Guess?, Inc. Reports Fiscal Year 2022 Second Quarter Results

Rhea-AI Summary

In Q2 fiscal 2022, Guess? reported revenues of $629 million, reflecting a 58% increase year-over-year but an 8% decline compared to Q2 fiscal 2020. Operating margin improved to 13.9%, more than doubling from pre-pandemic levels, while earnings per share soared to $0.91, a 160% increase from the same quarter of fiscal 2020. The company raised its full-year operating margin outlook to 10% and set a long-term goal for 12% by fiscal 2024. Additionally, a share repurchase authorization was increased to $200 million.

Positive

• Q2 revenue of $629 million, up 58% YoY.
• Operating margin increased to 13.9%, improving over pre-pandemic levels.
• EPS rose to $0.91, a 160% increase from Q2 fiscal 2020.
• Raised full-year operating margin outlook to 10%; long-term goal set at 12% by fiscal 2024.
• Increased share repurchase authorization to $200 million.

Negative

• Q2 revenue down 8% compared to Q2 fiscal 2020, primarily due to timing shifts in European shipments and store closures.
• Net revenue for the first six months of fiscal 2022 decreased 5.8% compared to the same period in fiscal 2020.

Q2 Fiscal 2022 Revenues Reached $629 Million, Up 58% Compared to Q2 Fiscal 2021, Down 8% Compared to Q2 Fiscal 2020

More than Doubled Operating Margin Versus the Pre-Pandemic Levels to Reach 13.9%

Q2 Earnings Per Share Increased by Over 2.5x Compared to Pre-Pandemic Levels to Finish at $0.91

Raising Full-Year Outlook for Operating Margin to 10.0%; Increasing Long-Term Operating Margin Goal to 12% and Adjusted Earnings Per Share to $3.50 by Fiscal 2024

Increases Share Repurchase Authorization to $200 Million

LOS ANGELES--(BUSINESS WIRE)-- Guess?, Inc. (NYSE: GES) today reported financial results for its second quarter ended July 31, 2021.

Carlos Alberini, Chief Executive Officer, commented, “We are very pleased with our performance this quarter, which significantly exceeded our earnings expectations. Compared to the second quarter of fiscal 2020, the LLY period, we expanded operating margin by over 700 basis points to 13.9%. Our revenues for the quarter finished down 8% versus LLY. The entire decline was due to a timing shift of European wholesale shipments into the third quarter and the impact of permanent store closures. We achieved this result in spite of the pandemic and being significantly less promotional in all of our direct-to-consumer businesses. Our operating profit growth was strong, up 90% to LLY. This resulted in earnings per share of $0.91, versus $0.35 in the LLY period.”

Paul Marciano, Co-Founder and Chief Creative Officer, added, “During the quarter we made great progress on our brand elevation strategy. This is a very ambitious project that touches almost every aspect of our business. The work that our teams have put into this has been extraordinary, and I want to thank them for their great contributions to this key initiative for our Company and our future.”

Mr. Alberini concluded, “Based on our progress, we now expect to deliver our 10% operating margin goal in the current year and are raising our expectations to reach 12% by fiscal year 2024, which would yield a return on invested capital of over 30% and adjusted earnings per share of around $3.50. The Guess brand has significant white space for revenue growth, and we are confident in our ability to reach our $2.8 billion revenue target by fiscal 2024. We continue to prioritize returning value to our shareholders and announced today that our Board has approved an increase of our existing share buyback program to $200 million. Overall, I could not be more excited about our future.”

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 and legal fees and related (credits) costs, (iv) certain separation charges, (v) non-cash debt discount amortization on our convertible senior notes, (vi) the related income tax effects of the foregoing items, as well as the impact from changes in the income tax law on deferred income taxes in certain tax jurisdictions, net income 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.

Second Quarter Fiscal 2022 Results Compared to Second Quarter Fiscal 2020

For the second quarter of fiscal 2022, the Company recorded GAAP net earnings of $61.1 million, a 141.1% increase from $25.3 million for the second quarter of fiscal 2020. GAAP diluted EPS increased 160.0% to $0.91 for the second quarter of fiscal 2022, compared to $0.35 for the second quarter of fiscal 2020. The Company estimates a positive impact from its share buybacks of $0.11 and a minimal impact from currency on GAAP diluted EPS in the second quarter of fiscal 2022 when compared to the second quarter of fiscal 2020.

For the second quarter of fiscal 2022, the Company’s adjusted net earnings were $64.1 million, a 133.7% increase from $27.4 million for the second quarter of fiscal 2020. Adjusted diluted EPS increased 152.6% to $0.96, compared to $0.38 for the second quarter of fiscal 2020. The Company estimates its share buybacks had a positive impact of $0.13 and currency had a minimal impact on adjusted diluted EPS in the second quarter of fiscal 2022 when compared to the second quarter of fiscal 2020.

Net Revenue. Total net revenue for the second quarter of fiscal 2022 decreased 8.0% to $628.6 million, from $683.2 million in the second quarter of fiscal 2020. In constant currency, net revenue decreased by 10.8%.

Earnings from Operations. GAAP earnings from operations for the second quarter of fiscal 2022 increased 90.0% to $87.4 million (including $0.4 million net gains on lease modifications, $1.5 million in non-cash impairment charges taken on certain long-lived store related assets and a $0.3 million favorable currency translation impact), from $46.0 million (including $1.5 million in non-cash impairment charges taken on certain long-lived store related assets) in the second quarter of fiscal 2020. GAAP operating margin in the second quarter of fiscal 2022 increased 7.2% to 13.9%, from 6.7% in the second quarter of fiscal 2020, driven primarily by lower markdowns, lower occupancy costs and higher initial markups. The negative impact of currency on operating margin for the quarter was approximately 30 basis points.

