we conversion compared

knit products women category. overall outperformed men. denim suits, and certain like for categories presses, activewear, top-performing Our overall woven watches the tops handbags, sweaters, accessories, shirts and and products included gem travel In for

and sales Asia, a watches. and trends than from had we better overall very recorded and quarter leather footwear products were goods men's challenging very against ago in strong driven performance In by women's Marciano we handbags, with a had up and kids success as strong year small and the accessories, a business.

in products. strength We and of footwear also saw sales kids

with brand Despite some for wages, confidence, momentum, Right inflation interest our higher how is that business are now, are on markets expect our in weighing products labor confident and our consumer very and we and we a impacting tighter pleased the there lot customers. are this time. Despite consumer. our with and resonating rising are challenges, those continue rates global and will we

business remains strategies shared to the approach Our consistent that in with our we the with past. you

to can and on in our further to initiatives our have teams we areas and optimize planning control, focus on to place that those we Our continue execution improve relentlessly results.

biggest four business We key and our areas brand see value, of to the efficiencies control growth. innovation, and opportunities inventory management, in create cost

initiative, influence facet led results our have Let our ambitious one. me been our global of Paul our the business. has team each I and have address to Starting as past, virtually with every brand in discussed reinvent The extraordinary. elevation brand

global of and brand our enabled has with Now vendors adding in consistently speed XX our consolidate significant distribution us development all vendor a driven categories. market. we represent all across product sourcing product efficiencies massively initiative despite products, to base proximity global across our our global of and to enhance to and design, of line This

styling Paul sustainability. and and the focus importantly, product teams strong our quality, products. to campaigns product increase featuring to teams those collaboration the a Most Paul, effort on in partners, and led has our our in licensee driving and improve product launches internal with marketing alignment has and between major taste also coordination led

than campaign million the She's face tremendous the XXX she exposure A Guess? wife good million Georgina Marciano has of Cristiano example well. Rodriguez is of followers, and as Instagram Star Georgina XXXX. gets our influencer followers. who with introducing a through him so most Ronaldo, and for model XX recent as Spanish-Argentine also more Soccer is fall

strong. All been of in on world magazines, wholesale and in are around products the by featured initial modeled in media our and for the the products social website catalogs sell-throughs available stores and have distribution very Georgina these

strategy value. related our customers' our the based to on all Also focus elevation perceived brand products is price to our

products buying not more, expected strictly on demand, not less. also based are customer We

full price, promotions is minimize more creating avoid goal at to inventory. Our sell excess and

opened store Over remodeled now have three our as many experience. the of we Lastly, refreshed we brand in has new hundreds improve of and stores representation the last customer well. to years, XX% fleet and been stores

free executing we our our investment been have management, cash inventory and reduce well to commitment to flow. on Moving increase inventory

new implemented functions multiple applications and We for planning for systems and several allocation data automate use to have better decision-making. inventory

buys execute results maximize have better are assortment solutions enhance us These strong. our and and to helping also very been And planning sales improve margins. to

taken already only cycle from more the one impacting negatively, month with without we have the second sales quarter out of than closed last product We inventory and X% about inventory year.

on we and functions compared first, are controls with reduction In to key Today, second, connection at we we ways inventory year operations very last in with America completing redundancies, do a with world more have are our across global level where close to are integrated goal organizational in year. areas: eliminate at the the we of confident systems a cost less. and XX% focusing several our we three and the efficiencies, looking streamline Europe; improve recently to financial most integration between accountability to can North

be businesses stores items our As the to third, including countries and see an market serviced These we for which years. retail Kong, line in serviced operation; teams many payroll, are to now and are our opportunities example, the we by into in China in hub large the currently Asian and in reduce our will which Hong store in be continue of integrated operations. expenses, process inbound closing will our Singapore, freight variable

results testament success. are our progress are today's and to pleased We our a with

greater in and organically exploring new network; first, considering in including licensees second, productivity leverage sales Lastly, categories; as product our third, opportunities our and see fourth, significant further markets; wholesale of growing mentioned I extensions, in infrastructure partners. global we opportunities and existing calls, and previous existing for new driving that brand growth: our network

areas our of of access long-term Investor builds you team leadership forward scheduled Guess? sharing report to year-end. plan, you out to I sustainability.guess.com. at our release growth also want ESG to fifth an which with more As of we the our all Day out these be can at look call before on

