GUESS? Swings to Q2 Profit Amidst Proposed Take-Private Deal

TL;DR

**GUESS? is going private at $16.75 a share, so if you're not a 'Rolling Stockholder,' take your cash and run.**

AI Summary

GUESS?, Inc. reported a net loss attributable to Guess?, Inc. of $26.686 million for the six months ended August 2, 2025, a significant decline from net earnings of $2.419 million in the prior year period. For the three months ended August 2, 2025, the company posted net earnings attributable to Guess?, Inc. of $6.242 million, a turnaround from a net loss of $10.603 million in the same period last year. Net revenue increased to $772.937 million for the three months ended August 2, 2025, up from $732.560 million, and to $1.420 billion for the six months, up from $1.324 billion. Gross profit rose to $328.769 million for the quarter and $587.226 million for the six months. Selling, general and administrative expenses increased to $308.588 million for the quarter and $595.124 million for the six months. The company announced a proposed take-private transaction with Authentic Brands Group LLC on August 20, 2025, where shareholders (excluding Rolling Stockholders) would receive $16.75 per share in cash, and the company would no longer be publicly traded. This transaction involves Authentic owning 51% of the intellectual property and certain Rolling Stockholders owning 49% of the intellectual property, while Rolling Stockholders would own 100% of the operating assets.

Why It Matters

This filing is critical for investors as GUESS? is undergoing a significant take-private transaction with Authentic Brands Group, offering $16.75 per share to public shareholders. This deal will fundamentally alter the company's ownership structure, separating its intellectual property from its operating assets, and delisting it from the NYSE. For employees and customers, the strategic partnership with Authentic Brands Group could lead to new brand directions and operational efficiencies, potentially impacting product offerings and retail experiences. The competitive landscape in fashion retail is intense, and this move allows GUESS? to potentially streamline operations and leverage Authentic's brand management expertise away from public market pressures.

Risk Assessment

Risk Level: high — The risk level is high due to the proposed take-private transaction with Authentic Brands Group. While offering a cash payout of $16.75 per share, the deal introduces significant restructuring risks, including the separation of intellectual property from operating assets and the potential for regulatory hurdles or shareholder dissent. The company also reported a net loss of $26.686 million for the six months ended August 2, 2025, indicating underlying operational challenges prior to the proposed transaction.

Analyst Insight

Investors holding GUESS? common stock should evaluate the $16.75 per share cash offer in the context of their investment strategy and the company's recent financial performance. Given the proposed take-private, the primary action for most public shareholders will be to accept the cash offer, as the stock will be delisted. Those considering appraisal rights should consult legal counsel.

Financial Highlights

debt To Equity

4.77

revenue

$1.420B

operating Margin

N/A

total Assets

$2.976B

total Debt

$1.051B

net Income

-$26.686M

eps

Not Disclosed

gross Margin

41.3%

cash Position

$189.635M

revenue Growth

+7.2%

Revenue Breakdown

Key Numbers

• $16.75 — Per Share Merger Consideration (cash price per share for public shareholders in the take-private transaction)
• $26.686M — Net loss attributable to Guess?, Inc. (for the six months ended August 2, 2025, compared to $2.419M net earnings in prior year)
• $6.242M — Net earnings attributable to Guess?, Inc. (for the three months ended August 2, 2025, compared to a $10.603M net loss in prior year)
• $772.937M — Net revenue (for the three months ended August 2, 2025, up from $732.560M)
• $1.420B — Net revenue (for the six months ended August 2, 2025, up from $1.324B)
• 51% — Authentic Brands Group's ownership (of substantially all of GUESS?'s intellectual property post-transaction)
• 49% — Rolling Stockholders' ownership (of substantially all of GUESS?'s intellectual property post-transaction)
• 100% — Rolling Stockholders' ownership (of GUESS?'s operating assets post-transaction)
• 52,082,463 — Common Stock shares outstanding (as of August 29, 2025)
• $189.635M — Cash and cash equivalents (as of August 2, 2025, up from $187.696M as of February 1, 2025)