For the second quarter of fiscal 2022, adjusted earnings from operations increased 84.9% to $88.6 million, from $47.9 million in the second quarter of fiscal 2020. Adjusted operating margin increased 7.1% to 14.1%, from 7.0% in the second quarter of fiscal 2020, driven primarily by lower markdowns, lower occupancy costs and higher initial markups.

Second Quarter Fiscal 2022 Results Compared to Second Quarter Fiscal 2021

For the second quarter of fiscal 2022, the Company recorded GAAP net earnings of $61.1 million, as compared to a GAAP net loss of $20.4 million for the second quarter of fiscal 2021. GAAP diluted EPS increased to $0.91 for the second quarter of fiscal 2022, compared to a GAAP diluted loss per share of $0.31 for the same prior-year quarter. The Company estimates a positive impact from its share buybacks and currency of $0.03 and $0.01, respectively, on GAAP diluted EPS in the second quarter of fiscal 2022 when compared to the prior-year quarter.

For the second quarter of fiscal 2022, the Company’s adjusted net earnings were $64.1 million, as compared to the Company’s adjusted net loss of $0.6 million for the second quarter of fiscal 2021. Adjusted diluted EPS increased to $0.96, compared to adjusted diluted loss per share of $0.01 for the same prior-year quarter. The Company estimates its share buybacks had a positive impact of $0.03 and currency had a minimal impact on adjusted diluted EPS in the second quarter of fiscal 2022 when compared to the prior-year quarter.

Net Revenue. Total net revenue for the second quarter of fiscal 2022 increased 57.7% to $628.6 million, from $398.5 million in the same prior-year quarter. In constant currency, net revenue increased by 51.1%.

Earnings (Loss) from Operations. GAAP earnings from operations for the second quarter of fiscal 2022 increased to $87.4 million (including $0.4 million net gains on lease modifications, $1.5 million in non-cash impairment charges taken on certain long-lived store related assets and a $2.3 million favorable currency translation impact), from a GAAP loss from operations of $14.3 million (including $0.9 million net gains on lease modifications and $12.0 million in non-cash impairment charges taken on certain long-lived store related assets) in the same prior-year quarter. GAAP operating margin in the second quarter of fiscal 2022 increased 17.5% to 13.9%, from negative 3.6% in the same prior-year quarter, driven primarily by overall leveraging of expenses. The positive impact of currency on operating margin for the quarter was approximately 30 basis points.

For the second quarter of fiscal 2022, adjusted earnings from operations increased to $88.6 million, from an adjusted operating loss of $0.9 million in the same prior-year quarter. Adjusted operating margin increased 14.3% to 14.1%, from negative 0.2% in the same prior-year quarter, driven primarily by overall leveraging of expenses.

Six-Month Period Fiscal 2022 Results Compared to Six-Month Period Fiscal 2020

For the six months ended July 31, 2021, the Company recorded GAAP net earnings of $73.1 million, compared to $3.9 million for the six months ended August 3, 2019. GAAP diluted EPS was $1.10 for the six months ended July 31, 2021, compared to $0.05 for the six months ended August 3, 2019. The Company estimates a net positive impact from its share buybacks and its prior year convertible notes transaction of $0.16 and a negative currency impact of $0.06 on GAAP diluted EPS for the six months ended July 31, 2021 when compared to the six months ended August 3, 2019.

For the six months ended July 31, 2021, the Company recorded adjusted net earnings of $78.0 million, compared to $7.8 million for the six months ended August 3, 2019. Adjusted diluted EPS was $1.17, compared to $0.10 for the six months ended August 3, 2019. The Company estimates its share buybacks and its prior year convertible notes transaction had a net positive impact of $0.20 and currency had a negative impact of $0.06 on adjusted diluted EPS during the six months ended July 31, 2021 when compared to the six months ended August 3, 2019.

Net Revenue. Total net revenue for the first six months of fiscal 2022 decreased 5.8% to $1.15 billion, from $1.22 billion for the six months ended August 3, 2019. In constant currency, net revenue decreased by 8.3%.

Earnings from Operations. GAAP earnings from operations for the first six months of fiscal 2022 was $114.0 million (including $2.6 million net gains on lease modifications, $1.9 million in non-cash impairment charges taken on certain long-lived store related assets and a $1.9 million unfavorable currency translation impact), compared to $21.5 million (including $3.3 million in non-cash impairment charges taken on certain long-lived store related assets) for the six months ended August 3, 2019. GAAP operating margin for the first six months of fiscal 2022 increased 8.1% to 9.9%, from 1.8% for the six months ended August 3, 2019, driven primarily by lower occupancy costs, higher initial markups and lower markdowns. The negative impact of currency on operating margin for the first six months of fiscal 2020 was approximately 50 basis points.

For the six months ended July 31, 2021, adjusted earnings from operations was $114.5 million, compared to $25.5 million for the six months ended August 3, 2019. Adjusted operating margin improved 7.9% to 10.0% for the six months ended July 31, 2021, from 2.1% for the six months ended August 3, 2019, driven primarily by lower occupancy costs, higher initial markups and lower markdowns.

Six-Month Period Fiscal 2022 Results Compared to Six-Month Period Fiscal 2021

For the six months ended July 31, 2021, the Company recorded GAAP net earnings of $73.1 million, compared to GAAP net loss of $178.0 million for the six months ended August 1, 2020. GAAP diluted EPS was $1.10 for the six months ended July 31, 2021, compared to GAAP diluted loss per share of $2.72 during the same prior-year period. The Company estimates a net positive impact from its share buybacks and its prior year convertible notes transaction and currency of $0.05 and $0.10, respectively, on GAAP diluted EPS for the six months ended July 31, 2021 when compared to the same prior-year period.