to many metrics assurance. of This comprehensive reasonable materiality achieved our obtain the key markets. report's which highlights gender examined fair and we KPMG assessment our including parity, one just our in to pay disclosures fashion and first-ever industry and we have first our treatment the has have outcomes and the become double in major the initiatives, report dedication of

to And our outlook. now

Our far. shown tremendous business has resilience so

execute and for first give confidence results of very teams our sell-throughs early are ability about in Our I our half fall and products to well. our encouraging. seasons and strongly new plans the holiday the us our feel

are X.X% and For to raising of margin operating share. to our we our adjusted for those reasons, a range EPS X% range expectations of outlook a $X.XX the to per year to $X.XX

commercial moment. we now to that as Markus our Accordingly, Markus, company. where career roles. our he role make expect I'm of great brings and relevant background strong Markus from Officer. significant him Hugo Chief EPS speaking will operational and despite And more to growth confident financial, headwinds. to strong even responsibilities excited this our he his with Financial that welcome share a multiple in contributions to had in company Boss, new will a to deliver I'm about XX-year year-over-year experience

pass to believe hasn't I together have to reputations be others others over create is Guess? same, sure great makes models is I'm places to brands it all it why by and factors could share long-term and list excited want those with sustainable separate a at to platform lists. Markus, particularly that a what unique, our three strong companies with to the to with our would still here makes future. this I I so What optimistic all drive you come for but stakeholders, I work. believe amazing so you been us as where do accident. I I'm of powerful special, about and I with Before Guess? business all place value or of could

extraordinary focused staked that position came years and execution. with unique XX The of for out we have ourselves vision

to First, and categories Paul the brand developed lifestyle only early founders brand. quickly lifestyle is not decades. courage over multiple campaigns the that and there the the created image ability, truly last well a Guess? and was today to on iconic the four brand. The is but most That beyond Denim. effectively pursue aspirational marketing had strong our Thanks

been offer And always across excellence today, than and amazing for products XX we more Product Guess?. categories men has women, kids. at king

business a powerful delivers model. capabilities high leverages Guess? without $XXX and so million capital, This so our is but the strong does royalties with model. in also to deploying it Second execution. returns, business licensing ensure aligns year mission and best it a diverse delivers significant

category internally. is mainly managed products, than Our all this know core are better We anyone. apparel,

product expertise in handbags are experts special and regions, products this. Similarly, design, have East understand model Middle as and the that those certain good best license watches, of Mexico distribution franchise out both leverage to or we partners and markets truly to manufacturing brand. for the a always been footwear licensed require in the that have and such However, examples

and countries world multichannel its reflects XXX true that a model capabilities, expansion network international with and The of global Our a an awareness a a almost are highly also brand resulting also presence consequence from pursued vision, today's and synergies providing significant omni-channel model. strategy. diversified benefits from balanced business direct Guess? inception, business strategy and global in from

have decisions family. and and results From supported work are work our us to a And a focus culture Guess? culture empowerment and and world. important makes a where third, all teams entrepreneurial as its businesses. all been deliver responsible inception, where over culture we here retain and and drives family attract that in top of and This talent has accountability professional our their to allow the highly great a build place Guess? adaptable, inside long-term to life a the

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grow the business progress I deliver years shareholders and positioned We in for come. year look our to forward reporting well creation this on value are to to our strong and for our future.

me pass Markus. the Markus. Welcome, let to that, call with And

Markus Neubrand

Carlos, afternoon, and you, Thank good everyone.

I'm for take help the of I Company's you am Guess? of I to The to brands growth. company. and to platform we a incredible through I'd Carlos long grow me to confidence to forward shareholders. term. support to globally, reknown outstanding to you and the business for and deliver looking value the Before strong thank this Marciano how continuing part family profitable the opportunity the with I our want Paul are you be sustainable and and have goal in engaging be a the tell their numbers, team to part Guess? excited and like a and

the With let's quarter. that, at operating look earnings per take profit We better-than-expected delivered a share. and revenues,

expanded line of enabled our results This manage margin, to with gross a performance of X.X%, deliver an or in expectations. outstanding and quarter's model, adjusted strength carefully costs, an of diversified us delivering beyond performance our operating which environment. demonstrates margin in all our We business with inventories maintained the dynamic all segments clean

detail. take Let better-than-expected from deliveries comp company performance licensing me through the year's and increase. The Total earlier-than-anticipated increase were our Europe. X% improved constant X% in in more revenues a revenues second and reflects you in sales, results a $XXX dollar retail positive last quarter wholesale quarter, million

performance the our where currency driven and for wholesale comps was we regional higher posted store The X% U.S. dollars. ship. to increase an Starting growth Europe increase Turning with revenue and a retail mainly quarter. X% in revenue by strong constant

