Guess? has recently released its 10-Q report, providing a detailed look at the company's performance and financial health. The company, founded in 1981 and headquartered in Los Angeles, California, designs, markets, distributes, and licenses lifestyle collections of apparel and accessories for men, women, and children. It operates through five segments: Americas Retail, Americas Wholesale, Europe, Asia, and Licensing, and sells its products through direct-to-consumer, wholesale, and licensing distribution channels, as well as through its retail websites. Guess? markets its products under various brand names, including GUESS, GUESS?, GUESS U.S.A., GUESS Jeans, GUESS? and Triangle Design, MARCIANO, and others.
In ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations, Guess? highlights the completion of the acquisition of rag & bone, a New York-based fashion brand, and the integration of its assets into the company's existing segments for financial reporting purposes. The report also discusses the impact of macroeconomic conditions, such as declines in consumer spending, inflation, higher interest rates, and foreign exchange rate fluctuations, on the company's business.
Foreign currency volatility is identified as a significant risk due to the majority of Guess?'s international operations being conducted in currencies other than the U.S. dollar. Fluctuations in exchange rates can impact the operating margins of foreign operations and reported earnings, particularly in regions such as Canada, Europe, and Mexico. Guess? has entered into derivative financial instruments to offset some of the exchange risk on foreign currency transactions.
The report also addresses the impact of inflation on Guess?'s overall cost structure, including transportation, employee compensation, and raw materials costs. The company has experienced increased costs in these areas, negatively impacting margins and expenses. Guess? anticipates that inflationary pressures will persist in the near term, with potential impacts on consumer discretionary spending and the interest rates on future debt. Following these announcements, the company's shares moved -1.1%, and are now trading at a price of $19.11. For more information, read the company's full 10-Q submission here.