For the six months ended July 31, 2021, the Company recorded adjusted net earnings of $78.0 million, compared to an adjusted net loss of $119.6 million for the six months ended August 1, 2020. Adjusted diluted EPS was $1.17, compared to adjusted loss per share of $1.83 during the same prior-year period. The Company estimates its share buybacks and its prior year convertible notes transaction and currency had a net positive impact of $0.05 and $0.09, respectively, on adjusted diluted EPS during the six months ended July 31, 2021 when compared to the same prior-year period.

Net Revenue. Total net revenue for the first six months of fiscal 2022 increased 74.4% to $1.15 billion, from $658.8 million in the same prior-year period. In constant currency, net revenue increased by 66.6%.

Earnings (Loss) from Operations. GAAP earnings from operations for the first six months of fiscal 2022 was $114.0 million (including $2.6 million net gains on lease modifications, $1.9 million in non-cash impairment charges taken on certain long-lived store related assets and a $1.6 million favorable currency translation impact), compared to GAAP loss from operations of $176.8 million (including $0.4 million net gains on lease modifications and $64.9 million in non-cash impairment charges taken on certain long-lived store related assets) in the same prior-year period. GAAP operating margin in fiscal 2022 increased 36.7% to 9.9%, from negative 26.8% in the same prior-year period, driven primarily by overall leveraging of expenses. The impact of currency on operating margin was minimal for the six months ended July 31, 2021.

For the six months ended July 31, 2021, adjusted earnings from operations was $114.5 million, compared to adjusted loss from operations of $109.5 million for the six months ended August 1, 2020. Adjusted operating margin improved 26.6% to 10.0% for the six months ended July 31, 2021, from negative 16.6% in the same prior-year period, driven primarily by overall leveraging of expenses.

Outlook

Given the current circumstances regarding the coronavirus (or “COVID-19”) crisis and its uncertain impact on our operations, we are not providing detailed guidance for the third quarter or the full fiscal year ending January 29, 2022. We expect revenues in the third quarter of fiscal 2022 to be slightly negative to flat versus the third quarter of fiscal 2020 as pandemic-related traffic declines are almost offset by continued momentum in our global e-commerce business and the favorable shift of European wholesale shipments from the second quarter into the third quarter.

For the full fiscal year 2022, assuming no additional COVID-related shutdowns past the second quarter, we expect revenues to be down mid-single digits versus fiscal 2020 and operating margin to reach approximately 10.0%. The expectations for the full year also assume a return to a normal cadence of product development for our European wholesale business. These comparisons are versus the pre-pandemic periods from two fiscal years prior in order to provide a more normalized comparison.

COVID-19 Second Quarter Business Update

The COVID-19 pandemic is continuing to impact the Company’s businesses. During the second quarter of fiscal 2022, the Company experienced lower net revenue compared to the second quarter of fiscal 2020 as it remained challenged by lower demand, capacity restrictions and temporary store closures. In light of the current environment, we continue to strategically manage expenses in order to protect profitability.

During the second quarter of fiscal 2022, the Company gradually reopened its stores that were closed at the end of the first quarter of fiscal 2022 due to COVID-19 restrictions. The overall impact resulted in stores being closed for approximately 5% of the total days during the second quarter of fiscal 2022, primarily in Europe and Canada. As of July 31, 2021, 100% of our stores were open.

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 September 24, 2021 to shareholders of record as of the close of business on September 8, 2021.

Share Repurchase

The Company announced today that its Board of Directors has authorized a program to repurchase, from time-to-time and as market and business conditions warrant, up to $200 million of its common stock. The newly authorized $200 million program includes $48 million remaining under the Company's previously authorized $500 million repurchase program. Repurchases may be made on the open market or in privately negotiated transactions, pursuant to Rule 10b5-1 trading plans or other available means. There is no minimum or maximum number of shares to be repurchased under the program and the program may be discontinued at any time, without prior notice.

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 six months ended July 31, 2021, August 1, 2020 and August 3, 2019, the adjusted results exclude the impact of certain professional service and 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 effects of the foregoing items, as well as the impact from changes in the income tax law on deferred income taxes in certain tax jurisdictions, net income tax settlements and adjustments to specific uncertain income tax positions, as well as certain discrete income tax adjustments, 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 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.

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 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.

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 income taxes divided by two-year average invested capital. The Company believes 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 August 25, 2021 to discuss the news announced in this press release. A live webcast of the conference call will be accessible at www.guess.com via the “Investor Relations” link. The webcast will be archived on the website for 30 days.