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

roughly comps excluding had outsized Turkey XX%. normal European In shipping that quarters, few with wholesale, Turkey, impact the we been the and patterns line have year. our would of on past previous whole Compared the returned summer initial the with in 'XX QX timing million hyperinflation in we into low to expectations, to a single As collection increase comp an aligned Spring/Summer from with experienced to winter expected expectations. increase spring campaign compared our Orders $XX is campaign wholesale year completed. are The digits almost shift prior initial 'XX QX. shipments

in by In decreased margin comp dollars headwinds, in product was to sales driven The offset currency both revenues points increased X%, IMU, constant impacting Operating partially by lower expansion markdowns, and our by negatively currency. basis U.S. European Retail, XXX and in margins. business our Americas higher strong XX.X%.

drove declined While traffic XX%. comp, conversion in sequential which our improvement following a in under QX pressure American stores, a QX North in stock decline remains X% of comp

to year's compared stable last were QX. AURs

point operating business American X.X% low of The margin e-com expenses, partially and a Our XX.X% operating than year a earlier. a increased selling decline XXX higher decrease driven offset by margin deleveraging lower by compared full better stores to margin mainly was in Retail of a North basis performed single posted expenses Americas and higher mix operating sales the the given digits. IMU. price

flat a Our by price higher initial were lower of product margins the full offset selling. with mix markup

move expense primarily we deleverage fourth of moderate, this the we begin second half the our year, the expect to quarter, through for in revenue. expectations As given to

constant was XXX driven margin in and XX% the was expenses. year, basis by Korea. stores the margin Wholesale, In Americas expansion, declined by last The lower currency. by driven acquired of dollars in in gross dollars improvement offset by by XX% partially XX% driven revenues constant XX% U.S. in points higher In an shipments U.S. The in growth Asia, in grew XX.X%, primarily Mexico decrease and currency. from Operating recently reached and revenue U.S.

stores and by margin constant direct was XXX XX.X% U.S. the increased well region as operating to Korean for our increased was segment. leverage our And currency. XX%. sales comp Segment as new basis X.X%. currency. This profit points revenues negative dollars margin and structure. in increased Royalty in improved by X% licensing improvement driven expense XX% finally, the Stock constant of Operating those operation operating

on XXX points. inflationary stores. X% in markdowns our IMUs, In our million. Adjusted quarter, our experienced XX.X%, total favorable gross margin selling the increased We partially an of company's quarter mix offset structure, were pressures by the negative was lower basis margin. to a higher and including Improved currency segment for SG&A expenses product on $XXX retail impact improvement cost

And most in our we notably made in investments infrastructure, Europe.

impacted unfavorable from the currency. also were expenses Our impact by

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

represented last to or increased of profit million operating year. increase million. adjusted quarter compared This XX% an $XX second to $X Our

a currency expenses. X.X%, QX, adjusted driven better higher negatively year's $X partially XXX profit mix, points. markup by basis operating business adjusted was than initial XXX higher the last favorable and by and margin basis operating by offset by impact and negative margin operating points primarily Adjusted affected million Currencies

of was lower an share adjusted losses quarter. net was per year's last quarter, adjusted million diluted to exposures. $X And recorded second to expense foreign increase EPS share. XX%. last an earnings net XX% million due $X.XX year's unrealized earnings $X.XX recorded in realized non-operating Adjusted tax The from We compared per a $X change of we in currency and of effective charge in versus rate QX second primarily

balance by million, on ago. venture partners' $XX $XX credit We offset $XXX compared in over our Moving million $XXX our of flow XX% draws Russia with the and year and include quarter in four million million The partially dividends to to cash million of most the ended sheet. a drivers cash minority free build joint to a interest. net of payment $X that purchase facilities million cash $XXX the last significant $XXX million quarters

quarter of U.S. year. We flat up roughly last $XXX down our million various constant $XXX borrowing the dollars Inventories capacity liquidity. Regionally, markets with so in million with global million, X% inventory a and North inventory total last being ended currency our available American from growth were facilities, comes QX. our of against international of levels on $XXX in our versus

inventory inventory in to pleased very Our more and Overall, well to support levels of this are receipts overall inventory as are and we orders a levels. timing with our is are reduce we further our we positioned and our our to feel line composition return forward business with year, our moving traditional forward. plan plan

