Summary: Guess Inc delivered a solid top-line in QQ2 2025, with revenue of $732.6 million and 10% year-over-year growth, aided by the Rag & Bone acquisition and continued strength in European wholesale. However, GAAP net income was negative (-$10.6 million) as the company invested aggressively in growth initiatives, marketing, and platform integration, leaving adjusted earnings per share (EPS) at $0.42 for the quarter. The results reflect a hybrid story: near-term margin pressure from higher occupancy costs, elevated marketing spend, and integration costs, countered by improving mixes (Europe wholesale, accessories/licensing) and a powerful growth platform that management believes can unlock multi-brand, multi-region upside over the medium term.
The quarter underscored the strategic pivot to a broader Guess platform, with Rag & Bone now embedded in the portfolio and Guess Jeans being positioned as a new, youth-oriented lifestyle brand. Management signaled a material investment cadence (marketing, CRM, social media, and new store concepts) and guided for a resilient FY2025 despite a softer consumer backdrop. Key takeaways include: (1) FY2025 revenue growth guidance of 9.5%–11%, (2) adjusted operating margin target of 7.3%–7.8% for the year with Q3 margin of 4.7%–5.8% and Q4 margin expansion expected, (3) roughly $100 million of free cash flow in 2025, aided by a stronger European wholesale book and operational leverage, and (4) a strengthened balance sheet with expanded liquidity, refinanced converts to 2028, and European credit facility expansion.
Investors should monitor: the trajectory of Rag & Bone’s contribution to top-line and margins, the effectiveness of the new marketing and CRM initiatives, currency dynamics (notably euro strength/weakness), freight/logistics costs (approx. $10 million back-half headwind), and the pace of regional turnarounds in Americas retail and Asia. Overall, the company’s long-term thesis hinges on leveraging a diversified, brand-led platform to drive accelerated growth across geographies and channels.”,