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GUESS?, Inc. Reports Fourth Quarter Results and Provides Update to Its Strategic Plan

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Reaffirms Plan to Deliver 10% Operating Margin by Fiscal 2025

Q4 Fiscal 2021 Revenues Decreased 23% to $648 Million; Decreased 26% in Constant Currency

Q4 Fiscal 2021 GAAP Earnings Per Share ("EPS") of $1.07, Compared to GAAP EPS of $1.18 in Q4 Fiscal 2020; Q4 Fiscal 2021 Adjusted EPS of $1.18, Compared to $1.22 in Q4 Fiscal 2020

Fiscal Year 2021 Revenues Decreased 30% to $1.88 Billion; Decreased 31% in Constant Currency

Fiscal Year 2021 GAAP Loss Per Share of $1.27, Compared to GAAP EPS of $1.33 in Fiscal Year 2020; Fiscal Year 2021 Adjusted Loss Per Share of $0.07, Compared to Adjusted EPS of $1.45 in Fiscal Year 2020

Guess?, Inc. (NYSE:GES) today reported financial results for its fourth quarter and fiscal year ended January 30, 2021.

Carlos Alberini, Chief Executive Officer, commented, "I am very pleased with our fourth quarter earnings performance, which significantly exceeded our expectations, in spite of the difficult circumstances we continued to face due to the pandemic. Our earnings per share reached $1.07 versus $1.18 last year. During the period, we expanded gross margin and managed expenses tightly, which helped us to mitigate the anticipated revenue decrease. With this performance, we conclude a challenging but rewarding year for our Company. I could not be more grateful and proud of our teams all over the world for their great work leading our Company through these unprecedented times, controlling very well what was controllable, finding opportunities to transform our business and positioning Guess for an even brighter future."

Mr. Alberini continued, "During the year, we made great progress executing our strategic plan and were able to accelerate the implementation of several key initiatives, including those related to customer centricity, elevating our brand, improving the quality of our product and developing one global product line. Today, we are updating our strategic plan and confirming our strong belief that our opportunities for market share gains, operating margin expansion and value creation remain intact. Furthermore, we are committed to delivering net revenues of $2.9 billion by fiscal year 2025 and an operating margin of 10% by that year. I am confident that we have an opportunity to more than double our earnings per share by fiscal year 2025 to $3.00 from $1.33 in fiscal 2020 and improve our return on invested capital to 26% in fiscal 2025 from 12% in fiscal 2020."

Mr. Alberini concluded, "Our product line looks the best I have seen in all my years with Guess. The customer is responding very well to our assortments in our stores and in our digital business, which has accelerated quite nicely in the fourth quarter and further into this year. We have a great team, a strong business model and an amazing brand with remarkable momentum to gain share and grow profitably for many years to come."

Adjusted Amounts

This press release contains certain non-GAAP, or adjusted, financial measures. References to "adjusted" results exclude the impact of (i) asset impairment charges, (ii) net gains on lease modifications, (iii) certain professional service, legal fees and related net credits, (iv) certain separation charges, (v) non-cash debt discount amortization on our convertible senior notes, (vi) the related tax effects of the foregoing items as well as the impact from changes in the tax law on deferred taxes in certain tax jurisdictions, net tax settlements and adjustments to specific uncertain income tax positions and (vii) certain discrete income tax adjustments, in each case where applicable. A reconciliation of reported GAAP results to comparable non-GAAP results is provided in the accompanying tables and discussed under the heading "Presentation of Non-GAAP Information" below.

COVID-19 Fourth Quarter Business Update

The coronavirus (or "COVID-19") pandemic has had and is continuing to have a material impact on the Company's financial performance. During the fourth quarter of fiscal 2021, the Company continued to experience lower net revenue compared to the same prior-year period as it remained challenged by lower demand, temporary store closures and capacity restrictions. The Company partially offset these revenue declines by reducing its SG&A expenses for the quarter through expense savings. Toward the end of the third quarter of fiscal 2021, the Company started to incur a new round of government-mandated temporary store closures, mostly in Europe. While the number of temporarily closed stores ebbed and flowed during the quarter based on local conditions, the overall impact resulted in stores being closed for over 15% of the total days during the fourth quarter of fiscal 2021, primarily in Europe and Canada. As of January 30, 2021 over 70% of our stores were open, with the majority of closed stores located primarily in Europe and Canada. As of March 27, 2021 approximately 77% of our stores were open.

Fourth Quarter Fiscal 2021 Results

For the fourth quarter of fiscal 2021, the Company recorded GAAP net earnings of $70.4 million, an 11.5% decrease from $79.6 million for the fourth quarter of fiscal 2020. GAAP diluted earnings per share decreased 9.3% to $1.07 for the fourth quarter of fiscal 2021, compared to $1.18 for the same prior-year quarter. The Company estimates a positive impact from its share buybacks and currency of $0.06 and $0.13, respectively, on GAAP diluted earnings per share in the fourth quarter of fiscal 2021.

For the fourth quarter of fiscal 2021, the Company's adjusted net earnings were $77.7 million, a 5.7% decrease from $82.3 million for the fourth quarter of fiscal 2020. Adjusted diluted earnings per share decreased 3.3% to $1.18, compared to $1.22 for the same prior-year quarter. The Company estimates that its share buybacks had a positive impact of $0.07 on adjusted diluted earnings per share in the fourth quarter of fiscal 2021.

Net Revenue. Total net revenue for the fourth quarter of fiscal 2021 decreased 23.0% to $648.5 million, from $842.3 million in the same prior-year quarter. In constant currency, net revenue decreased by 25.9%.

  • Americas Retail revenues decreased 24.2% in U.S. dollars and 24.0% in constant currency. Retail comp sales including e-commerce decreased 15% in U.S. dollars and constant currency.
  • Americas Wholesale revenues decreased 15.3% in U.S. dollars and 14.1% in constant currency.
  • Europe revenues decreased 26.8% in U.S. dollars and 31.8% in constant currency. Retail comp sales including e-commerce increased 2% in U.S. dollars and decreased 5% in constant currency.
  • Asia revenues decreased 16.2% in U.S. dollars and 20.7% in constant currency. Retail comp sales including e-commerce decreased 18% in U.S. dollars and 22% in constant currency.
  • Licensing revenues increased 12.2% in U.S. dollars.

Earnings from Operations. GAAP earnings from operations for the fourth quarter of fiscal 2021 decreased 25.5% to $71.9 million (including $5.2 million in non-cash impairment charges taken on certain long-lived store related assets and a $2.6 million favorable currency translation impact), from $96.5 million in the same prior-year quarter. GAAP operating margin in the fourth quarter decreased 40 basis points to 11.1%, from 11.5% in the same prior-year quarter, driven primarily by overall deleveraging of expenses due to the negative impact from the COVID-19 pandemic on our revenues and global operations, partially offset by lower expenses. The negative impact of currency on operating margin for the quarter was approximately 30 basis points.

