Guess', Inc. (NYSE:GES) Q4 2023 Earnings Conference Call March 14, 2023 4:45 PM ET

Company Participants

Fabrice Benarouche - VP, Finance and IR

Carlos Alberini - CEO

Dennis Secor - Interim CFO

Conference Call Participants

Corey Tarlowe - Jefferies

Dana Telsey - Telsey Advisory Group

Operator

Good day, everyone, and welcome to the Guess' Fourth Quarter Fiscal 2023 Earnings Conference Call.

I would like to turn the call Fabrice Benarouche, Vice President of Finance and Investor Relations.

Fabrice Benarouche

Thank you, operator. Good afternoon, everyone, and thank you for joining us today. On the call today with me are Carlos Alberini, Chief Executive Officer; and Dennis Secor, Interim Chief Financial Officer.

During today's call, the company will be making forward-looking statements including comments regarding future plans, strategic initiatives, capital allocation and short and long-term outlook. The company's actual results may differ materially from current expectations based on risk factors included in today's press release and the company's quarterly and annual reports filed with the SEC. Comments will also reference certain non-GAAP or adjusted measures. GAAP reconciliations and descriptions of these measures can be found in today's earnings release.

Now, I will turn it over to Carlos.

Carlos Alberini

Thank you, Fabrice. Good afternoon, everyone, and thank you for joining us today. I am very pleased to report our fourth quarter results, which exceeded our expectations for revenues, operating profit and earnings per share. This results cut a strong year for Guess, where we grew revenues by 4% in U.S. dollars and 12% in constant currency and delivered almost 10% in adjusted operating margin and $2.74 in adjusted earnings per share. We are very proud of our performance this year. And Paul and I want to thank our teams around the world for their commitment and strong execution.

During the fourth quarter, our revenues increased by 2% in US dollars and 8% in constant currency, well ahead of our expectations. The revenue increase was driven primarily by our business in Europe which delivered strong top line growth and solid profit performance in spite of currency headwinds. Our Europe results were driven by better than expected performance in our retail stores, including new stores, and solid results in our wholesale business due to increased shipments during the quarter. Our brand continues to enjoy strong momentum and our wholesale customers chose to take early deliveries when the product was available.

Our Americas retail business posted a marginal decrease in revenues and a more significant reduction in operating earnings. This decrease was attributed to lower gross margins as a result of increased markdowns, partially offset by a higher initial markup. Our Americas wholesale segment revenues decreased meaningfully in the quarter as we experienced lower orders and cancellations from our customers as they tightly managed their overall inventory levels. Despite achieving a higher gross margin in this business, operating earnings decreased due to higher expenses and deleveraging.