Guess?, Inc. ( GES ) shares are trading lower after the company reported second-quarter results yesterday and cut its FY25 adjusted EPS guidance below estimates.

Net revenue rose 10% Y/Y to $732.6 million, beating the consensus of $729.96 million. On a constant currency basis, revenue grew by 13% Y/Y. Adjusted EPS of $0.42 missed the street view of $0.43.

Europe revenues grew 5% Y/Y, Americas Retail revenues rose 8% Y/Y and Americas Wholesale revenues surged 93% Y/Y in the quarter.

On the other hand, Asia revenues decreased by 8% and Licensing revenues increased by 4% Y/Y in U.S. dollars in the quarter.

Adjusted earnings from operations fell 41.6% Y/Y to $37.9 million, with operating margin decreasing 4.6 ppt Y/Y to 5.2%. The decline is due to higher expenses, the impact of newly acquired businesses, and increased promotions.

As of August 3, 2024, cash and cash equivalent stood at $218.85 million.

Dividend: The Board of Directors approved a dividend per share of $0.30, payable on September 27, 2024, to shareholders of record as of September 11, 2024.

During the quarter, the company repurchased approximately 2.3 million shares of its common stock in open market transactions totaling $50.0 million, leaving a capacity of $139.8 million under the share repurchase program. 

Outlook: Guess? expects third-quarter net revenue to rise by 14.5% to 16.5% and adjusted EPS of $0.33-$0.45, vs. estimate of $0.58.

The company lowered its outlook for FY25 revenue to grow by 9.5% to 11.0% (vs. 10.7% to 12.7% prior) and adjusted EPS to $2.42 – $2.70 (from $2.62 – $3.00 earlier) vs. street view of $2.79.

Carlos Alberini, Chief Executive Officer, said, “Our bottom-line results reflect our decision to significantly increase our marketing investments compared to last year’s spend to support the international expansion of our brands, including our core Guess brand as well as the new additions to our portfolio – Guess Jeans and rag & bone.”

“As we look into the second half of the year, we are adjusting our outlook for revenues and earnings to reflect the softer consumer environment. As always, we will manage our costs and inventories carefully, while we continue to support the growth of our business, including investments in marketing, new stores and infrastructure.”

Price Action: GES shares are down 10.6% at $18.06 premarket at the last check Thursday.

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