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

in prior For the $XX capital and to of mainly were This in first million the year. remodels expenditures compared half, million, store $XX by investments the driven technology. half first

the changes expenditures, substantial improved in lower partially prior flow was cash for in $XX inventories Free from offset working an million year including capital half consumption the by a reduction lower capital favorable with income. net $XX and first of resulted positive for first compared $X free flow The million, half. improvement the million cash of cash

talk now fiscal third our the for quarter. So let's about and outlook 'XX

consider the the an on second of quarter operating the margins, stronger of earnings outlook revenues half to year, of behind now expectation With second level we business and as for similar we guidance. fiscal for us our the our raising a with year our are compared prior

improved outlook timing with some earnings our strong primarily third QX of were driven is the presented on which to by Our performance, quarter. shift

and to the we of revenues to nearly reach our this North their are We Europe, traffic anticipate who brand headwinds strong should where prudent In in continue spending. expect continue $X.X billion momentum year. in America, customers

with is well and pleased our aligned levels sales composition very our with inventory that are expectations. We

fluctuations normal of the X%, our and prevailing revenues and year to we in the parts With from grow in full business, dollars in both other expect currency X.X% range of local currency. environment, U.S. to

Moving P&L. down the

environment we mainly as as expenses, headwinds. of quarter supply normal. enjoying Just expansion despite currencies expanding for returned by have inflation year-over-year cost the and the fueled the anticipate rates. saw That we negatively lingering affect in will some shipping on balance chain second to basis we're margins year, currency should and a improvements year's the structure be this and On gross the both expense

about adjusted to X.X% and first operating are raising our year, half range time year. Let the year get second that the me extra some X.X% of of the fourth for this however, a the of the confident margin year. include outlook in or we for favorable, 'XX. pressure our given are With even results fiscal by of will Today, our the quarter, plans fourth strong week we should half we you turn to selling this quarter that remind an abate rate that

same At as on operating level profit expected our 'XX. the the is to fiscal high be in the end adjusted guidance, of

guidance. we by would the adjust on week, a low some the income outlook caused out performance-based COVID operating at an rate headwinds the factor that, midpoint year's selling our comp were benefit, and the currencies, perspective expense change underlying last extra represent in additional our to For of if teens growth relief for in

to to quarter which third We year dollar current of and are increase in quarter, a we range X.X% $X.XX EPS versus outlook the second last revenues the also rates. of exchange X.X% for range $X.XX In non-operating net raising per third is our of the quarter year's share, adjusted expect U.S. to on effect diluted the charges. based prevailing of the

represent a should tailwind impacts Currency revenue roughly growth. two-point for

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

Lastly, on allocation. capital

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

on our willingness based inflationary current the and best outlook environment, Our of pressures assessment to consumers' the including spend. is macroeconomic

power our arise risks will our allows manage us strength always, diversified business to of advantage in that the prudently As mitigate of taking business areas parts of model, of the other may which we to leverage business.

I and results in of a In very team, to our reiterate are we of outlined. our to just shareholders. an strong to invest the are we closing, execution growth and to with are the want Further, balance deliver confident business we I capital position that our return pleased sheet have in and financial continue to the excellent

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

Operator

first [Operator our Corey It Please moment Jefferies. from for proceed. Tarlowe comes Instructions] One with question.

Corey Tarlowe

you've it seems really in Europe. Carlos, had strong momentum some like

of that to little about the like wondering that So momentum unpack broadly if that just maybe brand. maybe the could you talk I'm bit seems partnerships are really growth. great bit have a helping It really us a little more for fuel and you just some

just there, would to get great color. some be So curious it

Carlos Alberini

Yes.

pleased Let performance our I'm the we me sure very and very, start, Yes, here. with then Company. chime are will in across Markus

a we And our as We prepared had quarter. we leading Europe every expected during As better. was charge said, great the business just did remarks, or there.

small a we was that quarter. and of it shift frankly, performance the that the of Some quarter shipments of better experienced. the into third bid from the part But second is that

been strong driven into was our in these strong comps What by healthy comps we saw customer very a very stores. and traffic Europe have

inside seeing the are also metrics just healthy We stores.

over took course, years. that Of are we couple changes benefiting the of price we last from the

we're and under much part from seeing And that the freight that what have inbound is and everything also benefiting with business. control the of impacting been margins very

what is to how We with how demand respect still pleased that our see in to a healthy customer our to terms the wholesale that, is very assortments through and seasons we feel very we carrying is perform. With with wholesale. current are our continue business of also responding for

we €XXX to is deliver the been new an That's million four currently. with now, in over the have. this that pre-pandemic of business to the Europe growth spite and that able from change business. big. over have three last we XX% And in we accounts about categories wholesale -- the increase for very talking million That's big entire years, momentum about in to about some €XXX ongoing It by strong was driven very that just are

pleased. So, very

margin Markus, talk operating you in the want Maybe Europe. to about

Markus Neubrand

you, Thank Carlos.