For the fourth quarter of fiscal 2021, adjusted earnings from operations decreased 27.0% to $74.2 million, from $101.7 million in the same prior-year quarter. Adjusted operating margin decreased 70 basis points to 11.4%, from 12.1% in the same prior-year quarter, driven primarily by overall deleveraging of expenses due to the negative impact from the COVID-19 pandemic on our revenues and global operations, partially offset by lower expenses.

  • Operating margin for the Company's Americas Retail segment increased 640 basis points to 12.8% in the fourth quarter of fiscal 2021, compared to 6.4% in the same prior-year quarter, driven primarily by lower store occupancy costs and store selling expenses and, to a lesser extent, lower markdowns, partially offset by the deleveraging impact of negative comp sales resulting from lower traffic as a result of the COVID-19 pandemic.
  • Operating margin for the Company's Americas Wholesale segment increased 390 basis points to 23.5% in the fourth quarter of fiscal 2021, compared to 19.6% in the same prior-year quarter, due mainly to higher selling prices and reduced sales discounts and allowances.
  • Operating margin for the Company's Europe segment decreased 620 basis points to 12.7% in the fourth quarter of fiscal 2021, from 18.9% in the same prior-year quarter, driven primarily by overall deleveraging of expenses due to lower revenue as a result of the COVID-19 pandemic as well as the timing shift of wholesale shipments into the first quarter of fiscal 2022, partially offset by the favorable impact of higher initial markups, government subsidies and rent concessions.
  • Operating margin for the Company's Asia segment increased 340 basis points to 5.0% in the fourth quarter of fiscal 2021, compared to 1.6% in the same prior-year quarter, due mainly to lower expenses, partially offset by the unfavorable impact of deleverage.
  • Operating margin for the Company's Licensing segment increased 820 basis points to 95.3% in the fourth quarter of fiscal 2021, compared to 87.1% in the same prior-year quarter, due to lower expenses.

Other income, net, was $14.6 million for the fourth quarter of fiscal 2021, compared to $1.8 million in the same prior-year quarter. The change was driven primarily by market volatility which resulted in net unrealized gains on the translation of foreign currency balances, compared to net unrealized losses in the same prior-year quarter.

Full Fiscal Year Results

For the fiscal year ended January 30, 2021, the Company recorded GAAP net loss of $81.2 million, compared to GAAP net earnings of $96.0 million for the fiscal year ended February 1, 2020. GAAP diluted loss per share was $1.27 for the fiscal year ended January 30, 2021, compared to GAAP earnings per share of $1.33 during the prior year. The Company estimates a net negative impact from its share buybacks and its prior year convertible notes transaction and currency of $0.19 and $0.04, respectively, on GAAP diluted loss per share for the fiscal year ended January 30, 2021.

For the fiscal year ended January 30, 2021, the Company recorded adjusted net loss of $4.5 million, compared to adjusted net earnings of $105.0 million for the fiscal year ended February 1, 2020. Adjusted diluted loss per share was $0.07, compared to adjusted earnings per share of $1.45 during the prior year. The Company estimates that its share buybacks and its prior year convertible notes transaction had a net negative impact of $0.02 on adjusted diluted loss per share during the fiscal year ended January 30, 2021.

Net Revenue. Total net revenue for fiscal 2021 decreased 29.9% to $1.88 billion, from $2.68 billion in the prior year. In constant currency, net revenue decreased by 31.0%.

  • Americas Retail revenues decreased 37.1% in U.S. dollars and 36.7% in constant currency.
  • Americas Wholesale revenues decreased 36.9% in U.S. dollars and 34.8% in constant currency.
  • Europe revenues decreased 24.6% in U.S. dollars and 27.2% in constant currency.
  • Asia revenues decreased 32.8% in U.S. dollars and 33.8% in constant currency.
  • Licensing revenues decreased 13.8% in U.S. dollars.

Earnings (Loss) from Operations. GAAP loss from operations for fiscal 2021 was $60.5 million (including $80.4 million in non-cash impairment charges taken on certain long-lived store related assets and a $9.3 million favorable currency translation impact), compared to GAAP earnings from operations of $140.7 million in the prior year. GAAP operating margin in fiscal 2021 decreased 850 basis points to negative 3.2%, from 5.3% in the prior year, driven primarily by overall deleveraging of expenses and higher asset impairment charges due to the negative impact from the COVID-19 pandemic on our revenues and global operations. The positive impact of currency on operating margin for fiscal 2021 was approximately 20 basis points.

For the fiscal year ended January 30, 2021, adjusted earnings from operations was $20.0 million, compared to $150.2 million for the fiscal year ended February 1, 2020. Adjusted operating margin decreased 460 basis points to 1.0% for the fiscal year ended January 30, 2021, from 5.6% in the prior year, driven primarily by overall deleveraging of expenses due to the negative impact from the COVID-19 pandemic on our revenues and global operations.

  • Operating margin for the Company's Americas Retail segment decreased 580 basis points to negative 3.1% in fiscal 2021, from 2.7% in the prior year, driven primarily by the deleveraging impact of temporary store closures and lower traffic as a result of the COVID-19 pandemic, partially offset by lower store selling expenses and lower occupancy costs.
  • Operating margin for the Company's Americas Wholesale segment decreased 220 basis points to 16.9% in fiscal 2021, from 19.1% in the prior year, due mainly to the negative impact from the COVID-19 pandemic on our revenues which resulted in overall deleveraging of expenses.
  • Operating margin for the Company's Europe segment decreased 360 basis points to 7.1% in fiscal 2021, from 10.7% in the prior year, driven primarily by overall deleveraging of expenses due to lower revenue as a result of the COVID-19 pandemic, partially offset by the favorable impact of higher initial markups, rent concessions and government subsidies.
  • Operating margin for the Company's Asia segment decreased 6.3% to negative 8.9% in fiscal 2021, from negative 2.6% in the prior year, due mainly to the negative impact from the COVID-19 pandemic which resulted in significantly higher inventory reserves and overall deleveraging of expenses.
  • Operating margin for the Company's Licensing segment increased 510 basis points to 91.8% in fiscal 2021, from 86.7% in the prior year, due to lower expenses.

Other expense, net, was $6.0 million for fiscal 2021, compared to $2.5 million in the prior year. The change was due primarily to net mark-to-market losses on revaluation of foreign exchange currency contracts, compared to gains in the prior year.

