EPS of $1.15 decreased by 28.8% from previous year
Gross margin of 44.1%
Net income of 81.40M
"“We completed our acquisition of rag & bone with WHP Global. This was the first brand acquisition in our 44-year history as we begin to leverage our powerful operating platform across more brands.”" - Carlos Alberini, Chief Executive Officer
Guess Inc (GES) Q4 FY2025 Results Analysis: Rag & Bone Accelerates Growth; Guess Jeans and India Expansion Debut, with Strategic Margin Expansion Path Ahead
Executive Summary
Guess Inc delivered a solid QQ4 2025 results with a revenue build driven by the Rag & Bone acquisition and core Guess improvements, demonstrating the company’s ability to monetize a diversified brand platform across wholesale, retail, and licensing. Revenue for the quarter rose 5% in USD to $932.3 million, with currency-adjusted growth of roughly 13% excluding the extra week in the prior year, of which Rag & Bone contributed 9 percentage points and the core Guess business contributed 5 percentage points. Gross margin expanded to 44.1% but was down 130 bps versus the prior-year quarter mainly due to higher occupancy costs and the Rag & Bone addition. Adjusted SG&A rose 11% to $305 million, reflecting the Rag & Bone infrastructure, elevated marketing investments, and core platform investments, leaving adjusted operating profit at $107 million and an 11.4% adjusted margin. For the full year, Guess reported USD revenue of $3.0 billion, up 8% year over year (10% in constant currency), with adjusted operating profit of $180 million and an adjusted margin of 6%, and adjusted EPS of $1.96. Management signaled a robust, multi-pronged growth program for FY2026 focused on Rag & Bone acceleration, a Middle East joint venture, Europe wholesale momentum, Guess Jeans expansion (including Tokyo and Melrose Ave flagship), and a targeted overhaul of North American store productivity (about 20 store closures by year-end). The company also highlighted a shift toward value-oriented pricing, exclusive DTC product, a more granular store clustering model, and intensified marketing/civilization of the customer journey (including a CRM upgrade in Europe and a Global marketing program). While the near-term macro environment remains cautious (tariffs, Red Sea disruption, currency volatility, and consumer softness in parts of Asia), Guess projects mid-single-digit revenue growth for FY2026 with a 4.5%–5.4% adjusted operating margin and adjusted EPS of $1.32–$1.76. This report synthesizes the quarterly results with the call commentary to deliver a forward-looking investment perspective.
Key Performance Indicators
Revenue
932.25M
QoQ: 26.23% | YoY:4.62%
Gross Profit
411.07M
44.09% margin
QoQ: 27.71% | YoY:1.50%
Operating Income
103.65M
QoQ: 145.17% | YoY:-29.65%
Net Income
81.40M
QoQ: 447.93% | YoY:-29.38%
EPS
1.53
QoQ: 346.77% | YoY:-28.84%
Revenue Trend
Margin Analysis
Key Insights
Q4 2025 revenue: $932.252 million, up 5.0% year over year. On a currency-adjusted basis and removing last year’s extra week, growth would have been ~13% (rag & bone +9 pp; core Guess +5 pp).
Q4 gross margin: 44.1%, down 130 basis points year over year, driven by higher occupancy costs and the Rag & Bone mix.
Q4 adjusted diluted EPS: $1.48; GAAP diluted EPS higher/lower? The reported GAAP-like metric is $1.53 in the basic data; adjusted metric is $1.48.
Financial Highlights
Revenue and profitability overview:
- Q4 2025 revenue: $932.252 million, up 5.0% year over year. On a currency-adjusted basis and removing last year’s extra week, growth would have been ~13% (rag & bone +9 pp; core Guess +5 pp).
- Q4 gross margin: 44.1%, down 130 basis points year over year, driven by higher occupancy costs and the Rag & Bone mix.
- Q4 adjusted SG&A: $305.455 million, up 11% YoY; adjusted SG&A rate: 32.7% (up 190 bps).
- Q4 adjusted operating profit: $107.0 million; adjusted operating margin: 11.4% (down ~320 bps vs. prior year).
- Q4 adjusted diluted EPS: $1.48; GAAP diluted EPS higher/lower? The reported GAAP-like metric is $1.53 in the basic data; adjusted metric is $1.48.
- Full-year 2025 revenue: $3.0 billion, up 8% in USD; up 10% in constant currency.
- Full-year adjusted operating profit: $180.0 million; adjusted operating margin: 6.0%; adjusted EPS: $1.96.
- Free cash flow (FCF) 2025: $160.7 million; net cash from operating activities: $183.2 million; cash balance at period end: $188.5 million.
- Balance sheet and liquidity: Total debt $1.4209 billion; net debt $1.2332 billion; total cash and equivalents $188.5 million; borrowing capacity ~ $588 million; regular quarterly dividend of $0.30 per share.
- Key leverage and efficiency ratios (FY25): gross margin 44.1%; EBITDA margin ~10.0%; operating margin ~11.1% (Q4 context); debt-to-capitalization ~73.8%; price-to-book ~1.30; price-to-sales ~0.71.