Key Players & Entities

• GUESS?, Inc. (company) — registrant
• Authentic Brands Group LLC (company) — acquiring partner in proposed transaction
• Paul Marciano (person) — Rolling Stockholder
• Carlos Alberini (person) — Rolling Stockholder
• Maurice Marciano (person) — Rolling Stockholder
• New York Stock Exchange (regulator) — exchange where common stock is registered
• rag & bone (company) — fashion brand acquired by GUESS? on April 2, 2024
• Securities and Exchange Commission (regulator) — filing authority
• Delaware General Corporation Law (regulator) — governing law for appraisal rights

FAQ

Risk Factors

• Take-Private Transaction Uncertainty [high — financial]: The proposed take-private transaction with Authentic Brands Group LLC introduces uncertainty regarding the company's future structure and operations. The transaction involves a significant shift in ownership of intellectual property and operating assets, which could impact strategic direction and financial performance.
• Inventory Management Challenges [medium — market]: Inventories increased significantly from $562.6 million to $668.4 million year-over-year. This rise, coupled with a decline in net royalties, suggests potential challenges in inventory turnover and markdown risks, impacting gross margins.
• Increased SG&A Expenses [medium — operational]: Selling, general, and administrative expenses rose to $308.6 million for the quarter and $595.1 million for the six months. This increase outpaced revenue growth in the quarter, potentially pressuring operating income if not managed effectively.
• Shift to Net Loss for the Six-Month Period [high — financial]: The company reported a net loss of $26.7 million for the six months ended August 2, 2025, a substantial decline from a net earning of $2.4 million in the prior year. This indicates a deterioration in overall profitability for the longer period.
• Dependence on Brand Licensing and Royalties [medium — market]: The decline in net royalties by 9.4% for the quarter and 11.8% for the six months suggests a potential weakening in the company's brand licensing agreements or a shift in revenue streams away from royalties.
• Leverage from Lease Obligations [medium — financial]: Long-term operating lease liabilities increased from $715.8 million to $793.5 million. While operating lease right-of-use assets also grew, this significant increase in lease obligations adds to the company's financial leverage.

Industry Context

The apparel and retail industry is highly competitive, characterized by evolving fashion trends, changing consumer preferences, and significant online competition. Companies like GUESS? face pressure to maintain brand relevance, manage inventory effectively, and adapt to digital sales channels. The industry also experiences cyclicality and is sensitive to economic conditions, impacting discretionary spending on fashion items.

Regulatory Implications

The primary regulatory implication stems from the take-private transaction, which will involve delisting from public exchanges and adherence to private company reporting standards. Compliance with securities laws regarding the transaction itself, including disclosures and shareholder approvals, is critical. Post-transaction, the company will operate under different regulatory frameworks as a private entity.

What Investors Should Do

1. Monitor the closing of the take-private transaction: Investors should track the progress and finalization of the proposed deal with Authentic Brands Group, as it will fundamentally change the company's ownership and trading status.
2. Analyze the impact of increased inventory: Given the significant rise in inventory levels ($668.4M from $562.6M), investors should assess the company's ability to manage this inventory efficiently to avoid markdowns and protect gross margins.
3. Evaluate SG&A expense control: The substantial increase in SG&A expenses ($308.6M for the quarter) warrants close monitoring to ensure it translates into sustainable revenue growth and does not erode profitability.
4. Assess the decline in royalty revenue: The decrease in net royalties (-9.4% for the quarter) should be investigated to understand the underlying causes and potential long-term impact on the business model.
5. Consider the shift in profitability: The transition from net earnings to a net loss for the six-month period ($26.7M loss vs. $2.4M gain) requires careful analysis of the contributing factors and the sustainability of the quarterly improvement.