Outlook

Given the current circumstances regarding the COVID-19 crisis and its uncertain impact on our operations, we are not providing detailed guidance for the first quarter or the full fiscal year ending January 29, 2022. We expect revenues in the first quarter of fiscal 2022 to be down in the high-single digits versus the first quarter of fiscal 2020 as pandemic-related shutdowns and traffic declines are partially offset by continued momentum in our global e-commerce business and the favorable timing shift of European wholesale shipments from the fourth quarter of fiscal 2021 into the first quarter of fiscal 2022. For the full fiscal year 2022, assuming no COVID-related shutdowns past the first quarter, we expect revenues to be down in the high single digits versus fiscal 2020. The expectation for the full year also assumes a return to a normal cadence of product development and shipments for our European wholesale business. These comparisons are both versus the pre-pandemic periods from two fiscal years prior, in order to provide a more normalized comparison.

Fiscal 2025 Strategic Plan Update

The five-year strategic plan that the Company presented in December 2019 continues to be a solid roadmap for revenue growth, increased profitability and value creation. The six key strategic pillars the Company identified remain at the core of its strategy, and the Company has made solid progress on initiatives across each of them amid the pandemic in fiscal 2021. The key strategic pillars include organization and culture, brand relevancy, product excellence, customer centricity, global footprint and functional capabilities. The Company's financial plan is to achieve an operating margin of 10% by fiscal 2025, with net revenues of $2.9 billion, a 2% CAGR from fiscal 2020.

Please refer to the Company's presentation materials (to be posted concurrently with the issuance of this earnings release) available at www.guess.com via the "Investor Relations" link. Those listening to today's investor conference call are encouraged to refer to the presentation materials during the call.

Dividend

The Company's Board of Directors has approved a quarterly cash dividend of $0.1125 per share on the Company's common stock. The dividend will be payable on April 30, 2021 to shareholders of record as of the close of business on April 14, 2021.

Presentation of Non-GAAP Information

The financial information presented in this release includes non-GAAP financial measures such as adjusted results, constant currency financial information, free cash flows and return on invested capital. For the three months and fiscal year ended January 30, 2021, the adjusted results exclude the impact of certain professional service, legal fees and related (credits) costs, certain separation charges, asset impairment charges, net gains on lease modifications, non-cash amortization of debt discount on the Company's convertible senior notes, the related income tax impacts of these adjustments as well as certain discrete income tax adjustments, where applicable. For the three months and fiscal year ended February 1, 2020, the adjusted results exclude the impact of certain professional service, legal fees and related (credits) costs, separation charges related to the departure of our former CEO, asset impairment charges, non-cash amortization of debt discount on the Company's convertible senior notes, and the related income tax impacts of these adjustments as well as the impact from changes in the tax law on deferred taxes in certain tax jurisdictions, net tax settlements and adjustments to specific uncertain tax positions, where applicable. These non-GAAP measures are provided in addition to, and not as alternatives for, the Company's reported GAAP results.

The Company has excluded these items from its adjusted financial measures primarily because it believes these items are not indicative of the underlying performance of its business and that the adjusted financial information provided is useful for investors to evaluate the comparability of the Company's operating results and its future outlook (when reviewed in conjunction with the Company's GAAP financial statements). A reconciliation of reported GAAP results to comparable non-GAAP results is provided in the accompanying tables.

This release also includes certain constant currency financial information. Foreign currency exchange rate fluctuations affect the amount reported from translating the Company's foreign revenue, expenses and balance sheet amounts into U.S. dollars. These rate fluctuations can have a significant effect on reported operating results under GAAP. The Company provides constant currency information to enhance the visibility of underlying business trends, excluding the effects of changes in foreign currency translation rates. To calculate net revenue and earnings (loss) from operations on a constant currency basis, actual or forecasted results for the current-year period are translated into U.S. dollars at the average exchange rates in effect during the comparable period of the prior year. The constant currency calculations do not adjust for the impact of revaluing specific transactions denominated in a currency that is different from the functional currency of that entity when exchange rates fluctuate. However, in calculating the estimated impact of currency on our earnings (loss) per share for our actual or forecasted results, the Company estimates gross margin (including the impact of merchandise-related hedges) and expenses using the appropriate prior-year rates, translates the estimated foreign earnings at the comparable prior-year rates, and excludes the year-over-year earnings impact of gains or losses arising from balance sheet remeasurement and foreign currency contracts not designated as merchandise hedges. The constant currency information presented may not be comparable to similarly titled measures reported by other companies.

The Company also includes information regarding its free cash flows in this release. The Company calculates free cash flows as cash flows from operating activities less (i) purchases of property and equipment and (ii) payments for property and equipment under finance leases. Free cash flows are not intended to be an alternative to cash flows from operating activities as a measure of liquidity, but rather to provide additional visibility to investors regarding how much cash is generated for discretionary and non-discretionary items after deducting purchases of property and equipment and payments for property and equipment under finance leases. Free cash flow information presented may not be comparable to similarly titled measures reported by other companies. A reconciliation of reported GAAP cash flows from operating activities to the comparable non-GAAP free cash flow measure is provided in the accompanying tables.

The Company also includes information regarding its return on invested capital (or "ROIC") in this release. The Company defines ROIC as adjusted net operating profit after taxes divided by two-year average invested capital. The Company believes that ROIC is a useful financial measure for investors in evaluating how efficiently the Company deploys its capital. The Company's method of calculating ROIC may differ from other companies' methods and therefore might not be comparable.

Investor Conference Call

The Company will hold a conference call at 4:45 pm (ET) on March 31, 2021 to discuss the news announced in this press release and to provide an update to its strategic plan. A live webcast of the conference call and related presentation materials (to be posted concurrently with the issuance of this earnings release) will be accessible at www.guess.com via the "Investor Relations" link. The webcast and related presentation materials will also be archived on the website.

About Guess?

Guess?, Inc. designs, markets, distributes and licenses a lifestyle collection of contemporary apparel, denim, handbags, watches, eyewear, footwear and other related consumer products. Guess? products are distributed through branded Guess? stores as well as better department and specialty stores around the world. As of January 30, 2021, the Company directly operated 1,046 retail stores in the Americas, Europe and Asia. The Company's partners and distributors operated 524 additional retail stores worldwide. As of January 30, 2021, the Company and its partners and distributors operated in approximately 100 countries worldwide. For more information about the Company, please visit www.guess.com.