We are up European operating XXX pleased quarter. with We're points. in our the margin basis business in second the development very

higher I remarks, markups. we driving think -- freight, see initial in shared I inbound especially I think international markups, the the the where prepared our from no benefits

see lower sales comp margins. second to helped line. to drive Carlos is also we the transactions in is also operating positive what performance the to contributed is strong our quarter. And bottom more -- currency margin headwind see from to in performance What the as markdowns us very mentioned, And still our continue positively

I think shared I previously. also

had this a think we our I in that was headwind margins.

performance and very think European the happy and I the pleased are with of we in our overall, But brand the with segment. strength very are

Carlos Alberini

a that is think Yes. about And partnerships, you I point. I big think and just mentioned the

lot strong and been markets. in of pleased management those markets. every to the driving the And obviously, We that with one very those been teams. of each is a business very they do And businesses in of they have country and we each able have what have own

partnerships the we just have wholesale. that then the And at accounts,

agent about very a thousands lot talking have are this, the do unique relationships, now to success is I with all consecutively. think relationships. thousands and And to very I think, several been has that years of for able we it And experience We accounts, of powerful.

Corey Tarlowe

basis? sounds great. making the get as on you levels to margins to that get look it progress over of inventory, the What That's to that become then a it's for potential regional more think likely up in then think do the you quarter, inventory for where what that And a little down but it the be does better driving ultimately, do even like it just you on And you're time point How bit there? a under by even like year. control. was means end

Carlos Alberini

I'm me overall, let our sure significant will year, effort last we address a year But the secure made regional start levels. And into really also. So business. Markus very again, came we that inventory to the knowing

So to centers arrive our we earlier. distribution product were ordering really to

to then the the the of chain of service business we rest we with spite there be experiencing could all together industry. So in the supply that disruptions were

the in reduce business. inventory major flow. cash of of investment was rely obviously, we we And delivery and that really the this we normalizing year, could supply the the as mean, I it's we sources that much on saw that to had one a tighter chain plan time line, made the

put running from with to the that were inventories, we to of and amount we of month we last a So extract about able one in out year. plan significant investments that really a inventory place been investment, have take

that very system be time visibility because to just make a us with numbers. able that lot line to will should we of we inventory -- are feel work know a about we with less this last confident end and with XX% of an be now closed that and we about by closed ordering those very the year that we year, with And gives the than we what we year of clear

Of diligently lot are a buying very of course, on we discipline. with

all has be us. not by customers this And worked demanded of buying in are any going We we increase strategies. product one and that to average X% our intentionally inventory, more driven our formula or very to is were unit and in And The is less we cost by what this think primarily every increase our are is channels. you referring in well that due than for pleased. strategically to

talking quality very we and our with completely product control, it. higher pleased things mix that are about and are I'm business in

Markus Neubrand

X% up in I to we're what Corey, development and quarters. inventories -- at in dollars, flat pleased very constant Carlos U.S. adding in few If last with think look we -- constant the the just our stay currency. over explained,

at improvement, quarter, look you can back at look up if first X% If the dollars. we the sequential in we've U.S. been

Our the of dollars end constant in inventory is X% QX. at

I to pleased, very we're think, progress. see this So

think I second inventory is at third think, for expectations to regarding end line position regional your also the the sales question, the mix, quarter. in the I with our the of Overall, quarter

the it's in and Asia, are think upcoming have, pleased that we inventories we the are that are very for and pleased. also then also We the with down up also Europe and in next where expectations in sales aligned I the growth quarters business, much to the see of Americas, see we very

And to very feel reduce said, about confident inventories further at our XX% what also our also down to roughly Carlos just just year-end. plan we reiterate

Carlos Alberini

are And if confident the million. about we that happens, $XXX

Markus Neubrand

Yes.