Key Dates

• 2025-08-20: Proposed Take-Private Transaction Announced — Signals a major strategic shift, with the company expected to cease being publicly traded. The terms offer a cash consideration of $16.75 per share to public shareholders.
• 2025-08-02: End of Second Quarter — Reporting period for the 10-Q, showing a net loss for the six months but a net profit for the quarter, alongside revenue growth.
• 2025-02-01: End of Previous Fiscal Year — Baseline for comparison of financial position, particularly cash and equivalents, and inventory levels.
• 2024-08-03: Prior Year Second Quarter End — Comparison period for the current quarter's and six-month period's financial performance, highlighting the shift from net earnings to net loss for the six-month period.

Glossary

Take-private transaction

A transaction where a public company is acquired by a private entity, resulting in the company no longer being listed on a stock exchange. (This is the most significant event discussed, as GUESS? Inc. is undergoing such a transaction with Authentic Brands Group LLC.)

Rolling Stockholders

A specific group of shareholders in GUESS? Inc. who will retain ownership of the company's operating assets and a portion of its intellectual property post-transaction. (Their unique ownership structure post-transaction is a key detail of the proposed deal.)

Intellectual Property (IP)

Intangible assets such as brand names, trademarks, patents, and copyrights that are legally protected. (The transaction involves a split ownership of GUESS?'s IP between Authentic Brands Group and Rolling Stockholders.)

Operating Assets

Tangible and intangible assets used in the day-to-day operations of a business, such as stores, inventory, and equipment. (Rolling Stockholders will own 100% of GUESS?'s operating assets after the transaction.)

Net Revenue

The total revenue of a company after deducting returns, allowances, and discounts. (The 10-Q reports an increase in net revenue for both the three and six-month periods.)

Gross Profit

The profit a company makes after deducting the costs associated with making and selling its products, or the costs associated with providing its services. (Gross profit increased for both the three and six-month periods, indicating improved cost management relative to revenue.)

Selling, General and Administrative Expenses (SG&A)

The costs incurred by a company in the process of selling, marketing, and administering its business. (SG&A expenses increased significantly, outpacing revenue growth in the quarter.)

Common Stock shares outstanding

The total number of shares of common stock that have been issued and are held by investors. (This figure is used to calculate per-share metrics and is relevant for the take-private transaction's per-share consideration.)

Year-Over-Year Comparison

Compared to the prior year period, GUESS? Inc. has seen a significant shift in profitability, moving from net earnings of $2.419 million to a net loss of $26.686 million for the six months ended August 2, 2025. While net revenue has shown growth, increasing by 7.2% for the six-month period to $1.420 billion, this has not translated into overall profit due to rising costs, particularly in selling, general, and administrative expenses. Gross margins have slightly improved, but the overall financial performance for the longer period has deteriorated, contrasting with a positive turnaround in net earnings for the most recent quarter.

Key Financial Figures

• $0.01 — ch registered Common Stock, par value $0.01 per share GES New York Stock Exchange

Filing Documents

• ges-20250802.htm (10-Q) — 2910KB
• cafbpsuawardagreementtsrfi.htm (EX-10.2) — 85KB
• paulmarcianorsuawardagreem.htm (EX-10.3) — 68KB
• a10q-q2fy26ex311.htm (EX-31.1) — 10KB
• a10q-q2fy26ex312.htm (EX-31.2) — 10KB
• a10q-q2fy26ex321.htm (EX-32.1) — 6KB
• a10q-q2fy26ex322.htm (EX-32.2) — 5KB
• 0000912463-25-000064.txt ( ) — 16350KB
• ges-20250802.xsd (EX-101.SCH) — 100KB
• ges-20250802_cal.xml (EX-101.CAL) — 159KB
• ges-20250802_def.xml (EX-101.DEF) — 620KB
• ges-20250802_lab.xml (EX-101.LAB) — 1152KB
• ges-20250802_pre.xml (EX-101.PRE) — 893KB
• ges-20250802_htm.xml (XML) — 2997KB

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION Item 1.

