ges-20211123
GUESS INC0000912463false00009124632021-11-232021-11-23


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): November 23, 2021

GUESS?, INC.
(Exact name of registrant as specified in its charter)

Delaware
(State or other jurisdiction of incorporation)
1-11893
95-3679695
(Commission File Number)
(IRS Employer Identification No.)

1444 S. Alameda Street, Los Angeles, California 90021
(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code: (213) 765-3100

Not applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading symbol(s)Name of each exchange on which registered
  
Common Stock, par value $0.01 per shareGESNew York Stock Exchange
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.



Item 2.02. Results of Operations and Financial Condition.

Guess?, Inc. (the “Company”) issued a press release on November 23, 2021 announcing its financial results for the quarter ended October 30, 2021. A copy of the press release is being furnished as Exhibit 99.1 attached hereto.

The information in this Item 2.02 of Form 8-K is being furnished hereby and shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”), or otherwise subject to the liabilities of such section, nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits.
Exhibit No.
Description
104
Cover Page Interactive Data File - the cover page XBRL tags are embedded within the Inline XBRL document

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, Guess?, Inc. has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Dated:
November 23, 2021
GUESS?, INC.
By:
/s/ Kathryn Anderson
Kathryn Anderson
Chief Financial Officer



3
Document

Exhibit 99.1
                                    
GUESS?, INC. REPORTS FISCAL YEAR 2022 THIRD QUARTER RESULTS

Q3 Fiscal 2022 Revenues Reached $643 Million, Up 13% Compared to Q3 Fiscal 2021, Up 4% Compared to Q3 Fiscal 2020

Delivered Operating Margin in Excess of 10.0%

Q3 EPS of $0.45 and Adjusted EPS of $0.62

Raises Full-Year Outlook for Operating Margin to 11.0%

Doubles Quarterly Cash Dividend from $0.1125 to $0.225 per Share on the Company’s Common Stock


LOS ANGELES, November 23, 2021 - Guess?, Inc. (NYSE: GES) today reported financial results for its third quarter ended October 30, 2021.

Carlos Alberini, Chief Executive Officer, commented, “We are very pleased with our performance this quarter, which exceeded our expectations for revenues and earnings. Our revenues for the quarter increased 13% versus last year and were up 4% compared to the third quarter of fiscal year 2020, pre-pandemic. The better performance than expected was driven by our European Wholesale, Americas Retail and Licensing businesses, which posted strong top and bottom line results across the board. All in all, we delivered a 10% operating margin in the period, driven by strong gross margin expansion, as a result of lower promotional activity and improved IMUs in spite of increased freight costs related to the supply chain disruptions experienced in the market.”

Paul Marciano, Co-Founder and Chief Creative Officer, added, “I am very pleased with the progress we have made during the last few months with our brand elevation strategy. For the first time in our Company’s history we have one global line of products across all categories and our products are highly elevated, with a strong focus on quality and sustainability. The Guess brand is enjoying strong momentum worldwide, and we see a big opportunity to gain market share and grow in multiple markets and product categories.”

Mr. Alberini concluded, “We are confident in our plans for the holiday business. Our inventory position is strong, and our customers are responding well to our assortments. Based on our progress, we now expect to deliver an operating margin of 11.0% in the current year, double that of fiscal 2020, pre-pandemic. I am very pleased with our performance for the current year but I am even more excited with what lies ahead for us. I believe that we are at an inflection point at Guess and I am very confident our business is well positioned to generate superior returns in the future. We will continue to prioritize returning value to our shareholders and announced today that our Board has approved to double our quarterly cash dividend from $0.1125 to $0.225.”

