US' Guess posts Q1 loss despite revenue growth, maintains FY26 outlook

Fibre2Fashion

06-06-2025

American clothing company Guess expects consolidated net revenue for full-year fiscal 2026 (FY26) to grow between 5.5 per cent and 7.4 per cent, with adjusted operating margin forecast in the range of 4.4 per cent to 5.1 per cent. Adjusted diluted earnings per share are projected between $1.32 and $1.64. For the second quarter alone, revenue is expected to rise 2.9 per cent to 4.7 per cent.
The company has reported a first quarter (Q1) net loss for FY26, weighed down by unrealised derivative losses and higher operating costs, despite a solid uptick in overall revenue. For the quarter ended May 3, the company recorded a GAAP net loss of $32.9 million, compared to net earnings of $13 million during the same period last year.
Guess's FY26 revenue is projected to grow 5.5â€'7.4 per cent. It has reported a Q1 FY26 net loss of $32.9 million, impacted by derivative losses and rising costs, despite a 9 per cent revenue rise to $647.8 million. Adjusted loss rose 61 per cent year-on-year. Retail sales fell in key regions, while Americas Wholesale surged. The company also completed its Rag & Bone acquisition.
Diluted loss per share came in at $0.65, including a $0.03 negative impact from share buybacks and a $0.08 benefit from currency fluctuations.
The company attributed part of the quarterly loss to a $4.3 million unrealised loss stemming from changes in the fair value of derivatives linked to its 2028 convertible senior notes. This compares unfavourably with a $38.5 million unrealised gain in the year-ago period.
On an adjusted basis, Guess reported a net loss of $22.3 million, up 61 per cent year-on-year. Adjusted diluted loss per share increased to $0.44 from $0.27.
Despite the earnings decline, total net revenue for the quarter rose 9 per cent to $647.8 million, driven by strong performance in the Americas Wholesale segment, which surged 63 per cent in US dollars and 70 per cent in constant currency. However, this growth was offset by weaker results in Asia, where revenues fell 20 per cent, and a 14 per cent drop in global licensing revenues. Retail comparable sales declined in both the Americas and Europe, with the Americas Retail segment recording an 11 per cent decrease in US dollars.
The company's GAAP operating loss widened to $33.3 million, with an operating margin of negative 5.1 per cent, compared to negative 3.4 per cent a year ago. Adjusted operating loss reached $25.8 million, with margins slipping further to negative 4 per cent. Rising store costs, higher advertising expenses, and currency headwinds were cited as the primary factors behind the margin contraction.
Regionally, the Americas Retail segment saw its operating margin deteriorate by 3.3 percentage points to negative 10.5 per cent, while the Asia segment swung from a positive 5.1 per cent margin to negative 3.1 per cent. Licensing margins remained largely stable at over 92 per cent.
Carlos Alberini, chief executive officer , commented, 'We are encouraged by our first quarter performance, which came in ahead of expectations across key metrics. Revenue grew 9 per cent in U.S. dollars and 12 per cent in constant currency, reflecting the successful integration of Rag & Bone and continued momentum in our wholesale businesses across Europe and the Americas. Disciplined expense management, combined with the better than expected top-line performance, enabled us to report operating results ahead of our guidance range, narrowing our loss for the quarter.'
The company also highlighted the completion of its acquisition of New York-based fashion label Rag & Bone in April 2024. As part of a joint venture with brand management firm WHP Global, Guess took over the operating assets and liabilities of Rag & Bone, while the intellectual property is now jointly owned. The acquisition is expected to strengthen Guess' positioning in the premium fashion segment.
Fibre2Fashion News Desk (KD)