Guess? (GES) Q2 2025 earnings summary

Executive summary

• Q2 revenue grew 10% year-over-year to $733 million, driven by the rag & bone acquisition and strong wholesale in Europe and Americas, while Asia saw a decline.

• GAAP net loss was $10.6 million (EPS $(0.28)), mainly due to a $40.5 million unrealized loss on derivatives tied to convertible notes, higher SG&A, and acquisition impacts.

• Adjusted net earnings were $23.0 million (adjusted EPS $0.42), down from $0.72 year-over-year.

• Operating margin fell to 6.5% (down from 9.7%); adjusted operating margin was 5.2% (down from 9.8%).

• The company is executing a transformation strategy, investing in marketing, organizational structure, and logistics to support long-term growth and brand expansion.

Financial highlights

• Q2 net revenue was $732.6 million, up 10.2% year-over-year; constant currency growth was 13%.

• Gross margin was 43.7%, down 60 basis points year-over-year, mainly due to higher store occupancy and markdowns.

• SG&A expenses rose 23% to $283 million, with 70% of the increase tied to rag & bone and marketing investments.

• Operating income for Q2 was $47.8 million, down 26% year-over-year; adjusted operating income was $37.9 million, down 42%.

• Inventories ended at $603 million, up 9% year-over-year, mainly from the rag & bone acquisition.

Outlook and guidance

• Full-year revenue growth is expected between 9.5% and 11%, revised down from prior guidance.

• Adjusted EPS for the year is forecasted between $2.42 and $2.70.

• Q3 revenue growth is projected at 14.5%-16.5%, with Q3 adjusted EPS between $0.33 and $0.45.

• Adjusted operating margin for the year is expected between 7.3% and 7.8%.

• Free cash flow for the year is now expected to be about $100 million, lower than previous estimates due to higher freight costs and inventory timing.