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Adjusted Amounts
This press release contains certain non-GAAP, or adjusted, financial measures. References to “adjusted” results exclude the impact of (i) asset impairment charges, (ii) net (gains) losses on lease modifications, (iii) certain professional service and legal fees and related (credits) costs, (iv) certain separation charges, (v) non-cash debt discount amortization on our convertible senior notes, (vi) the related income tax effects of the foregoing items, as well as the impact from changes in the income tax law on deferred income taxes in certain tax jurisdictions, net income tax settlements and adjustments to specific uncertain income tax positions, and (vii) certain discrete income tax adjustments related primarily to an intra-entity transfer of intellectual property rights to a wholly-owned Swiss subsidiary, in each case where applicable. A reconciliation of reported GAAP results to comparable non-GAAP results is provided in the accompanying tables and discussed under the heading “Presentation of Non-GAAP Information” below.
Third Quarter Fiscal 2022 Results Compared to Third Quarter Fiscal 2020
For the third quarter of fiscal 2022, the Company recorded GAAP net earnings of $29.9 million, a 140.5% increase from $12.4 million for the third quarter of fiscal 2020. GAAP diluted EPS increased 150.0% to $0.45 for the third quarter of fiscal 2022, compared to $0.18 for the third quarter of fiscal 2020. The Company estimates a net positive impact from its share buybacks and its convertible notes transaction of $0.04 and a negative impact from currency of $0.12 on GAAP diluted EPS in the third quarter of fiscal 2022 when compared to the third quarter of fiscal 2020.
For the third quarter of fiscal 2022, the Company’s adjusted net earnings were $41.6 million, a 178.8% increase from $14.9 million for the third quarter of fiscal 2020. Adjusted diluted EPS increased 181.8% to $0.62, compared to $0.22 for the third quarter of fiscal 2020. The Company estimates a net positive impact from its share buybacks and its convertible notes transaction of $0.05 and a negative impact from currency of $0.12 on adjusted diluted EPS in the third quarter of fiscal 2022 when compared to the third quarter of fiscal 2020.
Net Revenue. Total net revenue for the third quarter of fiscal 2022 increased 4.4% to $643.1 million, from $615.9 million in the third quarter of fiscal 2020. In constant currency, net revenue increased by 2.1%.
Earnings from Operations. GAAP earnings from operations for the third quarter of fiscal 2022 increased 190.0% to $65.7 million (including $3.0 million net losses on lease modifications, $1.2 million in non-cash impairment charges taken on certain long-lived store related assets and a $2.0 million unfavorable currency translation impact), from $22.6 million (including $1.8 million in non-cash impairment charges taken on certain long-lived store related assets) in the third quarter of fiscal 2020. GAAP operating margin in the third quarter of fiscal 2022 increased 6.5% to 10.2%, from 3.7% in the third quarter of fiscal 2020, driven primarily by lower markdowns, higher initial markups, overall leveraging of expenses and lower occupancy costs, partially offset by higher performance-based compensation. The negative impact of currency on operating margin for the quarter was approximately 40 basis points.
For the third quarter of fiscal 2022, adjusted earnings from operations increased 204.9% to $70.4 million, from $23.1 million in the third quarter of fiscal 2020. Adjusted operating margin increased 7.2% to 10.9%, from 3.7% in the third quarter of fiscal 2020, driven primarily by lower markdowns, higher initial markups, overall leveraging of expenses and lower occupancy costs, partially offset by higher performance-based compensation.
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Third Quarter Fiscal 2022 Results Compared to Third Quarter Fiscal 2021
For the third quarter of fiscal 2022, the Company recorded GAAP net earnings of $29.9 million, a 13.3% increase from $26.4 million for the third quarter of fiscal 2021. GAAP diluted EPS increased 9.8% to $0.45 for the third quarter of fiscal 2022, compared to $0.41 for the same prior-year quarter. The Company estimates a minimal impact from its share buybacks and its convertible notes transaction and a positive impact from currency of $0.02 on GAAP diluted EPS in the third quarter of fiscal 2022 when compared to the same prior-year quarter.
For the third quarter of fiscal 2022, the Company’s adjusted net earnings were $41.6 million, an 11.2% increase from $37.4 million for the third quarter of fiscal 2021. Adjusted diluted EPS increased 6.9% to $0.62, compared to $0.58 for the same prior-year quarter. The Company estimates a minimal impact from its share buybacks and its convertible notes transaction and a positive impact from currency of $0.02 on adjusted diluted EPS in the third quarter of fiscal 2022 when compared to the same prior-year quarter.