You've raised seen, we the that our for fiscal free cash for expectations seen million the flow Corey, you may forecast 'XX. €XXX to have year

Operator

One next you. Thank moment for question please. our

Dana Telsey question Group. the line Next from of Telsey with come Advisory

Dana Telsey

quarters, year about margin margin, third first how should as in back about health the year's in delivered it in Is thinking the do of different half do thinking beat? last regions? you the see the be you anything about you're potentially the consumer you think you the the the SG&A? in how to think conservatism? that, is And the the mindful for half, unpacking half now about come And with we shrink better of wouldn't allow you're second that and you marketing the as it's what as operating the of operating half. growth that Carlos, in whether and fourth Is first guidance than there or the

Carlos Alberini

operating with question. margin start to going I'm the Dana, Okay.

frankly, year. Just half solid a have for plan second of we the very the

is important knows. course, Of as most everybody half the this

of lot as second a just make we the of year creation. Here, the money value and in huge successful half here means being

So we a feel is have for the business. specific product We very plan that right.

strong very in is everything overall, the we profitability, to make bit Obviously, charged. that lot excellent half to what we this a the quarter. that are we going and some We extra need especially we the highly we feel are results, of plan for. a year, really But opportunity little things that's deliver team and fourth great very like second that a here deliver different feel have week. there have that The

seeing consumer, we With or behavior market we because respect it are different as the region still I look are truly you we of have health very we to the a think global. by know, to markets in And where different by the at operate.

Europe, see to with a coming continue starting into our we healthy customer stores. So

some those with places there are We where of the in have the differently, and issues still had like see but war significant just markets and that is markets. in we the significant there, just inflation different have see consumer among very Turkey, impacted that success been in Russia other obviously some we behaving differences

We to customer of flows that are that referring business a the strong, traffic it's continues that I reflection was seeing very be and to.

very reliable good in So our stores every changes we into And consumer that that behavior. continue see we think I the there business feel the far, in place. day is But a performance half. very second significant second the is unless in single healthy in so to the we going are half as see

people because time product selling at is the product indicator early, it's earlier wholesale well. every And to you business, very the our then think see wholesale with ship product, customers, very are like getting our customers retail and that are a that strong able that happy our looking we I the

be strong So indicator. that very should a

When you a at been look for now, this has challenged Americas environment us.

related now product. we contraction And seeing is for a don't to been it few frankly, have quarters. that We our think

think that we good some have very making on In we strides fact, been product.

look are when our at healthy. trends denim very Just you

When accessories it's strong. very look our business, at you

to us that where always of that We something relative versa our is to it go brand dresses casual ease. into very adapt very to we able the is really assortment have like been and allows going which can from quickly, quickly, casual we with to more and consumer a go vice

success. success And strong about with and tanks. had We're during we are -- success talking success with success denim, sweaters, seeing summer, shorts with we the

more that things to working but the well, value. lot little looking we of very consumer are lot think for of a is a are pressured that we a see continue bit and there So

not do that being promotional We environment general. we spite been really in very in able have of very promote. well been And to the have to with careful

us sweater go significant and a average and and retail. a unit plan, have drive great business Those categories both we to create looking of these plan the we those that think for women have think are outerwear especially men second at be in half, We a we'll and businesses big we some business. great because two of after volume course, higher items,

So are half. we about the excited second

I at more similar in markets. combination of is Asia, than said Europe, look you what different the when Asia, is this about then a common And

of the of different. each could be some And dynamics those in markets

who issues. knows, has places they So recover pandemic you its everybody they own -- else, on been way everything from like to and have their are have China but

us, our very like that And Asia to continue a and an place overall that great to improve a see you operation Korea we for then been as region. as has strong opportunity really have in

that We quarters seeing and it's -- plan, color we feel one is you we great have the aligned the we and this month are you the few with of today multiple terms that based we we very combination are just what we we So what quarter, completely even that on we a during things. a in been guidance think is in have see realistic everything and quarter have able with that shared to of during seeing now what have last of now. shared with

want on... you to touch So,

Markus Neubrand

Hi, Dana, it's Markus.

prevention of We closely area any don't address so the an see issues team in very shrink. and had. good this you team that in place. and far first loss year a we're Obviously, this question have is me terms shrink Let monitoring, we major

it's then last the almost a given expected very at key level also operating first realistic our same If margins profit are What guidance, think, expected on just go the view high and end the adjusted is the we guidance, are we to we've key think look, all, we the confident and operating that the drivers. can I Let of can, I me deliver If business year. look of drivers? as we on our performance. the

with ones negative Let the me start with headwinds. first

XXX our margin. We the is that than on currency less basis unfavorable operating have impact points