Forward-Looking Statements

Except for historical information contained herein, certain matters discussed in this press release or the related conference call and webcast, including statements concerning the potential actions and impacts related to the COVID-19 pandemic; statements concerning the Company's future outlook, including with respect to the first quarter and full year of fiscal 2022 and the Company's fiscal 2025 strategic plan; statements concerning the Company's expectations, goals, future prospects, global cost reduction opportunities and profitability efforts, capital allocation plans, cash needs and current business strategies and strategic initiatives; and statements expressing optimism or pessimism about future operating results, growth opportunities, earnings, and operating margins are forward-looking statements that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements, which are frequently indicated by terms such as "expect," "could," "will," "should," "goal," "strategy," "believe," "estimate," "continue," "outlook," "plan," "create," "see," and similar terms, are only expectations, and involve known and unknown risks and uncertainties, which may cause actual results in future periods to differ materially from what is currently anticipated. Factors which may cause actual results in future periods to differ materially from current expectations include, among others: our ability to maintain our brand image and reputation; domestic and international economic or political conditions, including economic and other events that could negatively impact consumer confidence and discretionary consumer spending; the continuation or worsening of impacts related to the COVID-19 pandemic, including business, financial, human capital, litigation and other impacts to the Company and its partners; our ability to successfully negotiate rent relief or other lease-related terms with our landlords; our ability to successfully negotiate or defer our vendor obligations; our ability to maintain adequate levels of liquidity; changes to estimates related to impairments, inventory and other reserves, including the impact of the CARES Act, which were made using the best information available at the time; changes in the competitive marketplace and in our commercial relationships; our ability to anticipate and adapt to changing consumer preferences and trends; our ability to manage our inventory commensurate with customer demand; risks related to the timing and costs of delivering merchandise to our stores and our wholesale customers; unexpected or unseasonable weather conditions; our ability to effectively operate our various retail concepts, including securing, renewing, modifying or terminating leases for store locations; our ability to successfully and/or timely implement our growth strategies and other strategic initiatives; our ability to successfully implement or update information technology systems, including enhancing our global omni-channel capabilities; our ability to expand internationally and operate in regions where we have less experience, including through joint ventures; risks related to our convertible senior notes issued in April 2019, including our ability to settle the liability in cash; our ability to successfully or timely implement plans for cost reductions; our ability to effectively and efficiently manage the volume and costs associated with our European distribution centers without incurring shipment delays; our ability to attract and retain key personnel; obligations or changes in estimates arising from new or existing litigation, income tax and other regulatory proceedings; risks related to the complexity of the Tax Reform, future clarifications and legislative amendments thereto, as well as our ability to accurately interpret and predict its impact on our cash flows and financial condition; the risk of economic uncertainty associated with the United Kingdom's departure from the European Union ("Brexit") or any other similar referendums that may be held; the occurrence of unforeseen epidemics, such as the COVID-19 pandemic; other catastrophic events; changes in U.S. or foreign income tax or tariff policy, including changes to tariffs on imports into the U.S.; accounting adjustments to our unaudited financial statements identified during the completion of our annual independent audit of financial statements and financial controls or from subsequent events arising after issuance of this release; risk of future non-cash asset impairments, including goodwill, right-of-use lease assets and/or other store asset impairments; restructuring charges; our ability to adapt to new regulatory compliance and disclosure obligations; risks associated with our foreign operations, such as violations of laws prohibiting improper payments and the burdens of complying with a variety of foreign laws and regulations (including global data privacy regulations); risks associated with the acts or omissions of our third party vendors, including a failure to comply with our vendor code of conduct or other policies; risks associated with cyber-attacks and other cyber security risks; risks associated with our ability to properly collect, use, manage and secure consumer and employee data; risks associated with our vendors' ability to maintain the strength and security of information technology systems; and changes in economic, political, social and other conditions affecting our foreign operations and sourcing, including the impact of currency fluctuations, global income tax rates and economic and market conditions in the various countries in which we operate. In addition to these factors, the economic, technological, managerial, and other risks identified in the Company's most recent annual report on Form 10-K and other filings with the Securities and Exchange Commission, including but not limited to the risk factors discussed therein, could cause actual results to differ materially from current expectations. The current global economic climate, length and severity of the COVID-19 pandemic, and uncertainty surrounding potential changes in U.S. policies and regulations may amplify many of these risks. Additional information with respect to known and unknown risks will also be set forth in the Company's annual report on Form 10-K for the fiscal year ended January 30, 2021, which is expected to be filed with the Securities and Exchange Commission in the first quarter of fiscal 2022. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Guess?, Inc. and Subsidiaries

Condensed Consolidated Statements of Income (Loss)

(amounts in thousands, except per share data)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Fiscal Year Ended

 

January 30, 2021

 

February 1, 2020

 

January 30, 2021

 

February 1, 2020

 

$

 

%

 

$

 

%

 

$

 

%

 

$

 

%

 

 

 

 

 

 

 

 

 

 

 

 

Product sales

$

618,973

 

 

95.5

%

 

$

815,975

 

 

96.9

%

 

$

1,802,533

 

 

96.1

%

 

$

2,592,262

 

 

96.8

%

Net royalties

29,482

 

 

4.5

%

 

26,279

 

 

3.1

%

 

73,996

 

 

3.9

%

 

85,847

 

 

3.2

%

Net revenue

648,455

 

 

100.0

%

 

842,254

 

 

100.0

%

 

1,876,529

 

 

100.0

%

 

2,678,109

 

 

100.0

%

 

 

 

 

 

 

 

 

 

 

 

 

Cost of product sales

372,130

 

 

57.4

%

 

503,660

 

 

59.8

%

 

1,179,427

 

 

62.9

%

 

1,662,401

 

 

62.1

%

 

 

 

 

 

 

 

 

 

 

 

 

Gross profit

276,325

 

 

42.6

%

 

338,594

 

 

40.2

%

 

697,102

 

 

37.1

%

 

1,015,708

 

 

37.9

%

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative expenses

201,638

 

 

31.1

%

 

237,237

 

 

28.1

%

 

679,958

 

 

36.1

%

 

865,060

 

 

32.2

%

Asset impairment charges

5,166

 

 

0.8

%

 

4,851

 

 

0.6

%

 

80,442

 

 

4.3

%

 

9,977

 

 

0.4

%

Net gains on lease modifications

(2,351

)

 

(0.4

%)

 

 

 

%

 

(2,801

)

 

(0.1

%)

 

 

 

%

 

 

 

 

 

 

 

 

 

 

 

 

Earnings (loss) from operations

71,872

 

 

11.1

%

 

96,506

 

 

11.5

%

 

(60,497

)

 

(3.2

%)

 

140,671

 

 

5.3

%

 

 

 

 

 

 

 

 

 

 

 

 

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

Interest expense

(5,657

)

 

(0.9

%)

 

(4,973

)

 

(0.6

%)

 

(22,869

)

 

(1.2

%)

 

(16,129

)

 

(0.6

%)

Interest income

629

 

 

0.1

%

 

563

 

 

0.1

%

 

2,237

 

 

0.1

%

 

1,729

 

 

0.1

%

Other income (expense), net

14,603

 

 

2.3

%

 

1,817

 

 

0.2

%

 

(5,950

)

 

(0.3

%)

 

(2,529

)

 

(0.2

%)

 

 

 

 

 

 

 

 

 

 

 

 

Earnings (loss) before Income tax expense (benefit)

81,447

 

 

12.6

%

 

93,913

 

 

11.2

%

 

(87,079

)

 

(4.6

%)

 

123,742

 

 

4.6

%

 

 

 

 

 

 

 

 

 

 

 

 

Income tax expense (benefit)

8,512

 

 

1.4

%

 

11,864

 

 

1.5

%

 

(6,338

)

 

(0.3

%)

 

22,513

 

 

0.8

%

 

 

 

 

 

 

 

 

 

 

 

 

Net earnings (loss)

72,935

 

 

11.2

%

 

82,049

 

 

9.7

%

 

(80,741

)

 

(4.3

%)

 

101,229

 

 

3.8

%

 

 

 

 

 

 

 

 

 

 

 

 

Net earnings attributable to noncontrolling interests

2,516

 

 

0.3

%

 

2,445

 

 

0.2

%

 

488

 

 

0.0

%

 

5,254

 

 

0.2

%

 

 

 

 

 

 

 

 

 

 

 

 

Net earnings (loss) attributable to Guess?, Inc.