Net Revenue. Total net revenue for the third quarter of fiscal 2022 increased 13.0% to $643.1 million, from $569.3 million in the same prior-year quarter. In constant currency, net revenue increased by 12.8%.
Earnings from Operations. GAAP earnings from operations for the third quarter of fiscal 2022 increased 47.7% to $65.7 million (including $3.0 million net losses on lease modifications, $1.2 million in non-cash impairment charges taken on certain long-lived store related assets and a $0.2 million favorable currency translation impact), from $44.5 million (including $10.3 million in non-cash impairment charges taken on certain long-lived store related assets and minimal net gains on lease modifications) in the same prior-year quarter. GAAP operating margin in the third quarter of fiscal 2022 increased 2.4% to 10.2%, from 7.8% in the same prior-year quarter, driven primarily by lower non-cash impairment charges, lower markdowns, higher initial markups and overall leveraging of expenses, partially offset by higher performance-based compensation. The positive impact of currency on operating margin for the quarter was approximately 60 basis points.
For the third quarter of fiscal 2022, adjusted earnings from operations increased 27.3% to $70.4 million, from $55.3 million in the same prior-year quarter. Adjusted operating margin increased 1.2% to 10.9%, from 9.7% in the same prior-year quarter, driven primarily by lower markdowns, higher initial markups and overall leveraging of expenses, partially offset by higher performance-based compensation.
Nine-Month Period Fiscal 2022 Results Compared to Nine-Month Period Fiscal 2020
For the nine months ended October 30, 2021, the Company recorded GAAP net earnings of $102.9 million, compared to $16.4 million for the nine months ended November 2, 2019. GAAP diluted EPS was $1.55 for the nine months ended October 30, 2021, compared to $0.22 for the nine months ended November 2, 2019. The Company estimates a net positive impact from its share buybacks and its convertible notes transaction of $0.19 and a negative currency impact of $0.18 on GAAP diluted EPS for the nine months ended October 30, 2021 when compared to the nine months ended November 2, 2019.
For the nine months ended October 30, 2021, the Company recorded adjusted net earnings of $119.5 million, compared to $22.7 million for the nine months ended November 2, 2019. Adjusted diluted EPS was $1.79, compared to $0.31 for the nine months ended November 2, 2019. The Company estimates its share buybacks and its convertible notes transaction had a net positive impact of $0.25, and currency had a negative impact of $0.18 on adjusted diluted EPS during the nine months ended October 30, 2021 when compared to the nine months ended November 2, 2019.
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Net Revenue. Total net revenue for the first nine months of fiscal 2022 decreased 2.4% to $1.79 billion, from $1.84 billion for the nine months ended November 2, 2019. In constant currency, net revenue decreased by 4.8%.
Earnings from Operations. GAAP earnings from operations for the first nine months of fiscal 2022 were $179.6 million (including $0.4 million net losses on lease modifications, $3.1 million in non-cash impairment charges taken on certain long-lived store related assets and a $3.9 million unfavorable currency translation impact), compared to $44.2 million (including $5.1 million in non-cash impairment charges taken on certain long-lived store related assets) for the nine months ended November 2, 2019. GAAP operating margin for the first nine months of fiscal 2022 increased 7.6% to 10.0%, from 2.4% for the nine months ended November 2, 2019, driven primarily by higher initial markups, lower occupancy costs and lower markdowns. The negative impact of currency on operating margin for the first nine months of fiscal 2022 was approximately 50 basis points.
For the nine months ended October 30, 2021, adjusted earnings from operations were $184.9 million, compared to $48.6 million for the nine months ended November 2, 2019. Adjusted operating margin improved 7.7% to 10.3% for the nine months ended October 30, 2021, from 2.6% for the nine months ended November 2, 2019, driven primarily by higher initial markups, lower occupancy costs and lower markdowns.
Nine-Month Period Fiscal 2022 Results Compared to Nine-Month Period Fiscal 2021
For the nine months ended October 30, 2021, the Company recorded GAAP net earnings of $102.9 million, compared to a GAAP net loss of $151.6 million for the nine months ended October 31, 2020. GAAP diluted EPS was $1.55 for the nine months ended October 30, 2021, compared to GAAP diluted loss per share of $2.35 during the same prior-year period. The Company estimates a net positive impact from its share buybacks and its convertible notes transaction and currency of $0.05 and $0.12, respectively, on GAAP diluted EPS for the nine months ended October 30, 2021 when compared to the same prior-year period.
