Guess?, Inc. Reports $23.4 Million Net Loss in Q3 Fiscal 2025 Despite Revenue Growth

Guess?, Inc. reported a net loss of $23.4 million for the third quarter of fiscal 2025, translating to a diluted loss per share of $0.47. This marks a significant decline from the net earnings of $55.7 million, or $0.82 per diluted share, recorded in the same quarter of the previous year. The company's total net revenue increased by 13.4% to $738.5 million, up from $651.2 million a year earlier, driven primarily by the acquisition of rag & bone and higher wholesale shipments. However, the gross margin decreased to 43.6% from 44.7%, attributed to a less favorable channel mix and increased costs.

In comparison to the previous fiscal period, Guess? experienced a notable increase in selling, general, and administrative (SG&A) expenses, which rose by 19.3% to $279.4 million. This increase was largely due to higher advertising and store labor costs. The company's operating margin also fell to 5.7%, down from 8.4% in the prior year, reflecting the impact of rising expenses and a shift in sales channels. Earnings from operations decreased by 22.8% to $42.3 million, compared to $54.8 million in the same quarter last year.

Strategically, Guess? completed the acquisition of rag & bone on April 2, 2024, which has been integrated into its existing segments for financial reporting. This acquisition is expected to enhance the company's brand portfolio and customer reach. The company also opened 25 new stores globally during the quarter, while closing 18, resulting in a total of 1,598 stores worldwide as of November 2, 2024. The Americas Wholesale segment saw a significant revenue increase of 79%, largely due to the rag & bone acquisition.

Operationally, Guess? reported an increase in accounts receivable, which rose by 12.5% to $383.4 million, driven by the rag & bone acquisition. Inventory levels also increased by 20.2% to $675.8 million, reflecting higher in-transit inventory as the company accelerated inventory receipts to mitigate supply chain disruptions. The company’s cash and cash equivalents decreased to $140.9 million from $244.1 million a year earlier, while total liabilities increased to $2.3 billion, up from $1.9 billion.

Looking ahead, Guess? anticipates continued challenges from macroeconomic conditions, including inflation and fluctuating consumer spending. The company is focused on managing expenses and optimizing its operations to protect profitability. The ongoing integration of rag & bone is expected to provide growth opportunities, although the company remains cautious about the potential impacts of global economic uncertainties on its performance.