Financial Statements (unaudited)

Financial Statements (unaudited) 1 Condensed Consolidated Balance Sheets as of August 2 , 2025 and February 1, 2025 1 Condensed Consolidated Statements of Income (Loss) — Three and Six Months Ended A ugust 2 , 2025 and August 3 , 2024 2 Condensed Consolidated Statements of Comprehensive Income (Loss) — Three and Six Months Ended August 2 , 2025 and August 3 , 2024 3 Condensed Consolidated Statements of Cash Flows — Six Months Ended August 2, 2025 and August 3, 2024 4 Condensed Consolidated Statements of Stockholders' Equity — Three and Six Months Ended A ugust 2 , 2025 and August 3 , 2024 5 Notes to Condensed Consolidated Financial Statements 7 Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 51 Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk 79 Item 4.

Controls and Procedures

Controls and Procedures 80

OTHER INFORMATION

PART II. OTHER INFORMATION Item 1.

Legal Proceedings

Legal Proceedings 81 Item 1A.

Risk Factors

Risk Factors 81 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 85 Item 5. Other Information 86 Item 6. Exhibits 87 i Table of Contents WHERE YOU CAN FIND MORE INFORMATION Investors and others should note that we announce material financial information to our investors using our investor relations website, press releases, Securities and Exchange Commission filings and public conference calls and webcasts. We may also use our LinkedIn page (www.linkedin.com/company/guess-) and our website (www.guess.com) as a means of disclosing information about the Company (as defined below), our products, our planned financial and other announcements, attendance at upcoming investor and industry conferences, and other matters as well as for complying with our disclosure obligations under Regulation FD. The information we post through these channels may be deemed material. Accordingly, investors should monitor these accounts and our investor relations website, in addition to following our press releases, SEC filings and public conference calls and webcasts. This list may be updated from time to time on our investor relations website. The information we post through these channels is not a part of this Quarterly Report on Form 10-Q. ii Table of Contents

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION

Financial Statements

ITEM 1. Financial Statements. GUESS?, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except share data) Aug 2, 2025 Feb 1, 2025 (unaudited) ASSETS Current assets: Cash and cash equivalents $ 189,635 $ 187,696 Accounts receivable, net 368,674 391,161 Inventories 668,378 562,649 Prepaid expenses 79,090 67,275 Other current assets 22,218 40,589 Total current assets 1,327,995 1,249,370 Property and equipment, net 258,226 240,114 Goodwill 35,744 33,157 Deferred income tax assets 190,870 171,818 Restricted cash 812 796 Operating lease right-of-use assets 933,717 839,879 Other assets 228,934 231,544 TOTAL ASSETS $ 2,976,298 $ 2,766,678 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Current portion of borrowings and finance lease obligations $ 27,120 $ 40,948 Accounts payable 346,799 318,712 Accrued expenses and other current liabilities 308,462 294,700 Current portion of operating lease liabilities 189,254 176,972 Total current liabilities 871,635 831,332 Convertible senior notes due 2028, net 338,222 336,527 Long-term debt and finance lease obligations 258,370 150,668 Long-term operating lease liabilities 793,515 715,755 Other long-term liabilities 173,738 181,621 Total liabilities 2,435,480 2,215,903 Redeemable noncontrolling interests 416 368 Commitments and contingencies (Note 14) Stockholders' equity: Preferred stock, $ .01 par value. Authorized 10,000,000 shares; no shares issued and outstanding — — Common stock, $ .01 par value. Authorized 150,000,000 shares; issued 142,771,253 and 142,771,253 shares; outstanding 52,074,269 and 51,691,595 shares as of August 2, 2025 and February 1, 2025, respectively 521 517 Paid-in capital 611,288 605,036 Retained earnings 1,231,417 1,289,233 Accumulated other comprehensive loss ( 130,262 ) ( 159,196 ) Treasury stock, 90,696,984 and 91,079,658 shares as of August 2, 2025 and February 1, 2025, respectively ( 1,225,413 ) ( 1,230,583 ) Guess

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View this 10-Q filing on SEC EDGAR