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 July 31, 2021, the Company directly operated 1,046 retail stores in the Americas, Europe and Asia. The Company’s partners and distributors operated 551 additional retail stores worldwide. As of July 31, 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 third quarter and full year of fiscal 2022 as well as fiscal 2024; statements concerning the Company’s expectations, goals, future prospects, global cost reduction opportunities, longer-term operating margin, revenue, EPS and ROIC expectations, capital allocation plans, cash needs and current business strategies and strategic initiatives; and statements expressing optimism or pessimism about future operating results and growth opportunities 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 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. 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
		July 31, 2021							August 1, 2020							August 3, 2019
		$				%			$				%			$				%
Product sales		$	606,691			96.5	%		$	386,392			97.0	%		$	664,678			97.3	%
Net royalties		21,933				3.5	%		12,147				3.0	%		18,542				2.7	%
Net revenue		628,624				100.0	%		398,539				100.0	%		683,220				100.0	%
Cost of product sales		334,538				53.2	%		251,511				63.1	%		417,554				61.1	%
Gross profit		294,086				46.8	%		147,028				36.9	%		265,666				38.9	%
Selling, general and administrative expenses		205,617				32.8	%		150,293				37.7	%		218,175				32.0	%
Asset impairment charges		1,501				0.2	%		11,969				3.0	%		1,504				0.2	%
Net gains on lease modifications		(420		)		(0.1	%)		(885		)		(0.2	%)		—				—	%
Earnings (loss) from operations		87,388				13.9	%		(14,349		)		(3.6	%)		45,987				6.7	%
Other income (expense):
Interest expense		(6,009		)		(1.0	%)		(5,941		)		(1.5	%)		(4,951		)		(0.7	%)
Interest income		461				0.1	%		436				0.1	%		313				0.0	%
Other income (expense), net		(1,001		)		(0.1	%)		5,548				1.4	%		(6,355		)		(0.9	%)
Earnings (loss) before income tax expense		80,839				12.9	%		(14,306		)		(3.6	%)		34,994				5.1	%
Income tax expense		17,692				2.9	%		6,386				1.6	%		8,818				1.3	%
Net earnings (loss)		63,147				10.0	%		(20,692		)		(5.2	%)		26,176				3.8	%
Net earnings (loss) attributable to noncontrolling interests		2,085				(0.3	%)		(334		)		(0.1	%)		854				0.1	%
Net earnings (loss) attributable to Guess?, Inc.		$	61,062			9.7	%		$	(20,358	)		(5.1	%)		$	25,322			3.7	%
Net earnings (loss) per common share attributable to common stockholders:
Basic		$	0.94						$	(0.31	)					$	0.36
Diluted		$	0.91						$	(0.31	)					$	0.35
Weighted average common shares outstanding attributable to common stockholders:
Basic		64,336							65,177							70,508
Diluted		66,074							65,177							71,356
Effective income tax rate		21.9		%					(44.6		)%					25.2		%
Adjusted selling, general and administrative expenses1:		$	205,508			32.7	%		$	147,937			37.1	%		$	217,770			31.9	%
Adjusted earnings (loss) from operations1:		$	88,578			14.1	%		$	(909	)		(0.2	%)		$	47,896			7.0	%
Adjusted net earnings (loss) attributable to Guess?, Inc.1:		$	64,078			10.2	%		$	(639	)		(0.2	%)		$	27,414			4.0	%
Adjusted diluted earnings (loss) per common share attributable to common stockholders1:		$	0.96						$	(0.01	)					$	0.38
Adjusted effective income tax rate1:		22.0		%					156.2		%					28.2		%
______________________________________________________________________
See page 22 for footnotes.

Guess?, Inc. and Subsidiaries
Condensed Consolidated Statements of Income (Loss)
(amounts in thousands, except per share data)
		Six Months Ended
		July 31, 2021							August 1, 2020							August 3, 2019
		$				%			$				%			$				%
Product sales		$	1,105,168			96.2	%		$	633,709			96.2	%		$	1,182,551			96.9	%
Net royalties		43,458				3.8	%		25,081				3.8	%		37,360				3.1	%
Net revenue		1,148,626				100.0	%		658,790				100.0	%		1,219,911				100.0	%
Cost of product sales		642,982				56.0	%		477,533				72.5	%		772,296				63.3	%
Gross profit		505,644				44.0	%		181,257				27.5	%		447,615				36.7	%
Selling, general and administrative expenses		392,301				34.1	%		293,581				44.5	%		422,820				34.6	%
Asset impairment charges		1,942				0.2	%		64,941				9.9	%		3,279				0.3	%
Net gains on lease modifications		(2,565		)		(0.2	%)		(429		)		(0.1	%)		—				—	%
Earnings (loss) from operations		113,966				9.9	%		(176,836		)		(26.8	%)		21,516				1.8	%
Other income (expense):
Interest expense		(11,935		)		(1.0	%)		(11,403		)		(1.7	%)		(6,210		)		(0.5	%)
Interest income		835				0.1	%		1,046				0.2	%		674				0.1	%
Other expense, net		(3,702		)		(0.4	%)		(14,032		)		(2.2	%)		(4,284		)		(0.4	%)
Earnings (loss) before income tax expense (benefit)		99,164				8.6	%		(201,225		)		(30.5	%)		11,696				1.0	%
Income tax expense (benefit)		23,147				2.0	%		(19,995		)		(3.0	%)		6,101				0.5	%
Net earnings (loss)		76,017				6.6	%		(181,230		)		(27.5	%)		5,595				0.5	%
Net earnings (loss) attributable to noncontrolling interests		2,949				0.2	%		(3,206		)		(0.5	%)		1,647				0.2	%
Net earnings (loss) attributable to Guess?, Inc.		$	73,068			6.4	%		$	(178,024	)		(27.0	%)		$	3,948			0.3	%
Net earnings (loss) per common share attributable to common stockholders:
Basic		$	1.13						$	(2.72	)					$	0.05
Diluted		$	1.10						$	(2.72	)					$	0.05
Weighted average common shares outstanding attributable to common stockholders:
Basic		64,185							65,446							75,216
Diluted		65,933							65,446							76,155
Effective income tax rate		23.3		%					9.9		%					52.2		%
Adjusted selling, general and administrative expenses1:		$	391,114			34.0	%		$	290,762			44.1	%		$	422,143			34.6	%
Adjusted earnings (loss) from operations1:		$	114,530			10.0	%		$	(109,505	)		(16.6	%)		$	25,472			2.1	%
Adjusted net earnings (loss) attributable to Guess?, Inc.1:		$	77,951			6.8	%		$	(119,552	)		(18.1	%)		$	7,798			0.6	%
Adjusted diluted earnings (loss) per common share attributable to common stockholders1:		$	1.17						$	(1.83	)					$	0.10
Adjusted effective income tax rate1:		23.2		%					4.6		%					48.4		%
______________________________________________________________________
See page 22 for footnotes.