$

70,419

 

 

10.9

%

 

$

79,604

 

 

9.5

%

 

$

(81,229

)

 

(4.3

%)

 

$

95,975

 

 

3.6

%

 

 

 

 

 

 

 

 

 

 

 

 

Net earnings (loss) per common share attributable to common stockholders:

Basic

$

1.10

 

 

 

 

$

1.21

 

 

 

 

$

(1.27

)

 

 

 

$

1.35

 

 

 

Diluted

$

1.07

 

 

 

 

$

1.18

 

 

 

 

$

(1.27

)

 

 

 

$

1.33

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding attributable to common stockholders:

Basic

63,033

 

 

 

 

65,019

 

 

 

 

64,179

 

 

 

 

70,461

 

 

 

Diluted

65,003

 

 

 

 

66,653

 

 

 

 

64,179

 

 

 

 

71,669

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Effective income tax rate

10.5

%

 

 

12.6

%

 

 

7.3

%

 

 

18.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted selling, general and administrative expenses1:

$

202,117

 

 

31.2

%

 

$

236,919

 

 

28.1

%

 

$

677,110

 

 

36.0

%

 

$

865,479

 

 

32.3

%

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted earnings from operations1:

$

74,208

 

 

11.4

%

 

$

101,675

 

 

12.1

%

 

$

19,992

 

 

1.1

%

 

$

150,229

 

 

5.6

%

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted net earnings (loss) attributable to Guess?, Inc.1:

$

77,668

 

 

12.0

%

 

$

82,336

 

 

9.8

%

 

$

(4,521

)

 

(0.2

%)

 

$

105,036

 

 

3.9

%

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted diluted earnings (loss) per common share attributable to common stockholders1:

$

1.18

 

 

 

 

$

1.22

 

 

 

 

$

(0.07

)

 

 

 

$

1.45

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted effective income tax rate1:

7.2

%

 

 

16.5

%

 

 

206.0

%

 

 

21.7

%

 

______________________________________________________________________

1

The adjusted results for the three months and fiscal year ended January 30, 2021 reflect the exclusion of certain professional service, legal fees and related (credits) costs, certain separation charges, asset impairment charges, net gains on lease modifications, non-cash amortization of debt discount on the Company's convertible senior notes, the related income tax impacts of these adjustments as well as certain discrete income tax adjustments, where applicable. The adjusted results for the three months and fiscal year ended February 1, 2020 reflect the exclusion of certain professional service, legal fees and related (credits) costs, separation charges related to the departure of our former CEO, asset impairment charges, non-cash amortization of debt discount on the Company's convertible senior notes, and the related income tax impacts of these adjustments as well as the impact from changes in the tax law on deferred taxes in certain tax jurisdictions, net tax settlements and adjustments to specific uncertain tax positions, where applicable. A complete reconciliation of actual results to adjusted results is presented in the table entitled "Reconciliation of GAAP Results to Adjusted Results."

Guess?, Inc. and Subsidiaries

Reconciliation of GAAP Results to Adjusted Results

(dollars in thousands)

The following table provides reconciliations of reported GAAP selling, general and administrative expenses to adjusted selling, general and administrative expenses, reported GAAP earnings (loss) from operations to adjusted earnings from operations, reported GAAP net earnings (loss) attributable to Guess?, Inc. to adjusted net earnings (loss) attributable to Guess?, Inc. and reported GAAP income tax expense (benefit) to adjusted income tax expense for the three months and fiscal year ended January 30, 2021 and February 1, 2020.

 

Three Months Ended

 

Fiscal Year Ended

 

January 30,

2021

 

February 1,

2020

 

January 30,

2021

 

February 1,

2020

 

 

 

 

 

 

 

 

Reported GAAP selling, general and administrative expenses

$

201,638

 

 

 

$

237,237

 

 

 

$

679,958

 

 

 

$

865,060

 

 

Certain professional service, legal fees and related net credits1

509

 

 

 

120

 

 

 

565

 

 

 

857

 

 

Separation charges2

(30

)

 

 

(438

)

 

 

(3,413

)

 

 

(438

)

 

 

 

 

 

 

 

 

 

Adjusted selling, general and administrative expenses

$

202,117

 

 

 

$

236,919

 

 

 

$

677,110

 

 

 

$

865,479

 

 

 

 

 

 

 

 

 

 

Reported GAAP earnings (loss) from operations

$

71,872

 

 

 

$

96,506

 

 

 

$

(60,497

)

 

 

$

140,671

 

 

Certain professional service, legal fees and related net credits1

(509

)

 

 

(120

)

 

 

(565

)

 

 

(857

)

 

Separation charges2

30

 

 

 

438

 

 

 

3,413

 

 

 

438

 

 

Asset impairment charges3

5,166

 

 

 

4,851

 

 

 

80,442

 

 

 

9,977

 

 

Net gains on lease modifications4

(2,351

)

 

 

 

 

 

(2,801

)

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted earnings from operations

$

74,208

 

 

 

$

101,675

 

 

 

$

19,992

 

 

 

$

150,229

 

 

 

 

 

 

 

 

 

 

Reported GAAP net earnings (loss) attributable to Guess?, Inc.

$

70,419

 

 

 

$

79,604

 

 

 

$

(81,229

)

 

 

$

95,975

 

 

Certain professional service, legal fees and related net credits1

(509

)

 

 

(120

)

 

 

(565

)

 

 

(857

)

 

Separation charges2

30

 

 

 

438

 

 

 

3,413

 

 

 

438

 

 

Asset impairment charges3

5,166

 

 

 

4,851

 

 

 

80,442

 

 

 

9,977

 

 

Net gains on lease modifications4

(2,351

)

 

 

 

 

 

(2,801

)

 

 

 

 

Amortization of debt discount5

2,598

 

 

 

2,449

 

 

 

10,394

 

 

 

7,558

 

 

Discrete tax adjustments6

3,248

 

 

 

 

 

 

4,053

 

 

 

 

 

Income tax impact from adjustments7

(933

)

 

 

(4,886

)

 

 

(18,228

)

 

 

(8,055

)

 

 

 

 

 

 

 

 

 

Total adjustments affecting net earnings (loss) attributable to Guess?, Inc.

