Guess revenues sliced in half by coronavirus disruptions

By

Robin Driver

Published
Jun 11, 2020

Los Angeles-based fashion retailer Guess?, Inc. announced a 51.5% decrease in net revenue for the first quarter on Wednesday and predicted a “similar” decline for Q2, sending shares in the company down almost 12% in premarket trading.
 

For the first quarter ended May 2, 2020, the company reported total net revenues of $260.3 million, down from $536.7 million in the prior-year period. In constant currencies, the decline was 50.1%.
 
Guess’ Americas retail segment saw the biggest decrease in sales, posting a 57.7% decline, while the wholesale channel in the same region reported a 44.0% drop. Revenues fell 52.6% in Asia, 49.3% in Europe and 31.3% in the company’s licensing business.

After prolonged temporary closures related to the Covid-19 pandemic, Guess began reopening some of its stores in Europe in mid-April and has been opening locations in the U.S. and Canada since May. Currently 400 of the company’s European stores and 180 of its North American locations are open, along with all of its Asian stores.
 
Overall, the retailer’s quarterly net loss came to $157.7 million, or $2.40 per diluted share, compared to a net loss of $21.4 million, or $0.27 per diluted share, in the same period in the previous year.
 
“The Covid-19 crisis has had a material impact on our company, including our operations and our financial results,” said Guess CEO Carlos Alberini in a release. “Looking forward, the building blocks of our long-term strategy are still intact. We remain focused on enhancing our omni-channel platform centered around the consumer and are accelerating our efforts to gain efficiencies across our global operations and rationalize our store portfolios.”
 
The company explained that sales at its reopened stores in Europe and North America have been “better than anticipated,” with sales productivity being approximately 75% in the U.S. and Canada, and 70% in Europe.
 
Nonetheless, Guess said it expects second-quarter sales to suffer from “a decrease similar to that of the first quarter,” while also refraining from giving any more specific financial guidance due to the ongoing uncertainty surrounding the evolution of the Covid-19 pandemic.
 
In order to safeguard its liquidity during and after the crisis, the company has implemented a number of cost-cutting measures, such as the furloughing of all retail associates and a large number of corporate employees in North America, temporary tiered salary reductions and the deferral of annual merit increases.

Guess has also permanently reduced its corporate headcount and is working to reduce its expenses, store occupancy costs and capital expenditures.