Guess?, Inc. and Subsidiaries

Reconciliation of GAAP Results to Adjusted Results

(dollars in thousands)

The 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 (loss) 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 (benefit) follows:

		Three Months Ended
		July 31, 2021				August 1, 2020				August 3, 2019
Reported GAAP selling, general and administrative expenses		$	205,617			$	150,293			$	218,175
Certain professional service and legal fees and related credits (costs)2		(109		)		151				(405		)
Separation charges3		—				(2,507		)		—
Adjusted selling, general and administrative expenses1		$	205,508			$	147,937			$	217,770
Reported GAAP earnings (loss) from operations		$	87,388			$	(14,349	)		$	45,987
Certain professional service and legal fees and related (credits) costs2		109				(151		)		405
Separation charges3		—				2,507				—
Asset impairment charges4		1,501				11,969				1,504
Net gains on lease modifications5		(420		)		(885		)		—
Adjusted earnings (loss) from operations1		$	88,578			$	(909	)		$	47,896
Reported GAAP net earnings (loss) attributable to Guess?, Inc.		$	61,062			$	(20,358	)		$	25,322
Certain professional service and legal fees and related (credits) costs2		109				(151		)		405
Separation charges3		—				2,507				—
Asset impairment charges4		1,501				11,969				1,504
Net gains on lease modifications5		(420		)		(885		)		—
Amortization of debt discount6		2,781				2,598				2,449
Discrete tax adjustments7		81				8,061				—
Income tax impact from adjustments8		(1,036		)		(4,380		)		(2,266		)
Total adjustments affecting net earnings (loss) attributable to Guess?, Inc.		3,016				19,719				2,092
Adjusted net earnings (loss) attributable to Guess?, Inc.1		$	64,078			$	(639	)		$	27,414
Reported GAAP income tax expense		$	17,692			$	6,386			$	8,818
Discrete tax adjustments7		(81		)		(8,061		)		—
Income tax impact from adjustments8		1,036				4,380				2,266
Adjusted income tax expense1		$	18,647			$	2,705			$	11,084
Adjusted effective income tax rate1		22.0		%		156.2		%		28.2		%
______________________________________________________________________
See page 22 for footnotes.

Guess?, Inc. and Subsidiaries
Reconciliation of GAAP Results to Adjusted Results (Continued)
(dollars in thousands)
		Six Months Ended
		July 31, 2021				August 1, 2020				August 3, 2019
Reported GAAP selling, general and administrative expenses		$	392,301			$	293,581			$	422,820
Certain professional service and legal fees and related credits (costs)2		(1,187		)		(139		)		(677		)
Separation charges3		—				(2,680		)		—
Adjusted selling, general and administrative expenses1		$	391,114			$	290,762			$	422,143
Reported GAAP earnings (loss) from operations		$	113,966			$	(176,836	)		$	21,516
Certain professional service and legal fees and related (credits) costs2		1,187				139				677
Separation charges3		—				2,680				—
Asset impairment charges4		1,942				64,941				3,279
Net gains on lease modifications5		(2,565		)		(429		)		—
Adjusted earnings (loss) from operations1		$	114,530			$	(109,505	)		$	25,472
Reported GAAP net earnings (loss) attributable to Guess?, Inc.		$	73,068			$	(178,024	)		$	3,948
Certain professional service and legal fees and related (credits) costs2		1,187				139				677
Separation charges3		—				2,680				—
Asset impairment charges4		1,942				64,941				3,279
Net gains on lease modifications5		(2,565		)		(429		)		—
Amortization of debt discount6		5,562				5,197				2,662
Discrete tax adjustments7		228				170				—
Income tax impact from adjustments8		(1,471		)		(14,226		)		(2,768		)
Total adjustments affecting net earnings (loss) attributable to Guess?, Inc.		4,883				58,472				3,850
Adjusted net earnings (loss) attributable to Guess?, Inc.1		$	77,951			$	(119,552	)		$	7,798
Reported GAAP income tax expense (benefit)		$	23,147			$	(19,995	)		$	6,101
Discrete tax adjustments7		(228		)		(170		)		—
Income tax impact from adjustments8		1,471				14,226				2,768
Adjusted income tax expense (benefit)1		$	24,390			$	(5,939	)		$	8,869
Adjusted effective income tax rate1		23.2		%		4.6		%		48.4		%
______________________________________________________________________
See page 22 for footnotes.

Guess?, Inc. and Subsidiaries
Consolidated Segment Data
(dollars in thousands)
		Three Months Ended												% change
		July 31, 2021				August 1, 2020				August 3, 2019				August 1, 2020			August 3, 2019
Net revenue:
Americas Retail		$	186,297			$	110,065			$	198,966			69	%		(6	%)
Americas Wholesale		49,858				20,285				41,902				146	%		19	%
Europe		322,723				205,851				340,509				57	%		(5	%)
Asia		47,813				50,191				83,301				(5	%)		(43	%)
Licensing		21,933				12,147				18,542				81	%		18	%
Total net revenue		$	628,624			$	398,539			$	683,220			58	%		(8	%)
Earnings (loss) from operations:
Americas Retail		$	37,916			$	(4,704	)		$	5,957			(906	%)		536	%
Americas Wholesale		12,944				1,688				8,422				667	%		54	%
Europe		51,417				20,795				51,594				147	%		(0	%)
Asia		(4,847		)		(3,367		)		(4,800		)		44	%		1	%
Licensing		20,154				11,511				15,547				75	%		30	%
Total segment earnings from operations		117,584				25,923				76,720				354	%		53	%
Corporate overhead		(29,115		)		(29,188		)		(29,229		)		(0	%)		(0	%)
Asset impairment charges		(1,501		)		(11,969		)		(1,504		)		(87	%)		(0	%)
Net gains on lease modifications		420				885				—				(53	%)
Total earnings (loss) from operations		$	87,388			$	(14,349	)		$	45,987			(709	%)		90	%
Operating margins:
Americas Retail		20.4		%		(4.3		%)		3.0		%
Americas Wholesale		26.0		%		8.3		%		20.1		%
Europe		15.9		%		10.1		%		15.2		%
Asia		(10.1		%)		(6.7		%)		(5.8		%)
Licensing		91.9		%		94.8		%		83.8		%
GAAP operating margin for total Company		13.9		%		(3.6		%)		6.7		%
Certain professional service and legal fees and related (credits) costs1, 2		0.0		%		(0.0		%)		0.1		%
Separation charges1, 3		0.1		%		0.6		%		—		%
Asset impairment charges1, 4		0.2		%		3.0		%		0.2		%
Net gains on lease modifications1, 5		(0.1		%)		(0.2		%)		—		%
Adjusted operating margin for total Company1		14.1		%		(0.2		%)		7.0		%
______________________________________________________________________
See page 22 for footnotes.

