Guess Inc’s Q1 2020 Turns Out A Mixed Bag; E-Commerce To Drive Future Growth

by Trefis Team
Rate   |   votes   |   Share

Guess Inc (NYSE: GES) released its Q1 2020 results on June 6, 2019, followed by a conference call with analysts.

Performance Snapshot

  • The company reported revenue of $536.7 million in Q1 2020, marking y-o-y growth of 3% over Q1 2019.
  • Higher revenue was driven by growth in retail and wholesale business across geographies – North America, Europe, and Asia.
  • Top line growth benefited from healthy growth in e-commerce and comparable sales, along with new store additions.
  • GES reported an adjusted net loss of $0.25 per share in Q1 2020, slightly higher than a loss of $0.23/share in Q1 2019.
  • Higher loss was mainly driven by higher markdowns in US retail, unfavorable business mix in Europe and higher advertising expense.
  • Trefis estimates suggest that revenue and margin performance in the remaining three quarters would be better, leading to growth in the top and bottom line for FY 2020.

We have summarized the key announcements in our interactive dashboard – How did Guess Inc fare in Q1 2020 and what is the full year outlook? In addition, here is more Trefis Consumer Discretionary Services data.

A Quick Look At GES’ Revenue Sources

GES reported total revenue of $2.61 billion in FY 2019. The key revenue sources are:

  • Americas Retail: $0.82 billion revenue in FY 2019 (32% of total revenue). The segment includes retail stores and concessions in Americas. It also includes the e-commerce business which has directly operated retail and other marketplace websites in the U.S., Canada, Mexico, Brazil, Chile, and Peru.
  • Americas Wholesale: $0.17 billion revenue in FY 2019 (7% of total revenue). Under the segment, GES sells products through wholesale channels throughout the Americas and to third-party distributors based in Central and South America as well as licensed retail locations operated by wholesale partners.
  • Europe: $1.14 billion revenue in FY 2019 (44% of total revenue). Includes European retail stores, e-commerce sales, and the wholesale business which sells Guess apparel and accessories in Europe.
  • Asia: $0.39 billion revenue in FY 2019 (15% of total revenue). The division includes retail, wholesale, and e-commerce sales of Guess apparel and accessories in Asia.
  • Licensing: $0.08 billion revenue in FY 2019 (3% of total revenue). Under this segment, the company offers trademark license agreements to operators that manufacture and distribute apparel and accessories.

A] Revenue Trend

Americas Retail

  • Americas retail revenues increased 3% (y-o-y) in Q1 2020, driven by growth in comparable store and digital sales.
  • Adverse impact of closure of a number of stores over recent quarters due to lower customer traffic in brick-and-mortar stores, was more than offset by an upswing in online retail sales.

Americas Wholesale

  • Segment revenue increased by 13.6% (y-o-y) in Q1 2020, driven by higher shipments, mainly in the US and Mexican wholesale business.
  • Increased focus on wholesale business due to slowdown in retail store sales has benefited the segment during the quarter.


  • The company’s focus on linking brick-and-mortar stores, e-commerce, and mobile sales to improve online operations has helped the segment grow in Q1 2020.
  • Europe revenues increased by 2.2% (y-o-y) driven by an increase in store count, higher shipments in wholesale business, and comparable sales growth.


  • Segment revenue increased 1.4% in Q1 2020 due to rising customer base and increasing online presence.
  • Digital sales growth in China has been a major driver as the company’s alliance with Tmall is yielding positive results.


  • Licensing revenue decreased by 4.9% (y-o-y) in Q1 2020 due to lower sales from partners.
  • Also, adoption of a new revenue recognition methodology in FY 2019 led to a drop in revenue in Q1 2020 due to the large base effect.

B] Total Expenses and Profitability Trend

The company’s total expenses have largely trended upward on year-on-year basis over the recent quarters, driven by higher distribution costs, increase in advertising and marketing cost, asset impairments, and volatility in tax outgo.

  • Cost of Goods Sold: Cost of sales increased by 2.1% (y-o-y) in Q1 2020, driven by higher markdowns in US, unfavorable business mix in Europe, and higher distribution cost. However, COGS as % of revenue decreased to 66.1% from 66.6% from the year-ago period.
  • SG&A Expense: Increase in SG&A cost was primarily due to an increase in professional service and legal fee, along with higher advertising expense. SG&A as a % of revenue increased to 38.2% from 38% in the year ago period.
  • Effective Tax Rate: The effective tax rate was higher in Q1 2020 compared to the previous year period in the absence of any re-measurement of deferred tax assets unlike last year.

Net income margin remained almost flat on a y-o-y basis in Q1 2020, driven by better product cost management, offset by higher spending on advertising and lower tax benefits received during the quarter.

Full Year Outlook

  • For the full year, we expect total revenue to increase by 4.2% from $2.61 billion in FY 2019 to $2.72 billion in FY 2020.
  • Higher revenue is likely to be driven by healthy growth in Europe and Asia, led by increasing store count, rising share of online sales, strong comparable sales growth, and growth in the wholesale business, partially offset by decreasing footfalls at brick-and-mortar stores, especially in the Americas.
  • Net income margin is expected to rise from 0.5% in FY 2019 to 0.6% in FY 2020, primarily due to an increase in revenues, lower markdowns in the retail business, and absence of non-recurring costs.

Trefis has a price estimate of $23 per share for GES’ stock.




What’s behind Trefis? See How it’s Powering New Collaboration and What-Ifs

For CFOs and Finance Teams | Product, R&D, and Marketing Teams

All Trefis Data

Like our charts? Explore example interactive dashboards and create your own.

Rate   |   votes   |   Share


Name (Required)
Email (Required, but never displayed)
Be the first to comment!