For the nine months ended October 30, 2021, the Company recorded adjusted net earnings of $119.5 million, compared to an adjusted net loss of $82.2 million for the nine months ended October 31, 2020. Adjusted diluted EPS was $1.79, compared to adjusted loss per share of $1.27 during the same prior-year period. The Company estimates its share buybacks and its convertible notes transaction and currency had a net positive impact of $0.05 and $0.11, respectively, on adjusted diluted EPS during the nine months ended October 30, 2021 when compared to the same prior-year period.
Net Revenue. Total net revenue for the first nine months of fiscal 2022 increased 45.9% to $1.79 billion, from $1.23 billion in the same prior-year period. In constant currency, net revenue increased by 41.7%.
Earnings (Loss) from Operations. GAAP earnings from operations for the first nine months of fiscal 2022 were $179.6 million (including $0.4 million net losses on lease modifications, $3.1 million in non-cash impairment charges taken on certain long-lived store related assets and a $1.8 million favorable currency translation impact), compared to a GAAP loss from operations of $132.4 million (including $0.5 million net gains on lease modifications and $75.3 million in non-cash impairment charges taken on certain long-lived store related assets) in the same prior-year period. GAAP operating margin in fiscal 2022 increased 20.8% to 10.0%, from negative 10.8% in the same prior-year period, driven primarily by overall leveraging of expenses, lower non-cash impairment charges and lower markdowns. The positive impact of currency on operating margin for the nine months ended October 30, 2021 was approximately 20 basis points.
For the nine months ended October 30, 2021, adjusted earnings from operations were $184.9 million, compared to adjusted loss from operations of $54.2 million for the nine months ended October 31, 2020. Adjusted operating margin improved 14.7% to 10.3% for the nine months ended October 30, 2021, from negative 4.4% in the same prior-year period, driven primarily by overall leveraging of expenses and lower markdowns.
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Outlook
Given the current circumstances regarding the coronavirus (or “COVID-19”) crisis and its uncertain impact on our operations, we are not providing detailed guidance for the fourth quarter or the full fiscal year ending January 29, 2022. We expect revenues in the fourth quarter of fiscal 2022 to be down mid-single digits versus the fourth quarter of fiscal 2020 as the impact of permanent store closures and an unfavorable shift of European wholesale shipments from the fourth quarter into the first quarter of next year are partially offset by continued momentum in our global e-commerce business.
For the full fiscal year 2022, assuming no increased COVID-related shutdowns from current levels (approximately 1% of our directly operated stores), we expect revenues to be down low-single digits versus fiscal 2020 and operating margin to reach approximately 11.0%. These comparisons are versus the pre-pandemic periods from two fiscal years prior in order to provide a more normalized comparison.
A reconciliation of the Company’s outlook for GAAP operating margin to adjusted operating margin for the fourth quarter and fiscal year ending January 29, 2022 is as follows:
Reconciliation of GAAP Outlook to Adjusted Outlook
Fourth Quarter of Fiscal 2022Fiscal Year 2022
GAAP operating margin13.1%11.0%
Certain professional service and legal fees and related (credits) costs1
—%0.1%
Asset impairment charges2
—%0.1%
Net (gains) losses on lease modifications3
—%—%
Adjusted operating margin13.1%11.2%
______________________________________________________________________________
See pages 21 and 22 for footnotes
COVID-19 Third Quarter Business Update
The COVID-19 pandemic is continuing to negatively impact the Company’s businesses. Although we achieved slightly higher net revenue during the third quarter of fiscal 2022 compared to the third quarter of fiscal 2020, we remained challenged by lower traffic and capacity restrictions. In addition, while we began the third quarter of fiscal 2022 with 100% of our directly operated stores open for business, we started to incur a new round of government-mandated temporary store closures toward the end of the quarter. This resulted in the closure of less than 5% of our directly operated stores as of October 30, 2021, mostly in Europe, the impact of which was minimal to our third quarter results.
In light of the fluid nature of the pandemic, we continue to carefully monitor global and regional developments, particularly in Europe, and respond appropriately. We also continue to strategically manage expenses in order to protect profitability.
Dividend
The Company’s Board of Directors has approved an increase to our quarterly cash dividend payment, from $0.1125 to $0.225 per share, realigning the per-share dividend amount to the level prior to the issuance of our Convertible Senior Notes in April 2019. The dividend will be payable on December 24, 2021 to shareholders of record as of the close of business on December 8, 2021.