Guess?, Inc. and Subsidiaries
Consolidated Segment Data
(dollars in thousands)
		Six Months Ended												% change
		July 31, 2021				August 1, 2020				August 3, 2019				August 1, 2020			August 3, 2019
Net revenue:
Americas Retail		$	341,832			$	184,649			$	375,389			85	%		(9	%)
Americas Wholesale		95,288				46,160				88,107				106	%		8	%
Europe		564,575				312,324				550,564				81	%		3	%
Asia		103,473				90,576				168,491				14	%		(39	%)
Licensing		43,458				25,081				37,360				73	%		16	%
Total net revenue		$	1,148,626			$	658,790			$	1,219,911			74	%		(6	%)
Earnings (loss) from operations:
Americas Retail		$	58,190			$	(41,377	)		$	4,145			(241	%)		1,304	%
Americas Wholesale		24,499				3,312				16,236				640	%		51	%
Europe		55,615				(23,611		)		35,267				(336	%)		58	%
Asia		(6,655		)		(26,144		)		(8,003		)		(75	%)		(17	%)
Licensing		39,585				21,605				32,191				83	%		23	%
Total segment earnings (loss) from operations		171,234				(66,215		)		79,836				(359	%)		114	%
Corporate overhead		(57,891		)		(46,109		)		(55,041		)		26	%		5	%
Asset impairment charges		(1,942		)		(64,941		)		(3,279		)		(97	%)		(41	%)
Net gains on lease modifications		2,565				429				—				498	%
Total earnings (loss) from operations		$	113,966			$	(176,836	)		$	21,516			(164	%)		430	%
Operating margins:
Americas Retail		17.0		%		(22.4		%)		1.1		%
Americas Wholesale		25.7		%		7.2		%		18.4		%
Europe		9.9		%		(7.6		%)		6.4		%
Asia		(6.4		%)		(28.9		%)		(4.7		%)
Licensing		91.1		%		86.1		%		86.2		%
GAAP operating margin for total Company		9.9		%		(26.8		%)		1.8		%
Certain professional service and legal fees and related (credits) costs1, 2		0.1		%		0.0		%		0.0		%
Separation charges1, 3		0.0		%		0.4		%		—		%
Asset impairment charges1, 4		0.2		%		9.9		%		0.3		%
Net gains on lease modifications1, 5		(0.2		%)		(0.1		%)		—		%
Adjusted operating margin for total Company1		10.0		%		(16.6		%)		2.1		%
______________________________________________________________________
See page 22 for footnotes.

Guess?, Inc. and Subsidiaries
Constant Currency Financial Measures
(dollars in thousands)
		Three Months Ended
		July 31, 2021										August 1, 2020			% change
		As Reported			Foreign Currency Impact				Constant Currency			As Reported			As Reported			Constant Currency
Net revenue:
Americas Retail		$	186,297		$	(3,448	)		$	182,849		$	110,065		69	%		66	%
Americas Wholesale		49,858			(1,722		)		48,136			20,285			146	%		137	%
Europe		322,723			(18,375		)		304,348			205,851			57	%		48	%
Asia		47,813			(2,690		)		45,123			50,191			(5	%)		(10	%)
Licensing		21,933			—				21,933			12,147			81	%		81	%
Total net revenue		$	628,624		$	(26,235	)		$	602,389		$	398,539		58	%		51	%
		July 31, 2021										August 3, 2019			% change
		As Reported			Foreign Currency Impact				Constant Currency			As Reported			As Reported			Constant Currency
Net revenue:
Americas Retail		$	186,297		$	(937	)		$	185,360		$	198,966		(6	%)		(7	%)
Americas Wholesale		49,858			25				49,883			41,902			19	%		19	%
Europe		322,723			(16,224		)		306,499			340,509			(5	%)		(10	%)
Asia		47,813			(1,834		)		45,979			83,301			(43	%)		(45	%)
Licensing		21,933			—				21,933			18,542			18	%		18	%
Total net revenue		$	628,624		$	(18,970	)		$	609,654		$	683,220		(8	%)		(11	%)
Guess?, Inc. and Subsidiaries
Constant Currency Financial Measures
(dollars in thousands)
		Six Months Ended
		July 31, 2021										August 1, 2020			% change
		As Reported			Foreign Currency Impact				Constant Currency			As Reported			As Reported			Constant Currency
Net revenue:
Americas Retail		$	341,832		$	(5,437	)		$	336,395		$	184,649		85	%		82	%
Americas Wholesale		95,288			(2,913		)		92,375			46,160			106	%		100	%
Europe		564,575			(36,587		)		527,988			312,324			81	%		69	%
Asia		103,473			(6,134		)		97,339			90,576			14	%		7	%
Licensing		43,458			—				43,458			25,081			73	%		73	%
Total net revenue		$	1,148,626		$	(51,071	)		$	1,097,555		$	658,790		74	%		67	%
		July 31, 2021										August 3, 2019			% change
		As Reported			Foreign Currency Impact				Constant Currency			As Reported			As Reported			Constant Currency
Net revenue:
Americas Retail		$	341,832		$	(1,307	)		$	340,525		$	375,389		(9	%)		(9	%)
Americas Wholesale		95,288			294				95,582			88,107			8	%		8	%
Europe		564,575			(25,745		)		538,830			550,564			3	%		(2	%)
Asia		103,473			(3,078		)		100,395			168,491			(39	%)		(40	%)
Licensing		43,458			—				43,458			37,360			16	%		16	%
Total net revenue		$	1,148,626		$	(29,836	)		$	1,118,790		$	1,219,911		(6	%)		(8	%)