- Notable channel and geographic mix in QQ4: Europe wholesale growth in double digits (cc), Europe retail comps +5% CC; Americas retail +4% USD but cc comps flat-to +9% depending on currency/week; Asia revenue down 15% USD; Licensing grew 18% in Q4.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
932.25M
4.62%
26.23%
Gross Profit
411.07M
1.50%
27.71%
Operating Income
103.65M
-29.65%
145.17%
Net Income
81.40M
-29.38%
447.93%
EPS
1.53
-28.84%
346.77%
Key Financial Ratios
currentRatio
1.5
grossProfitMargin
44.1%
operatingProfitMargin
11.1%
netProfitMargin
8.73%
returnOnAssets
2.94%
returnOnEquity
16.1%
debtEquityRatio
2.81
operatingCashFlowPerShare
$3.6
freeCashFlowPerShare
$3.15
dividendPayoutRatio
21.4%
priceToBookRatio
1.3
priceEarningsRatio
2.02
Net Income vs. Revenue
Expense Breakdown
Management Commentary
Key management quotes and context from the QQ4 2025 earnings call:
- Strategy and acquisitions: “We completed our acquisition of rag & bone with WHP Global. This was the first brand acquisition in our 44-year history … as we begin to leverage our powerful operating platform across more brands.” Significance: Rag & Bone is a core growth engine and integration is central to Guess’s multi-brand strategy and margin expansion potential.
- Brand expansion and geographic growth: “We launched our new brand Guess Jeans globally to attract a new younger customer, offering an entire collection inspired by our rich archives … denim that is affordable yet sustainable.” Significance: Guess Jeans aims to capture a younger demographic while leveraging Guess’s heritage and supply chain capabilities.
- India expansion: “We signed a partnership agreement with the Tata Group to represent Guess Jeans in India … closing the year with 22 new stores in the market.” Significance: India is a material growth opportunity with expanding store footprint and distribution.
- Middle East joint venture and restructuring: “We entered into a joint-venture agreement with our partner in the Middle East, the Chalhoub Group … turn this business to a third party to run it.” Significance: Potential profitability uplift and better-localized operations in a large market.
- North American store optimization: “We plan to reduce our North American store fleet by roughly 20 stores by the end of the year … closures at natural lease ends.” Significance: Partial withdrawal from underperforming locations to boost profitability and capital allocation efficiency.
- Marketing and CRM investments: “80% of the customers visiting stores perform extensive research online prior to their visits … implementing a new CRM system in Europe and marketing overhaul with General Idea.” Significance: Elevating omnichannel integration and customer engagement to lift conversion and AUR.
- Tariff risk and guidance stance: “The guidance does not include the impact of the new tariffs announced yesterday.” Significance: Tariff exposure remains a material risk; management contemplates selective counter-sourcing opportunities in Latin America.
- Guess Jeans and design evolution: “Guess Jeans … Tokyo flagship; collaboration with VERDY in Japan; a big $100 million-plus opportunity soon.” Significance: The brand is positioned for strong wholesale and DTC penetration, with high-profile collaborations driving awareness and demand.
“We completed our acquisition of rag & bone with WHP Global. This was the first brand acquisition in our 44-year history as we begin to leverage our powerful operating platform across more brands.”
— Carlos Alberini, Chief Executive Officer
“We launched our new brand Guess Jeans globally to attract a new younger customer, offering an entire collection inspired by our rich archives, providing denim that is affordable yet sustainable.”
— Carlos Alberini, Chief Executive Officer
Forward Guidance
Management guidance for FY2026 envisions revenue growth of 3.9% to 6.2%, supported by Rag & Bone’s full-year contribution, continued Europe wholesale momentum, and expansion of Guess Jeans distribution (including Tokyo and Melrose flagship). The company targets an adjusted operating margin of 4.5% to 5.4% and adjusted EPS of $1.32 to $1.76. First-quarter guidance implies revenue growth of 5.8% to 7.5% and an adjusted loss per share of $0.74 to $0.65, reflecting start-up costs and ramp-up of Rag & Bone and Middle East JV accounting for early-year headwinds. A net currency headwind of about 1 percentage point is expected for the year, with potential tailwinds in Q4.
Key drivers and risk factors:
- Growth drivers: Rag & Bone full-year operation; Middle East JV consolidation; Europe wholesale share gains; Guess Jeans expansion (including new stores in Tokyo and West Hollywood); exclusive DTC product and faster replenishment via speed-to-market. Free cash flow guidance is ~$55 million for FY2026, reflecting higher marketing and store investments alongside SG&A expansion from the Rag & Bone integration.
- Risks: Tariffs impact, macro consumer caution, currency volatility, and ongoing geopolitical events (Ukraine war, Red Sea disruptions). Sensitivity to US/intl demand shifts and the performance of fresh brand initiatives (Guess Jeans, Rag & Bone) remain critical.