7,249

 

 

 

2,732

 

 

 

76,708

 

 

 

9,061

 

 

 

 

 

 

 

 

 

 

Adjusted net earnings (loss) attributable to Guess?, Inc.

$

77,668

 

 

 

$

82,336

 

 

 

$

(4,521

)

 

 

$

105,036

 

 

 

 

 

 

 

 

 

 

Reported GAAP income tax expense (benefit)

$

8,512

 

 

 

$

11,864

 

 

 

$

(6,338

)

 

 

$

22,513

 

 

Discrete tax adjustments6

(3,248

)

 

 

 

 

 

(4,053

)

 

 

 

 

Income tax impact from adjustments7

933

 

 

 

4,886

 

 

 

18,228

 

 

 

8,055

 

 

 

 

 

 

 

 

 

 

Adjusted income tax expense

$

6,197

 

 

 

$

16,750

 

 

 

$

7,837

 

 

 

$

30,568

 

 

 

 

 

 

 

 

 

 

Adjusted effective income tax rate

7.2

%

 

16.5

%

 

206.0

%

 

21.7

%

______________________________________________________________________

1

During the three months and fiscal year ended January 30, 2021 and February 1, 2020, the Company recorded certain professional service, legal fees and related net credits, which it otherwise would not have incurred as part of its business operations.

2

During the fiscal year ended January 30, 2021, the Company recorded $0.2 million in separation-related charges mainly related to certain cash severance payments, partially offset by adjustments to non-cash stock-based compensation expense related to our former Chief Executive Officer resulting from changes in expected performance conditions of certain previously granted stock awards that were no longer subject to service vesting requirements after his departure. Additionally, during the fiscal year ended January 30, 2021, the Company recorded $3.2 million in separation-related charges mainly related to headcount reduction in response to the COVID-19 pandemic. During the three months and fiscal year ended February 1, 2020, the Company recorded $0.4 million mainly related to non-cash stock-based compensation expense resulting from changes in expected performance conditions of certain previously granted stock awards that were no longer subject to service vesting requirements after the former CEO's departure.

3

During the three months and fiscal year ended January 30, 2021, the Company recognized asset impairment charges related primarily to impairment of operating lease right-of-use assets and impairment of property and equipment related to certain retail locations resulting from lower revenue and future cash flow projections from the ongoing effects of the COVID-19 pandemic. During the three months and fiscal year ended February 1, 2020, the Company's asset impairment charges related primarily to impairment of property and equipment and impairment of operating lease right-of-use assets related to certain retail locations resulting from under-performance and expected store closures as well as impairment charges related to the Company's China retail reporting unit.

4

During the three months and fiscal year ended January 30, 2021, the Company recorded net gains on lease modifications related primarily to the early termination of certain lease agreements.

5

In April 2019, the Company issued $300 million principal amount of 2.00% convertible senior notes due 2024 (the "Notes") in a private offering. The Company has separated the Notes into liability (debt) and equity (conversion option) components. The debt discount, which represents an amount equal to the fair value of the equity component, is amortized as non-cash interest expense over the term of the Notes.

6

During the three months and fiscal year ended January 30, 2021, the discrete tax adjustments related primarily to the negative impact from cumulative valuation allowances, partially offset by tax benefits from a tax rate change due to net operating loss carryback. During the three months and fiscal year ended January 30, 2021, the Company recognized an increase (decrease) in valuation allowances of $(0.7) million and $4.2 million, respectively, resulting from jurisdictions where there have been cumulative net operating losses, limiting the Company's ability to consider other subjective evidence to continue to recognize the existing deferred tax assets. This was partially offset by tax expenses of approximately $3.8 million due to better performance than initially expected during the three months ended January 30, 2021 and tax benefits of approximately $0.7 million during the year ended January 30, 2021 resulting from a tax rate change related to the ability to carryback net operating losses to tax years with a higher federal corporate tax rate as allowed under the CARES Act enacted in March 2020.

7

The income tax effect of certain professional service, legal fees and related net credits, separation charges, asset impairment charges, net gains on lease modifications and the amortization of debt discount was based on the Company's assessment of deductibility using the statutory tax rate (inclusive of the impact of valuation allowances) of the tax jurisdiction in which the charges were incurred. The income tax adjustment for the fiscal year ended February 1, 2020 also included the impact from changes in the tax law on deferred taxes in certain tax jurisdictions, net tax settlements and adjustments to specific uncertain tax positions.

Guess?, Inc. and Subsidiaries

Consolidated Segment Data

(dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Fiscal Year Ended

 

January 30,

2021

 

February 1,

2020

 

%

change

 

January 30,

2021

 

February 1,

2020

 

%

change

 

 

 

 

 

 

 

 

 

 

 

 

Net revenue:

 

 

 

 

 

 

 

Americas Retail

$

195,829

 

 

$

258,334

 

 

(24

%)

 

$

510,806

 

 

$

811,547

 

 

(37

%)

Americas Wholesale

35,476

 

 

41,884

 

 

(15

%)

 

117,607

 

 

186,389

 

 

(37

%)

Europe

307,648

 

 

420,297

 

 

(27

%)

 

941,546

 

 

1,248,114

 

 

(25

%)

Asia

80,020

 

 

95,460

 

 

(16

%)

 

232,574

 

 

346,212

 

 

(33

%)

Licensing

29,482

 

 

26,279

 

 

12

%

 

73,996

 

 

85,847

 

 

(14

%)

Total net revenue

$

648,455

 

 

$

842,254

 

 

(23

%)

 

$

1,876,529

 

 

$

2,678,109

 

 

(30

%)

 

 

 

 

 

 

 

 

 

 

 

 

Earnings (loss) from operations:

 

 

 

 

 

 

 

 

 

 

 

Americas Retail

$

25,128

 

 

$

16,533

 

 

52

%

 

$

(15,776

)

 

$

22,279

 

 

(171

%)

Americas Wholesale

8,353

 

 

8,222

 

 

2

%

 

19,912

 

 

35,674

 

 

(44

%)

Europe

38,925

 

 

79,336

 

 

(51

%)

 

66,790

 

 

134,078

 

 

(50

%)

Asia

3,971

 

 

1,541

 

 

158

%

 

(20,758

)

 

(8,894

)

 

(133

%)

Licensing

28,105

 

 

22,896

 

 

23

%

 

67,938

 

 

74,459

 

 

(9

%)

Total segment earnings from operations

104,482

 