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Presentation of Non-GAAP Information
The financial information presented in this release includes non-GAAP financial measures, such as adjusted results, constant currency financial information, free cash flows and return on invested capital. For the three months and nine months ended October 30, 2021, October 31, 2020 and November 2, 2019, the adjusted results exclude the impact of certain professional service and legal fees and related (credits) costs, certain separation charges, asset impairment charges, net (gains) losses on lease modifications, non-cash amortization of debt discount on the Company’s convertible senior notes, the related income tax effects of the foregoing items, the impact from changes in the income tax law on deferred income taxes in certain tax jurisdictions, net income tax settlements and adjustments to specific uncertain income tax positions, as well as certain discrete income tax adjustments related primarily to an intra-entity transfer of intellectual property rights to a wholly-owned Swiss subsidiary, in each case where applicable. These non-GAAP measures are provided in addition to, and not as alternatives for, the Company’s reported GAAP results.
The Company has excluded these items from its adjusted financial measures primarily because it believes these items are not indicative of the underlying performance of its business and the adjusted financial information provided is useful for investors to evaluate the comparability of the Company’s operating results and its future outlook (when reviewed in conjunction with the Company’s GAAP financial statements). A reconciliation of reported GAAP results to comparable non-GAAP results is provided.
This release also includes certain constant currency financial information. Foreign currency exchange rate fluctuations affect the amount reported from translating the Company’s foreign revenue, expenses and balance sheet amounts into U.S. dollars. These rate fluctuations can have a significant effect on reported operating results under GAAP. The Company provides constant currency information to enhance the visibility of underlying business trends, excluding the effects of changes in foreign currency translation rates. To calculate net revenue and earnings (loss) from operations on a constant currency basis, actual or forecasted results for the current-year period are translated into U.S. dollars at the average exchange rates in effect during the comparable period of the prior year. The constant currency calculations do not adjust for the impact of revaluing specific transactions denominated in a currency different from the functional currency of that entity when exchange rates fluctuate. However, in calculating the estimated impact of currency on our earnings (loss) per share for our actual or forecasted results, the Company estimates gross margin (including the impact of merchandise-related hedges) and expenses using the appropriate prior-year rates, translates the estimated foreign earnings at the comparable prior-year rates, and excludes the year-over-year earnings impact of gains or losses arising from balance sheet remeasurement and foreign currency contracts not designated as merchandise hedges. The constant currency information presented may not be comparable to similarly titled measures reported by other companies.
The Company also includes information regarding its free cash flows in this release. The Company calculates free cash flows as cash flows from operating activities less (i) purchases of property and equipment and (ii) payments for property and equipment under finance leases. Free cash flows are not intended to be an alternative to cash flows from operating activities as a measure of liquidity, but rather to provide additional visibility to investors regarding how much cash is generated for discretionary and non-discretionary items after deducting purchases of property and equipment and payments for property and equipment under finance leases. Free cash flow information presented may not be comparable to similarly titled measures reported by other companies. A reconciliation of reported GAAP cash flows from operating activities to the comparable non-GAAP free cash flow measure is provided.
The Company also includes information regarding its return on invested capital (or “ROIC”) in this release. The Company defines ROIC as adjusted net operating profit after income taxes divided by two-year average invested capital. The Company believes ROIC is a useful financial measure for investors in evaluating how efficiently the Company deploys its capital. The Company’s method of calculating ROIC may differ from other companies’ methods and, therefore, might not be comparable.
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Investor Conference Call
The Company will hold a conference call at 4:15 pm (ET) on November 23, 2021 to discuss the news announced in this press release. A live webcast of the conference call will be accessible at www.guess.com via the “Investor Relations” link. The webcast will be archived on the website for 30 days.
About Guess?
Guess?, Inc. designs, markets, distributes and licenses a lifestyle collection of contemporary apparel, denim, handbags, watches, eyewear, footwear and other related consumer products. Guess? products are distributed through branded Guess? stores as well as better department and specialty stores around the world. As of October 30, 2021, the Company directly operated 1,052 retail stores in the Americas, Europe and Asia. The Company’s partners and distributors operated 558 additional retail stores worldwide. As of October 30, 2021, the Company and its partners and distributors operated in approximately 100 countries worldwide. For more information about the Company, please visit www.guess.com.
Forward-Looking Statements
Except for historical information contained herein, certain matters discussed in this press release or the related conference call and webcast, including statements concerning the potential actions and impacts related to the COVID-19 pandemic; statements concerning the Company’s future outlook including with respect to the fourth quarter and full year of fiscal 2022 as well as fiscal 2024; statements concerning the Company’s expectations, goals, future prospects, longer-term operating margin, revenue, EPS and ROIC expectations and current business strategies and strategic initiatives; and statements expressing optimism or pessimism about future operating results and growth opportunities are forward-looking statements that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements, which are frequently indicated by terms such as “expect,” “could,” “will,” “should,” “goal,” “strategy,” “believe,” “estimate,” “continue,” “outlook,” “plan,” “create,” “see,” and similar terms, are only expectations, and involve known and unknown risks and uncertainties, which may cause actual results in future periods to differ materially from what is currently anticipated. Factors which may cause actual results in future periods to differ materially from current expectations include, among others: our ability to maintain our brand image and reputation; domestic and international economic or political conditions, including economic and other events that could negatively impact consumer confidence and discretionary consumer spending; the continuation or worsening of impacts related to the COVID-19 pandemic, including business, financial, human capital, litigation and other impacts to the Company and its partners; our ability to successfully negotiate rent relief or other lease-related terms with our landlords; our ability to maintain adequate levels of liquidity; changes to estimates related to impairments, inventory and other reserves, including the impact of the CARES Act, which were made using the best information available at the time; changes in the competitive marketplace and in our commercial relationships; our ability to anticipate and adapt to changing consumer preferences and trends; our ability to manage our inventory commensurate with customer demand; risks related to the timing and costs of delivering merchandise to our stores and our wholesale customers; unexpected or unseasonable weather conditions; our ability to effectively operate our various retail concepts, including securing, renewing, modifying or terminating leases for store locations; our ability to successfully and/or timely implement our growth strategies and other strategic initiatives; our ability to successfully implement or update information technology systems, including enhancing our global omni-channel capabilities; our ability to expand internationally and operate in regions where we have less experience, including through joint ventures; risks related to our convertible senior notes issued in April 2019, including our ability to settle the liability in cash; our ability to successfully or timely implement plans for cost reductions; our ability to effectively and efficiently manage the volume and costs associated with our European distribution centers without incurring shipment delays; our ability to attract and retain key personnel; obligations or changes in estimates arising from new or existing litigation, income tax and other regulatory proceedings; risks related to the complexity of the Tax Reform, future clarifications and legislative amendments thereto, as well as our ability to
7


