Guess? Inc (NYSE: GES) closed fiscal 2025 on a strong note with fourth-quarter revenues climbing to $932 million, driven by its 50% stake in rag & bone acquisition and strong wholesale momentum in Europe and the Americas.
Full-year sales hit $3 billion, marking an 8% increase in U.S. dollars and 10% in constant currency. The company posted an adjusted operating margin of 6.0% and adjusted EPS of $1.96, fueled by solid licensing and wholesale performance, although direct-to-consumer sales faced headwinds in North America and Asia.
Moving forward, Guess? aims for business optimization that could unlock around $30 million in additional profits by fiscal year 2027. With new growth engines like Guess Jeans and rag & bone, the company is sharpening its focus on profitability and global expansion.
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#Why This Is Important for Retail Investors
Strong Revenue Growth: Consistent sales increases across core markets and new acquisitions like its 50% stake in rag & bone signal that Guess? is building momentum even in a challenging retail environment.
Focus on Profitability: Strategic moves to streamline operations and exit unprofitable stores are designed to strengthen margins, a positive sign for future earnings growth.
Expansion of Brand Portfolio: The launch of Guess Jeans and the addition of rag & bone diversifies the business, reducing reliance on any single brand and opening new revenue streams.
Clear Cost-Saving Initiatives: Plans to unlock $30 million in operating profit through business optimization could drive higher cash flow and support potential shareholder returns.
Resilient Against Market Challenges: Despite weakness in direct-to-consumer channels, strong wholesale and licensing growth show Guess? can adapt its business model and maintain solid financial performance.
#About the Company
Guess? designs, markets, and distributes a lifestyle collection of contemporary apparel, denim, handbags, footwear, watches, and accessories. Its products are sold through branded Guess? stores, department stores, specialty retailers, and e-commerce platforms across the globe. The company operates over 1,000 stores directly and maintains a strong network of licensee and distributor partnerships in nearly 100 countries. Guess? has positioned itself as a global fashion brand known for its distinctive image and broad demographic reach, from heritage customers to Millennials and Gen Z. In 2024, Guess? expanded its portfolio by acquiring a 50% interest in rag & bone.
#Growth Drivers and Market Opportunities
Guess? sees growth opportunities through geographic expansion, brand diversification, and stronger digital engagement. The launch of GUESS JEANS targets the Gen Z market, while the addition of rag & bone opens access to a more affluent customer base. Licensing and wholesale partnerships continue to scale the brand in underpenetrated regions. Portfolio optimization, store rationalization, and a focused digital strategy aim to boost direct-to-consumer productivity. The global demand for accessible premium fashion remains resilient, offering Guess? new avenues to grow revenue and margin, especially as it taps into lifestyle branding across apparel, footwear, and accessories.
#Competitive Landscape
Guess? competes in the global fashion and lifestyle market against brands like Levi’s, Ralph Lauren, PVH Corp. (Tommy Hilfiger and Calvin Klein), and American Eagle Outfitters. Fast fashion retailers such as Zara and H&M add further pressure with speed-to-market advantages. Luxury brands expanding into more affordable lines also intensify competition for aspirational customers. Guess? differentiates itself through strong brand recognition, diversified global operations, and a multi-channel approach that blends retail, wholesale, and digital. Its recent portfolio expansion with rag & bone strengthens its position in the premium segment, helping it reach a broader and higher-spending audience.
#Risks and Challenges
Guess? faces several risks, including shifting consumer preferences, macroeconomic volatility, and heightened competition. The company must successfully integrate rag & bone without disrupting existing operations. Ongoing challenges in Asia, particularly China, could weigh on direct-to-consumer performance.
Foreign exchange fluctuations impact reported revenue and earnings due to the company’s significant international exposure. Execution risk around store closures and business optimization efforts could also temporarily affect financial performance. Additionally, any misalignment between brand positioning and evolving fashion trends could impact sales growth and profitability, especially as Guess? targets newer demographics with initiatives like GUESS JEANS.
#Capital Allocation and Investment Plans
Guess? continues to prioritize a balanced approach to capital allocation. It returns value to shareholders through dividends and share repurchases while maintaining flexibility for strategic investments. The company raised its regular dividend by 33%, announced a $2.25 special dividend, and authorized a $200 million share buyback program.
At the same time, it is investing in digital infrastructure, store optimization, and brand development, particularly with the GUESS JEANS launch and rag & bone integration.
Guess? maintains a strong cash position of $360 million, providing ample liquidity to support growth initiatives while preserving its solid financial foundation.
#Recent Developments and Milestones
Guess? announced the appointment of Alberto Toni as its new Chief Financial Officer, effective after the company files its next quarterly report in mid-June. Toni will succeed Interim CFO Dennis Secor, who will stay on through September to support the transition. Based in Lugano, Switzerland, Toni will oversee Guess?’s global finance operations. He brings over 30 years of international financial and operational experience, including leadership roles at Flos B&B Italia Group, Bata, Deoleo, and Heineken. Management sees Toni’s expertise as a key asset in driving portfolio optimization, cost efficiency, and long-term growth.
#What's Next: Catalysts and Risks
Key catalysts include the successful integration of rag & bone, stronger direct-to-consumer sales through store optimization, and global expansion of GUESS JEANS. Transitioning the Greater China business to a local partner could boost regional profitability.
However, risks remain, including softer traffic trends in North America and Asia, operational execution challenges, and economic uncertainty. Currency fluctuations may continue to impact results given Guess?’s broad international presence.
Investors will closely watch upcoming earnings reports for signs of margin improvement and progress on the company’s $30 million operating profit enhancement target by fiscal 2027.
#Relevant ETFs
Investors interested in Guess? may find exposure through ETFs focused on consumer discretionary and retail sectors.
SPDR S&P Retail ETF (XRT)
Consumer Discretionary Select Sector SPDR Fund (XLY)
Amplify Online Retail ETF (IBUY)