VALUATION HIGHLIGHTS

1. European Operations constitute 51% of the Trefis price estimate for Guess?'s stock.
2. North American Retail constitutes 23% of the Trefis price estimate for Guess?'s stock.
3. North American Wholesale constitutes 14% of the Trefis price estimate for Guess?'s stock.

WHAT HAS CHANGED?

1. Guess Q3 FY 2026 Snapshot

Guess?, Inc. delivered a stronger-than-expected Q3 2026, reporting $791.4 million in revenue—up about 7% year over year—and swinging to a $25.6 million GAAP profit after a loss the prior year. The company posted GAAP diluted EPS of roughly $0.48–$0.49 and adjusted EPS of $0.35, a slight improvement from $0.34 a year earlier. Margins improved as well, with GAAP operating margin at 2.9% and adjusted operating margin near 4.7%. The upside was driven primarily by strength in Americas wholesale and a recovery in Europe, partially offset by continued softness in Americas retail and Asia.

Note: Guess' FY'25 ended on February 1, 2025.

2. Guidance

Guess has suspended forward guidance for fiscal 2026. The suspension comes because the company is in the process of a proposed take-private transaction with Authentic Brands Group, and until that deal closes (expected Q4 FY26) management says it cannot responsibly provide updated forecasts.

BUSINESS SUMMARY

Guess is a specialty retailer that designs, markets, distributes, and licenses one of the world's leading lifestyle collections of contemporary apparel and accessories for men, women, and children. Some of the company's most popular brands include GUESS, G by GUESS, and MARCIANO. Guess's core customers are style-conscious customers between the ages of 18 and 32.

SOURCES OF VALUE

European segment is one of the largest contributors to the company's stock price

Guess' profitability in the European wholesale business is currently growing, which is evident from the fact that despite not growing the number of wholesale dealers significantly over the past year, the revenues from the wholesale business kept growing. Going forward, we expect European business revenues to reach around $1.8 billion by the end of our forecast period as the company expands in markets such as Germany. However, if Guess's European revenues increase to over $2.3 billion by the end of the Trefis forecast period driven by aggressive expansion in lucrative markets, there could be a 15% upside to our price estimate for Guess.

KEY TRENDS

Foot traffic decline in the U.S. troubling stores

Due to a lack of footfall in the brick-and-mortar stores, Guess had been suffering in the Americas, specifically in North America, for quite a few years. Hence, the company is gradually trying to reduce its footprint and increase its profitability in the region. Now, the Americas contribute over 36% to Guess' total revenues. The management plans on reducing this contribution to around 25% in the future, and it plans on achieving a 7.5% overall long-term operating margin in the Americas. To achieve these goals, the company is creating a better balance between the American retail and wholesale businesses, while closing stores, improving its product offerings, and building a stronger online presence through celebrity endorsements, marketing, and promotions.

Susceptibility to currency fluctuations

Guess earns close to 64% of its revenues from outside North America (as of FY 2025), and hence, its growth is highly susceptible to currency fluctuations. Though this is something the company cannot control, it remains a significant threat.