Guess?, Inc. and Subsidiaries
Selected Condensed Consolidated Balance Sheet Data
(in thousands)
		July 31, 2021			January 30, 2021			August 1, 2020			August 3, 2019
ASSETS
Cash and cash equivalents		$	458,914		$	469,110		$	327,970		$	131,060
Receivables, net		299,915			314,147			246,471			292,985
Inventories		430,289			389,144			419,427			484,236
Other current assets		74,771			60,123			80,069			59,226
Property and equipment, net		210,515			216,196			240,081			302,906
Restricted cash		230			235			228			519
Operating lease right-of-use assets		727,636			764,804			766,853			900,062
Other assets		254,631			252,109			229,630			231,210
Total assets		$	2,456,901		$	2,465,868		$	2,310,729		$	2,402,204
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current portion of borrowings and finance lease obligations		$	21,193		$	38,710		$	42,321		$	32,554
Current operating lease liabilities		214,392			222,800			235,749			213,912
Other current liabilities		479,567			501,029			452,410			426,886
Long-term debt and finance lease obligations		79,924			68,554			66,069			35,512
Convertible senior notes, net		264,604			258,614			252,988			242,055
Long-term operating lease liabilities		623,040			662,657			659,118			747,791
Other long-term liabilities		138,084			144,004			143,225			125,915
Redeemable and nonredeemable noncontrolling interests		25,779			25,837			20,581			22,707
Guess?, Inc. stockholders’ equity		610,318			543,663			438,268			554,872
Total liabilities and stockholders’ equity		$	2,456,901		$	2,465,868		$	2,310,729		$	2,402,204

Guess?, Inc. and Subsidiaries
Condensed Consolidated Cash Flow Data
(in thousands)
		Six Months Ended
		July 31, 2021				August 1, 2020				August 3, 2019
Net cash provided by (used in) operating activities		$	42,976			$	40,685			$	(22,957	)
Net cash used in investing activities		(20,806		)		(11,970		)		(33,868		)
Net cash provided by (used in) financing activities		(26,639		)		13,585				(18,549		)
Effect of exchange rates on cash, cash equivalents and restricted cash		(5,732		)		1,070				(4,042		)
Net change in cash, cash equivalents and restricted cash		(10,201		)		43,370				(79,416		)
Cash, cash equivalents and restricted cash at the beginning of the year		469,345				284,828				210,995
Cash, cash equivalents and restricted cash at the end of the period		$	459,144			$	328,198			$	131,579
Supplemental information:
Depreciation and amortization		$	27,918			$	32,250			$	37,225
Total lease costs (excluding finance lease cost)		$	138,364			$	147,058			$	180,307

Guess?, Inc. and Subsidiaries
Reconciliation of Net Cash Provided By Operating Activities to Free Cash Flow
(in thousands)
		Six Months Ended
		July 31, 2021				August 1, 2020				August 3, 2019
Net cash provided by (used in) operating activities		$	42,976			$	40,685			$	(22,957	)
Less: Purchases of property and equipment		(21,601		)		(10,099		)		(34,551		)
Less: Payments for property and equipment under finance leases		(2,911		)		(1,859		)		(1,202		)
Free cash flow		$	18,464			$	28,727			$	(58,710	)

Guess?, Inc. and Subsidiaries
Retail Store Data
Global Store and Concession Count
		Stores						Concessions
Region		Total		Directly Operated		Partner Operated		Total		Directly Operated		Partner Operated
		As of July 31, 2021
United States		245		244		1		1		—		1
Canada		74		74		—		—		—		—
Central and South America		106		71		35		29		29		—
Total Americas		425		389		36		30		29		1
Europe and the Middle East		745		524		221		44		44		—
Asia and the Pacific		427		133		294		263		91		172
Total		1,597		1,046		551		337		164		173
		As of August 1, 2020
United States		259		257		2		1		—		1
Canada		79		79		—		—		—		—
Central and South America		110		72		38		27		27		—
Total Americas		448		408		40		28		27		1
Europe and the Middle East		742		515		227		38		38		—
Asia and the Pacific		432		161		271		303		115		188
Total		1,622		1,084		538		369		180		189
		As of August 3, 2019
United States		287		285		2		1		—		1
Canada		80		80		—		—		—		—
Central and South America		111		71		40		27		27		—
Total Americas		478		436		42		28		27		1
Europe and the Middle East		726		510		216		37		37		—
Asia and the Pacific		520		216		304		337		162		175
Total		1,724		1,162		562		402		226		176