accurately interpret and predict its impact on our cash flows and financial condition; risks related to the tax treatment of our third quarter fiscal 2022 intra-entity transfer of intellectual property rights from certain U.S entities to a wholly-owned Swiss subsidiary; the risk of economic uncertainty associated with the United Kingdom’s departure from the European Union (“Brexit”) or any other similar referendums that may be held; the occurrence of unforeseen epidemics, such as the COVID-19 pandemic; other catastrophic events; changes in U.S. or foreign income tax or tariff policy, including changes to tariffs on imports into the U.S.; accounting adjustments to our unaudited financial statements identified during the completion of our annual independent audit of financial statements and financial controls or from subsequent events arising after issuance of this release; risk of future non-cash asset impairments, including goodwill, right-of-use lease assets and/or other store asset impairments; restructuring charges; our ability to adapt to new regulatory compliance and disclosure obligations; risks associated with our foreign operations, such as violations of laws prohibiting improper payments and the burdens of complying with a variety of foreign laws and regulations (including global data privacy regulations); risks associated with the acts or omissions of our third party vendors, including a failure to comply with our vendor code of conduct or other policies; risks associated with cyber-attacks and other cyber security risks; risks associated with our ability to properly collect, use, manage and secure consumer and employee data; risks associated with our vendors’ ability to maintain the strength and security of information technology systems; and changes in economic, political, social and other conditions affecting our foreign operations and sourcing, including the impact of currency fluctuations, global income tax rates and economic and market conditions in the various countries in which we operate. In addition to these factors, the economic, technological, managerial, and other risks identified in the Company’s most recent annual report on Form 10-K and other filings with the Securities and Exchange Commission, including but not limited to the risk factors discussed therein, could cause actual results to differ materially from current expectations. The current global economic climate, length and severity of the COVID-19 pandemic, and uncertainty surrounding potential changes in U.S. policies and regulations may amplify many of these risks. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
Contact:Guess?, Inc.
Fabrice Benarouche
VP, Finance and Investor Relations
(213) 765-5578
Source:Guess?, Inc.