 

128,528

 

 

(19

%)

 

118,106

 

 

257,596

 

 

(54

%)

 

 

 

 

 

 

 

 

 

 

 

 

Corporate overhead

(29,795

)

 

(27,171

)

 

10

%

 

(100,962

)

 

(106,948

)

 

(6

%)

Asset impairment charges

(5,166

)

 

(4,851

)

 

6

%

 

(80,442

)

 

(9,977

)

 

706

%

Net gains on lease modifications

2,351

 

 

 

 

 

 

2,801

 

 

 

 

 

Total earnings (loss) from operations

$

71,872

 

 

$

96,506

 

 

(26

%)

 

$

(60,497

)

 

$

140,671

 

 

(143

%)

 

 

 

 

 

 

 

 

 

 

 

 

Operating margins:

 

 

 

 

 

 

 

 

 

 

 

Americas Retail

12.8

%

 

6.4

%

 

 

 

(3.1

%)

 

2.7

%

 

 

Americas Wholesale

23.5

%

 

19.6

%

 

 

 

16.9

%

 

19.1

%

 

 

Europe

12.7

%

 

18.9

%

 

 

 

7.1

%

 

10.7

%

 

 

Asia

5.0

%

 

1.6

%

 

 

 

(8.9

%)

 

(2.6

%)

 

 

Licensing

95.3

%

 

87.1

%

 

 

 

91.8

%

 

86.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP operating margin for total Company

11.1

%

 

11.5

%

 

 

 

(3.2

%)

 

5.3

%

 

 

Certain professional service, legal fees and related net credits

(0.1

%)

 

(0.0

%)

 

 

 

(0.0

%)

 

(0.1

%)

 

 

Separation charges

0.0

%

 

0.0

%

 

 

 

0.1

%

 

0.0

%

 

 

Asset impairment charges

0.8

%

 

0.6

%

 

 

 

4.3

%

 

0.4

%

 

 

Net gains on lease modifications

(0.4

%)

 

%

 

 

 

(0.1

%)

 

%

 

 

Adjusted operating margin for total Company

11.4

%

 

12.1

%

 

 

 

1.1

%

 

5.6

%

 

 

 

Guess?, Inc. and Subsidiaries

Constant Currency Financial Measures

(dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

 

 

 

January 30, 2021

 

February 1, 2020

 

% change

 

As Reported

 

Foreign

Currency

Impact

 

Constant

Currency

 

As Reported

 

As

Reported

 

Constant

Currency

Net revenue:

 

 

 

 

 

 

 

 

 

 

 

Americas Retail

$

195,829

 

 

$

463

 

 

 

$

196,292

 

 

$

258,334

 

 

(24

%)

 

(24

%)

Americas Wholesale

35,476

 

 

508

 

 

 

35,984

 

 

41,884

 

 

(15

%)

 

(14

%)

Europe

307,648

 

 

(21,164

)

 

 

286,484

 

 

420,297

 

 

(27

%)

 

(32

%)

Asia

80,020

 

 

(4,365

)

 

 

75,655

 

 

95,460

 

 

(16

%)

 

(21

%)

Licensing

29,482

 

 

 

 

 

29,482

 

 

26,279

 

 

12

%

 

12

%

Total net revenue

$

648,455

 

 

$

(24,558

)

 

 

$

623,897

 

 

$

842,254

 

 

(23

%)

 

(26

%)

 

Fiscal Year Ended

 

 

 

 

 

January 30, 2021

 

February 1, 2020

 

% change

 

As Reported

 

Foreign Currency Impact

 

Constant Currency

 

As Reported

 

As Reported

 

Constant Currency

Net revenue:

 

 

 

 

 

 

 

 

 

 

 

Americas Retail

$

510,806

 

 

$

3,132

 

 

 

$

513,938

 

 

$

811,547

 

 

(37

%)

 

(37

%)

Americas Wholesale

117,607

 

 

3,910

 

 

 

121,517

 

 

186,389

 

 

(37

%)

 

(35

%)

Europe

941,546

 

 

(33,144

)

 

 

908,402

 

 

1,248,114

 

 

(25

%)

 

(27

%)

Asia

232,574

 

 

(3,428

)

 

 

229,146

 

 

346,212

 

 

(33

%)

 

(34

%)

Licensing

73,996

 

 

 

 

 

73,996

 

 

85,847

 

 

(14

%)

 

(14

%)

Total net revenue

$

1,876,529

 

 

$

(29,530

)

 

 

$

1,846,999

 

 

$

2,678,109

 

 

(30

%)

 

(31

%)

 

Guess?, Inc. and Subsidiaries

Selected Condensed Consolidated Balance Sheet Data

(in thousands)

 

 

 

 

 

January 30,

2021

 

February 1,

2020

 

 

 

 

ASSETS

 

 

 

 

Cash and cash equivalents

$

469,110

 

 

$

284,613

 

 

 

 

 

Receivables, net

314,147

 

 

327,281

 

 

 

 

 

Inventories

389,144

 

 

393,129

 

 

 

 

 

Other current assets

60,123

 

 

59,212

 

 

 

 

 

Property and equipment, net

216,196

 

 

288,112

 

 

 

 

 

Restricted cash

235

 

 

215

 

 

 

 

 

Operating lease right-of-use assets

764,804

 

 

851,990

 

 

 

 

 

Other assets

252,109

 

 

224,410

 

 

 

 

 

Total assets

$

2,465,868

 

 

$

2,428,962

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

Current portion of borrowings and finance lease obligations

$

38,710

 

 

$

9,490

 

 

 

 

 

Current operating lease liabilities

222,800

 

 

192,066

 

 

 

 

 

Other current liabilities

501,029

 

 

436,857

 

 

 

 

 

Long-term debt and finance lease obligations

68,554

 

 

32,770

 

 

 

 

 

Convertible senior notes, net

258,614

 

 

247,363

 

 

 

 

 

Long-term operating lease liabilities

662,657

 

 

714,079

 

 

 

 

 

Other long-term liabilities

144,004

 

 

130,259

 

 

 

 

 

Redeemable and nonredeemable noncontrolling interests

25,837

 

 

26,364

 

 

 

 

 

Guess?, Inc. stockholders' equity

543,663

 

 

639,714

 

 

 

 

 

Total liabilities and stockholders' equity

$

2,465,868

 

 

$

2,428,962

 

 

Guess?, Inc. and Subsidiaries

Condensed Consolidated Cash Flow Data

(in thousands)

 

 

 

 

 

 

 

Fiscal Year Ended

 

 

January 30,

2021

 

February 1,

2020

 

 

 

 

 

Net cash provided by operating activities

 

$

209,050

 

 

 

$

197,913

 

 

 

 

 

 

 

Net cash used in investing activities

 

(22,161

)

 

 

(56,471

)

