Guess Q1: Rag & Bone acquisition boosts revenue, net loss widens

Guess financial results for the first quarter ended May 3, 2025, revealed a complex picture of growth driven by strategic acquisitions and wholesale momentum, set against a backdrop of increased losses. Despite a GAAP net loss for the quarter, the company's revenue surpassed expectations, primarily attributed to the successful integration of the newly acquired Rag & Bone brand and robust performance in its European and Americas wholesale businesses.

Total net revenue for the quarter increased by 9 percent to 647.8 million dollars, or 12 percent in constant currency.

Carlos Alberini, chief executive officer, expressed encouragement, stating, "Revenue grew 9% in U.S. dollars and 12% in constant currency, reflecting the successful integration of rag & bone and continued momentum in our wholesale businesses across Europe and the Americas." He also highlighted disciplined expense management as a factor in narrowing the quarterly loss.

Highlights of Guess Q1 results

For the first quarter, Guess reported a GAAP net loss of 32.9 million dollars, a significant shift from a GAAP net earnings of 13 million dollars in the comparable prior-year quarter. Consequently, GAAP diluted net loss per share was 65 cents, compared to GAAP diluted net earnings per share of 23 cents in the prior year. On an adjusted basis, the net loss increased by 61 percent to 22.3 million dollars, resulting in an adjusted diluted net loss per share of 44 cents, up 63 percent from 27 cents previously.

Regionally, Europe revenues saw an 8 percent increase (9 percent in constant currency), though retail comparable sales in the region decreased by 4 percent (3 percent in constant currency). Americas Retail revenues grew 9 percent (12 percent in constant currency), but retail comparable sales in this segment experienced an 11 percent decline (9 percent in constant currency). Americas Wholesale revenues demonstrated strong growth, increasing by 63 percent (70 percent in constant currency).

Asia revenues, on the other hand, decreased by 20 percent (16 percent in constant currency), with retail comparable sales down 24 percent (20 percent in constant currency). Licensing revenues also saw a 14 percent decrease.

For the second quarter of fiscal 2026, Guess projects consolidated net revenue to increase between 2.9 percent and 4.7 percent, with GAAP and adjusted operating margins expected to be between 2.5 percent and 3.3 percent. This translates to projected GAAP and adjusted earnings from operations ranging from 19 million dollars to 26 million dollars, and diluted EPS from 11 cents to 18 cents (GAAP) and 11 cents to 21 cents (adjusted).

For the full fiscal year 2026, the company anticipates consolidated net revenue growth of 5.5 percent to 7.4 percent, GAAP operating margin between 3.9 percent and 4.6 percent, and adjusted operating margin between 4.4 percent and 5.1 percent. Full-year GAAP earnings from operations are projected between 124 million dollars and 148 million dollars, with adjusted earnings from operations between 139 million dollars and 163 million dollars. Diluted EPS for the full year is expected to be 87 cents to 1.11 dollars (GAAP) and 1.32 dollars to 1.64 dollars (adjusted).

Guess plans to expand Rag & Bone into new markets

Paul Marciano, co-founder and chief creative officer, underscored the strength of Guess's diversified business model, which encompasses 25 product categories, multiple global markets, and various consumer channels.

The company plans to leverage this extensive platform to fuel future revenue growth, including expanding Rag & Bone into new markets and product categories, broadening the distribution of its Guess Athleisure line, and increasing the market share of its Guess Jeans brand among younger consumers.

Looking ahead, Alberini anticipates continued revenue growth for the remainder of fiscal 2026, driven by the expansion of Rag & Bone, the ongoing development of Guess Jeans, and a new joint venture with the Chalhoub Group in the Middle East.

Proactive measures have been taken to manage tariff exposure, aiming to limit the net impact to less than 10 million dollars for the year. The company’s board of directors approved a quarterly cash dividend of 30 cents per share payable on July 3, 2025.