Guess?, Inc. and Subsidiaries
Adjusted Earnings Per Share for the Fiscal Year
(in thousands)
		FY2020				FY2024E*15
Reported GAAP net earnings attributable to Guess?, Inc.		$	95,975
Certain professional service and legal fees and related (credits) costs2		(857		)
Separation charges3		438
Asset impairment charges4		9,977
Amortization of debt discount6		7,558
Income tax impact from adjustments8, 9		(8,055		)
Total adjustments affecting net earnings attributable to Guess?, Inc.		9,061
Adjusted net earnings attributable to Guess?, Inc.1		$	105,036
GAAP earnings per share		$	1.33			$	3.36
Certain professional service and legal fees and related (credits) costs2		$	(0.01	)		$	—
Separation charges3		$	—			$	—
Asset impairment charges4		$	0.12			$	—
Amortization of debt discount6		$	0.08			$	0.14
Income tax impact from adjustments8,9		$	(0.07	)		$	—
Adjusted earnings per share1		$	1.45			$	3.50
______________________________________________________________________
* Amounts represent estimates for future fiscal years.
See page 22 for footnotes.

Guess?, Inc. and Subsidiaries
Return on Invested Capital for the Fiscal Year
(in thousands)
		FY2019				FY2020				FY2020 2-Year Average				FY2023E				FY2024E				FY2024E 2-Year Average
Total assets10		$	1,649,205			$	2,428,962			$	2,039,084			$	2,747,000			$	2,953,000			$	2,850,000
Less: Cash and cash equivalents		(210,460		)		(284,613		)		(247,537		)		(634,000		)		(806,000		)			(720,000	)
Less: Operating right-of-use assets10		—				(851,990		)		(425,995		)		(760,000		)		(764,000		)			(762,000	)
Less: Accounts payable		(286,657		)		(232,761		)		(259,709		)		(333,000		)		(346,000		)			(339,500	)
Less: Accrued expenses		(252,392		)		(204,096		)		(228,244		)		(208,000		)		(209,000		)			(208,500	)
Add: Accrual for European Commission fine11		45,619				—				22,809				—				—					—
Average invested capital		$	945,315			$	855,502			$	900,408			$	812,000			$	828,000			$	820,000
										FY2020												FY2024E
Reported GAAP earnings from operations										$	140,671											$	335,000
Less: Certain professional service and legal fees and related (credits) costs2										(857		)											—
Add: Asset impairment charges4										9,977													—
Add: Separation charges3										438													—
Adjusted earnings from operations12										$	150,229											$	335,000
Less: Asset impairments4										(9,977		)											—
Less: Other income (expense), net										(2,529		)											(1,400	)
Less: Income tax expense13										(29,886		)											(83,400	)
Adjusted net operating profit after taxes1										$	107,837											$	250,200
Non-GAAP return on invested capital14										12		%											31	%
______________________________________________________________________
See page 22 for footnotes.

Guess?, Inc. and Subsidiaries
Footnotes to Condensed Consolidated Financial Data
Footnotes:
1		The adjusted results reflect the exclusion of certain professional service and 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. A complete reconciliation of actual results to adjusted results is presented in the “Reconciliation of GAAP Results to Adjusted Results.”
2		Amounts recorded represent certain professional service and legal fees and related (credits) costs, which the Company otherwise would not have incurred as part of its business operations.
3		Amounts represent certain separation-related charges due to headcount reduction in response to the pandemic and due to the separation of our former Chief Executive Officer.
4		Amounts represent asset impairment charges related primarily to impairment of operating lease right-of-use assets and 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 and expected store closures.
5		Amounts recorded represent net gains on lease modifications related primarily to the early termination of certain lease agreements.
6		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. Estimates of adjusted earnings per share for the full fiscal year 2024 exclude the amortization anticipated to be recorded in those years as such amounts are known. The Company has not assumed any potential share dilution related to the convert or related warrants.
7		Amounts represent discrete income tax adjustments related primarily to the impacts from cumulative valuation allowances and the income tax benefits from an income tax rate change due to net operating loss carrybacks.
8		The income tax effect of certain professional service and legal fees and related (credits) costs, 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 income tax rate (inclusive of the impact of valuation allowances) of the tax jurisdiction in which the charges were incurred.
9		During fiscal year 2020, the Company recorded 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.
10		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.
11		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.
12		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.
13		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 2024 effective income tax rate.
14		The Company defines return on invested capital (or "ROIC") as adjusted net operating profit after taxes divided by two-year average invested capital.
15		The Company is unable to predict future amounts for items excluded for non-GAAP for fiscal year 2024, with the exception of amounts related to the amortization of debt discount, as these expenditures and credits are inconsistent in amount and frequency and certain elements used to estimate such items have not yet occurred or are out of the Company's control. As such, the Company has not considered any future charges in the accompanying GAAP outlook.

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20210825005751/en/

Guess?, Inc.

Fabrice Benarouche

VP, Finance and Investor Relations

(213) 765-5578

Source: Guess?, Inc.

FAQ

What were Guess?'s Q2 fiscal 2022 earnings results for GES?

Guess? reported Q2 fiscal 2022 revenues of $629 million, a 58% increase from the previous year, and a net earnings of $61.1 million.

How did Guess?'s operating margin change in Q2 fiscal 2022?

The operating margin for Q2 fiscal 2022 increased to 13.9%, more than double the margin from pre-pandemic levels.

What is the updated outlook for Guess? for the full fiscal year 2022?

Guess? raised its full-year operating margin outlook to 10% and set a long-term aspiration of 12% by fiscal 2024.

What is the effect of share buybacks on Guess?'s earnings?

Share buybacks contributed an estimated $0.11 to GAAP diluted EPS in Q2 fiscal 2022.

Is there a dividend announced by Guess? for GES?

Yes, Guess?'s Board approved a quarterly cash dividend of $0.1125 per share, payable on September 24, 2021.