 

 

 

 

 

 

Net cash used in financing activities

 

(9,907

)

 

 

(64,165

)

 

 

 

 

 

 

Effect of exchange rates on cash, cash equivalents and restricted cash

 

7,535

 

 

 

(3,444

)

 

 

 

 

 

 

Net change in cash, cash equivalents and restricted cash

 

184,517

 

 

 

73,833

 

 

 

 

 

 

 

Cash, cash equivalents and restricted cash at the beginning of the year

 

284,828

 

 

 

210,995

 

 

 

 

 

 

 

Cash, cash equivalents and restricted cash at the end of the year

 

$

469,345

 

 

 

$

284,828

 

 

 

 

 

 

 

Supplemental information:

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

$

63,501

 

 

 

$

72,188

 

 

 

 

 

 

 

Total lease costs (excluding finance lease cost)

 

$

283,806

 

 

 

$

368,435

 

 

 

Guess?, Inc. and Subsidiaries

Reconciliation of Net Cash Provided By Operating Activities to Free Cash Flow

(in thousands)

 

 

 

 

 

Fiscal Year Ended

 

January 30,

2021

 

February 1,

2020

 

 

 

 

Net cash provided by operating activities

$

209,050

 

 

 

$

197,913

 

 

 

 

 

 

Less: Purchases of property and equipment

(18,876

)

 

 

(61,868

)

 

 

 

 

 

Less: Payments for property and equipment under finance leases

(7,131

)

 

 

(2,733

)

 

 

 

 

 

Free cash flow

$

183,043

 

 

 

$

133,312

 

 

 

Guess?, Inc. and Subsidiaries

Retail Store Data

Global Store and Concession Count

 

 

 

 

 

 

 

 

 

 

 

 

 

As of January 30, 2021

 

Stores

 

Concessions

Region

Total

 

Directly

Operated

 

Partner

Operated

 

Total

 

Directly

Operated

 

Partner

Operated

 

 

 

 

 

 

 

 

 

 

 

 

United States

251

 

249

 

2

 

1

 

 

1

Canada

76

 

76

 

 

 

 

Central and South America

105

 

70

 

35

 

27

 

27

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Americas

432

 

395

 

37

 

28

 

27

 

1

 

 

 

 

 

 

 

 

 

 

 

 

Europe and the Middle East

725

 

507

 

218

 

44

 

44

 

Asia and the Pacific

413

 

144

 

269

 

304

 

101

 

203

 

 

 

 

 

 

 

 

 

 

 

 

Total

1,570

 

1,046

 

524

 

376

 

172

 

204

 

 

 

 

 

 

 

 

 

 

 

 

 

As of February 1, 2020

 

Stores

 

Concessions

Region

Total

 

Directly

Operated

 

Partner

Operated

 

Total

 

Directly

Operated

 

Partner

Operated

 

 

 

 

 

 

 

 

 

 

 

 

United States

282

 

280

 

2

 

1

 

 

1

Canada

80

 

80

 

 

 

 

Central and South America

113

 

73

 

40

 

27

 

27

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Americas

475

 

433

 

42

 

28

 

27

 

1

 

 

 

 

 

 

 

 

 

 

 

 

Europe and the Middle East

745

 

517

 

228

 

39

 

39

 

Asia and the Pacific

509

 

219

 

290

 

327

 

117

 

210

 

 

 

 

 

 

 

 

 

 

 

 

Total

1,729

 

1,169

 

560

 

394

 

183

 

211

 

Guess?, Inc. and Subsidiaries

Return on Invested Capital

(in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

FY2019

 

FY2020

 

FY2020

2-Year

Average

 

FY2024E

 

FY2025E

 

FY2025E

2-Year

Average

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total assets1

$

1,649,205

 

 

 

$

2,428,962

 

 

 

$

2,039,084

 

 

 

$

2,918,000

 

 

 

$

2,829,000

 

 

 

$

2,873,500

 

 

Less: cash and cash equivalents

(210,460

)

 

 

(284,613

)

 

 

(247,537

)

 

 

(786,000

)

 

 

(675,000

)

 

 

(730,500

)

 

Less: Operating right-of-use assets1

 

 

 

(851,990

)

 

 

(425,995

)

 

 

(764,000

)

 

 

(768,000

)

 

 

(766,000

)

 

Less: Accounts payable

(286,657

)

 

 

(232,761

)

 

 

(259,709

)

 

 

(346,000

)

 

 

(354,000

)

 

 

(350,000

)

 

Less: Accrued expenses

(252,392

)

 

 

(204,096

)

 

 

(228,244

)

 

 

(209,000

)

 

 

(210,000

)

 

 

(209,500

)

 

Add: Accrual for European Commission fine2

45,619

 

 

 

 

 

 

22,809

 

 

 

 

 

 

 

 

 

 

 

Average invested capital

$

945,315

 

 

 

$

855,502

 

 

 

$

900,408

 

 

 

$

813,000

 

 

 

$

822,000

 

 

 

$

817,500

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FY2020

 

 

 

 

 

FY2025E

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted earnings from operations3

 

 

 

 

$

150,229

 

 

 

 

 

 

 

$

290,000

 

 

Less: Asset impairments

 

 

 

 

(9,977

)

 

 

 

 

 

 

 

 

Less: Other income (expense), net

 

 

 

 

(2,529

)

 

 

 

 

 

 

(1,400

)

 

Less: Income tax expense4

 

 

 

 

(29,886

)

 

 

 

 

 

 

(72,150

)

 

Adjusted net operating profit after taxes

 

 

 

 

$

107,837

 

 

 

 

 

 

 

$

216,450

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP return on invested capital5

 

 

 

 

12%

 

 

 

 

 

26%

______________________________________________________________________

1

 

During fiscal year 2020, the Company adopted a comprehensive new lease standard which superseded previous lease guidance. The standard requires a lessee to recognize an asset related to the right to use the underlying asset and a liability that approximates the present value of the lease payments over the term of contracts that qualify as leases under the new guidance. The adoption of the standard resulted in the recording of operating lease right-of-use assets and operating lease liabilities.

2

 

During fiscal year 2019, the Company recognized a charge of €39.8 million ($45.6 million) related to a fine by the European Commission related to its inquiry concerning potential violations of European Union competition rules by the Company.

3

 

The adjusted earnings from operations for fiscal year 2020 reflect the exclusion of certain items which the Company believes are not indicative of the underlying performance of its business. Refer to the "Reconciliation of GAAP Results to Adjusted Results" table above.

4

 

Income taxes are calculated using the adjusted effective income tax rate for fiscal year 2020 of 21.7% and a projection of 25% for the fiscal 2025 effective income tax rate.

5

 

The Company defines return on invested capital (or "ROIC") as adjusted net operating profit after taxes divided by two-year average invested capital.

 

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