- Investor watch-list: Watch progression of Rag & Bone contribution, the pace of European and Middle East expansion, the impact of price-point optimization and space allocation on margins, and the effectiveness of the CRM/marketing overhaul in driving traffic and conversion.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
GES Focus
44.09%
11.10%
16.10%
2.02%
ROST
26.50%
12.40%
10.20%
20.91%
PLCE
28.50%
1.67%
13.40%
-3.92%
BKE
52.60%
25.40%
18.20%
7.73%
HIBB
35.20%
11.10%
10.20%
5.50%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Investment thesis: Guess Inc is transitioning into a multi-brand, globally distributed platform with meaningful growth levers across Rag & Bone, Guess Jeans, and strategic regional initiatives. The QQ4 2025 results show solid top-line resilience supported by Rag & Bone and ongoing licensing momentum, while short-term profitability pressures due to integration and higher marketing spend are expected to moderate through FY2026 as synergies crystallize. Management projects 3.9%–6.2% USD revenue growth for FY2026 with a 4.5%–5.4% adjusted operating margin and a range of $1.32–$1.76 for adjusted EPS, signaling a path toward mid-single-digit margins with durable cash generation (FCF guidance of roughly $55 million). The strategic initiatives—Rag & Bone full-year contribution, Middle East JV, Europe wholesale strength, Guess Jeans global expansion, and enhanced DTC productivity—offer multiple levers for revenue growth and margin improvement.
Key considerations for investors:
- Leverage from the Rag & Bone integration is pivotal; expect a step-up in profitability as the business stabilizes across geographies.
- The India opportunity (Tata partnership) and Greater China transition to third-party operators present significant upside if execution hurdles are managed and brand momentum translates regionally.
- Tariff and currency headwinds remain meaningful sensitivities; countermeasures in sourcing and pricing will be closely watched.
- Valuation discipline given peer dispersion, with Guess’s mix of growth levers potentially offsetting near-term margin headwinds. Investors should monitor the pace of DTC productivity gains, the successful rollout of Guess Jeans, and the contribution from the Chalhoub JV.
Key Investment Factors
Growth Potential
Multiple growth vectors support a multi-year revenue trajectory: Rag & Bone expansion (full-year impact), Guess Jeans brand acceleration (global roll-out and key collaborations such as VERDY in Japan), India growth via Tata partnership, and a Middle East joint venture that will consolidate local P&L. In Europe, wholesale momentum remains a bright spot with order books for Fall/Winter up 7% YoY; U.S./Canada digital and store initiatives are designed to lift DTC productivity, complemented by a data-driven store clustering approach and selective product exclusives.
Profitability Risk
Key risks include tariff headwinds (management notes a $200 million US production/distribution exposure, with 1/3 linked to Rag & Bone), currency volatility (multi-region exposure), cash flow volatility tied to working capital (inventory and receivables elevated by Rag & Bone), and ongoing macro uncertainty impacting discretionary consumer spend. Asia remains challenged (notably Korea and China), while Greater China transitions to a potential third-party operator to improve profitability. The store-consolidation plan in North America is meaningful but exposes near-term revenue volatility.
Financial Position
Healthy liquidity with ~$588 million of available financing, $188 million cash, and a total debt load of ~$1.42 billion. The dividend is maintained at $0.30 per share. The company generated $183.2 million operating cash flow in QQ4 and $160.7 million free cash flow for the year, underscoring robust cash generation post-integration. However, the higher SG&A and the Rag & Bone amortization amplify near-term expense headwinds, which are anticipated to ease as the year progresses and synergies are realized.
SWOT Analysis
Strengths
Diversified multi-brand platform (Guess, Rag & Bone, and licensing) with global footprint across Americas, Europe, and Asia
Strategic acquisitions and in-house capabilities (Rag & Bone integration, outerwear and dresses brought in-house, and sequential licensing reforms)
Strong wholesale momentum in Europe and expansion in licensing categories (footwear, fragrances, eyewear) with 18% quarterly growth
Significant brand-building initiatives (Guess Jeans, India expansion with Tata, and Middle East Chalhoub JV) and a marketing transformation (CRM upgrade and General Idea partnership)
Robust cash generation and liquidity headroom with ongoing dividend and buyback optionality
Weaknesses
Quarterly gross margin compression from higher occupancy costs and Rag & Bone integration
Weakness in North American retail comps (14% CC decline including e-commerce) and Asia softness (upper-teens decline in revenue in QQ4), reflecting regional demand headwinds
Leverage risk from large debt load and near-term operating deleverage due to elevated SG&A
Greater China transition expected to a third-party operator may temporarily suppress revenue and require careful P&L management
Opportunities
Rag & Bone full-year contribution and expansion into US outlets and European markets
Guess Jeans global expansion, including Tokyo flagship and collaboration strategy (VERDY) to accelerate prestige and youth appeal
Middle East direct retail operations via Chalhoub JV to realize full P&L benefits
Europe wholesale share gains and potential price-point optimization to capture value-conscious consumers
Store productivity improvements, exclusive product for DTC, and faster replenishment to increase conversion and average unit retail
Threats
Tariff exposure on US-sourced products; management cautions on tariff impact and notes a $200 million US production/distribution base
Macro sensitivity: inflation, currency swings, and geopolitical risks (Red Sea, Ukraine) that affect consumer demand and supply chains
Intense competition in global apparel with volatile fashion cycles and shifting consumer preferences