We have also the have, not received that higher year, positive last and may a we the are this we've lower compensation. prior think, reporting, have comping And also What year we do drivers, see. you performance-based subsidies from recall, I where COVID-relief as year. we

especially store by We by comp Asia. sales, driven Europe positive have and

impact higher We have favorable lower of shipping initial the costs. the markups mainly driven by

them, we driver to QX second expect as they've on I think operating in this help our we gross continue our to improving margins, and think been well the this margin margin of to we and as seen commented have expand QX, half I and how in in year.

year fiscal in some to you terms that of also year, with the pressure quarter, benefit you the course, importantly, roughly I think, rate growth of for of expense structure represents in also this the sales XXrd asked company extra total also the will this Carlos of help SG&A mentioned, have -- fourth And have the selling We've given the quarter of fourth QX. X% the the clearly abate 'XX. that as And we we will week. will for before, will impact week the in

Operator

from Instructions] Thank Serna it proceed. the you. next our UBS. with from One [Operator Mauricio moment line of And for question. comes Please

Mauricio Serna

then like might maybe could categories I or maybe the I if what maybe elaborate the results. sales have if look the done in seen be good any seen line, different where lower like like to across in the on important you trends Europe, maybe that the changes at sales What I which a exclude may have markets, little more on or business, maybe the category seeing pretty segments? you're the wanted growth ones best if sales quarter the ask roughly driving strong like and the third are ask been, of like a which are ones I bit significant the across you if most impact. guidance, you And speaking, main sequentially lagging? have -- also which in think FX you is trend segments on on you Congratulations seeing Great. perspective,

Carlos Alberini

you first about me thank let so Well, Hi, Mauricio, start categories. for question your with questions. your

have And by very handbags, in have we other I both Just primarily in women the like in men very and wholesale that develop. business a big Europe, and significant, for business many big but to a and and we now. business is that continue kids said, and evolve accessories, apparel categories also driven is

have footwear. And just last, and I would then the Marciano say, we brand have we

what within Paul, together with there. the way just success put changing global those, whole have done, the the have just we so lines a just multiple see we the just And the all apparel product areas teams, lot categories, seen among we in has of assortment and and with introduction product with that strength whole multiple line

had dresses category. have a touches that We main everything great success as with

Our a athleisure to from and new line, offering very well. maybe line that line, at X.X, from which now, continues completely as zero the wholesale years of significant last is a X part that do to our line pretty being went entire well

strong now. seasons more of Kids also just line as stable had the several growth, Our

And we a dressing collection. as casual from our the just more business, migrated footwear to more

that change as great we think seen with have success I well.

handbag continues strong. Our business be has been strong and to

do. we collections. are ahead new what very say very the for and pack is we very we of we we there that always think competition believe that limited about feel It's I our strongly -- and difficult, there,

business bags. of lot in a sizes have different of We

logo a together, of require lot business is when quality we the a great a aligned the it considering you offer combination, just value we price with great have We put that and that proposition.

of across a see still overall, lot business grow. continue very to board, So, strong to we the a opportunities

whole accessories a is lot be products. have line a -- that And bigger. We think of we line could men's

that trying invest in fuel So we to are category. growth that and

again, what line be. compared And underwear feel that just it We whole we could small is to swimwear. the business and a have very of

in So are categories these the to growth. invest we to trying fuel

big is cases certain multiple well. accounts they buy categories, that think cases, we And as and in the I in many key overall, have Marciano relationships including this here that advantage big just with

overall, you can with sales very, maybe, guidance, that. happy the So, Markus, very start. to respect With

Fabrice Benarouche

Yes. Yes.

X.X% the Let and start, full year, for guiding me up think between revenues we're Mauricio, I quickly X%. now

driving to the growth revenue positive X% that comps Before, it compared What the bottom growth We've we to end Asia. drivers half, maintaining see prior in while top Europe end continue was the to increased expectations. X%. in are the and second key for the our

fourth quarter, for also We net have about as driver the we just and week talked we the stores. have the the new XXrd in

prepared in we the my tailwind into quarter, I but also stated we the delivery also as now reminded, from quarter revenue at the to third also I currencies expectations in our quarter, mentioned, wholesale we had we have please you into then my a on -- think going For second quarter. shared the I QX that drivers think initial the benefited a third $XX remarks, million be play, and think have I second that's from two-point And are of guided same the as compared growth. shift will what

Operator

Research. you. question, we from one the proceed. time have line Thank with more one for moment Cap Eric Small Consumer And comes Please of please. It Beder

Eric Beder

Congratulations on a quarter and great guidance.

Let's talk about allocation. capital bit little a

about stores. in flow potential look continue free expand year, $XXX should do to at terms of it we in cash or further open share million How be have terms to repurchases where you want thinking You increasing dividend? but that of this the in you

Carlos Alberini

very so able favorable very that fact also we just our convertible, we do and are were have the with of just maturities to just we terms, kind happy able of defer the to as like Well, that were some know, we into refinanced under those you future.

refinanced couple and structure, facilities, very the great good have redid of year, today, a we our capital and credit position. facilities. also in So are Last team we a a

our that that generate every that. happy good capacity significant, we we and can pretty feel time are is So cash place. flow, we're free why just very and we in a about squeeze more very That's

think I lot a as shareholder very has increase to pro returns, the and last were and have Board during with our few tremendously very active dividend been increase those recently. company a share they years. repurchases -- the So as done We returns, really and that

since been talking the outstanding I've about are of back. We XX% were repurchased that shares

We we sure we our service way to keep super invest be the last we we and are investments, our business our year, as than going to spending the that do just that to grow is lower we with top have of in we powder capacity priority and to year, we And imagine, plenty we that want you sure are money, to feel but this to can be active when business. make a able to just, being with So first to are want make our that. want CapEx opportunities dry have we very more. prudent

pride balancing Board Board we approaches priorities And of proud have of all for that course, return those that shareholders Of and shareholders us times. the managing consider been continue is this are we all I to very so. I And in at to on take is. lot to that. look can our a a we very opportunity because to feel we But that a will effective value we going good to how at topic how the when all be you I'm opportunities way. and And more pro do promise active,

Eric Beder

Okay.

be countries? where we where should thinking be should thinking about more that of Or in like to you we other sense? it about add what regions opportunities would and in terms in think those how stores stores terms makes I of add to

Carlos Alberini

not there so have many opportunities to in and or are Well, of for different potential always the really of the Guess? those Yes. markets. one partners. primarily at markets, look cases, we -- whether we we brand the the we And with any those develop markets, work

the where territories model of them. several of are business, franchise with have we our they have type examples license Just that a or we run business either where partners

I a in still opportunity opportunities large to business and bring lot over one are in mean, could categories market, and particular in expensive the are many category other are, of with. the especially And it be that we but the just in develop -- strong world, of one that considering we see all categories our we see how we

here. growth So, we have plenty of opportunity for

and this billion. is Guess? pays you look brand $X.X that be today, on what fewer of brands, number of are with we it ultimate If than We $X.X a of bigger we our them $X that. for at at This of you is the I'm product billion, about have. than based billion with look lot type as some -- the consumer this less product, have offering lifestyle about when categories talking could the billion. Guess? of size, less think in measuring the a size the $X some global a is

going countries, lot a to of mean, like markets a see back are brand is where the I But they tremendous So we opportunity. doing and India, well. the opportunity,

board. XX close across are We there are partner with that the opening They will year been that The stores been and very has we this stores stores have we than pretty opening think there. working with more aggressively, stores. a profitable

any well brand for well don't is a as huge world, brand. the Guess? -- we is across you market I because have that can think the brand is And it's And market. exciting a not is that very just the where the fortune us to known known go that

So that opportunity. gives us big a

Of investing goal in have very a we China, this we been been not has that's huge for course, a challenging up. market. Unfortunately, us, but are giving

very And presence businesses, penetrate businesses. profitable are the more lot to there then there very And a that changing grow think to could committed opportunity we that model are and big looking We the productive, in see lot and that business just markets some and within have is future. looking into there. that are of a where at are good a market where We a into we very we something very, other be but market. opportunity we Europe,

people and There and brand again, think are desire. so the many very countries, that something cultures many relevant we so Guess? that is

make those to to want that we product the brand customers. put available all potential the So, and

Operator

and will Thank for ladies Thank you. Q&A to final I you, back gentlemen. Carlos Alberini session. pass comments. the ends this And it

Carlos Alberini

this Yes. with Thank you. are our Well, excited we very performance about pleased just -- future. our we very and are year,

very clear half a well. have We executing are for and and proud good teams second that. of the We're very our very strategy a plan

well and shareholders. value positioned grow for business are our our We to deliver strong

We very Thank with appreciate that and us that, you we soon. you joined Thank look forward really to speaking you. everyone today. to

Operator

Thank you, everyone, for joining.

disconnect. You may now

Guess' (GES) 23 Aug 232024 Q2 Earnings call transcript