8


Guess?, Inc. and Subsidiaries
Condensed Consolidated Statements of Income
(amounts in thousands, except per share data)
Three Months Ended
October 30, 2021October 31, 2020November 2, 2019
$% $% $%
Product sales$616,489 95.9 %$549,851 96.6 %$593,736 96.4 %
Net royalties26,581 4.1 %19,433 3.4 %22,208 3.6 %
Net revenue643,070 100.0 %569,284 100.0 %615,944 100.0 %
Cost of product sales349,466 54.3 %329,764 57.9 %386,445 62.7 %
Gross profit293,604 45.7 %239,520 42.1 %229,499 37.3 %
Selling, general and administrative expenses223,775 34.8 %184,739 32.5 %205,003 33.3 %
Asset impairment charges1,152 0.2 %10,335 1.8 %1,847 0.3 %
Net (gains) losses on lease modifications3,006 0.5 %(21)(0.0 %)— — %
Earnings from operations65,671 10.2 %44,467 7.8 %22,649 3.7 %
Other income (expense):
Interest expense(5,550)(0.9 %)(5,809)(1.0 %)(4,946)(0.8 %)
Interest income487 0.1 %562 0.1 %492 0.1 %
Other expense, net(7,800)(1.2 %)(6,521)(1.2 %)(62)(0.1 %)
Earnings before income tax expense52,808 8.2 %32,699 5.7 %18,133 2.9 %
Income tax expense20,441 3.2 %5,145 0.9 %4,548 0.7 %
Net earnings32,367 5.0 %27,554 4.8 %13,585 2.2 %
Net earnings attributable to noncontrolling interests2,487 0.4 %1,178 0.2 %1,162 0.2 %
Net earnings attributable to Guess?, Inc.$29,880 4.6 %$26,376 4.6 %$12,423 2.0 %
Net earnings per common share attributable to common stockholders:
Basic$0.46 $0.41 $0.19 
Diluted4
$0.45 $0.41 $0.18 
Weighted average common shares outstanding attributable to common stockholders:
Basic64,373 62,789 66,393 
Diluted4
65,852 63,579 67,314 
Effective income tax rate38.7 %15.7 %25.1 %
Adjusted selling, general and administrative expenses5:
$223,225 34.7 %$184,231 32.4 %$206,417 33.6 %
Adjusted earnings from operations5:
$70,379 10.9 %$55,289 9.7 %$23,082 3.7 %
Adjusted net earnings attributable to Guess?, Inc.5:
$41,553 6.5 %$37,363 6.6 %$14,902 2.4 %
Adjusted diluted earnings per common share attributable to common stockholders5:
$0.62 $0.58 $0.22 
Adjusted effective income tax rate5:
27.0 %16.4 %23.6 %
______________________________________________________________________
See pages 21 and 22 for footnotes.
9


Guess?, Inc. and Subsidiaries
Condensed Consolidated Statements of Income (Loss)
(amounts in thousands, except per share data)
Nine Months Ended
October 30, 2021October 31, 2020November 2, 2019
$%$%$%
Product sales$1,721,657 96.1 %$1,183,560 96.4 %$1,776,287 96.8 %
Net royalties70,039 3.9 %44,514 3.6 %59,568 3.2 %
Net revenue1,791,696 100.0 %1,228,074 100.0 %1,835,855 100.0 %
Cost of product sales992,448 55.4 %807,297 65.7 %1,158,741 63.1 %
Gross profit799,248 44.6 %420,777 34.3 %677,114 36.9 %
Selling, general and administrative expenses616,076 34.4 %478,320 39.0 %627,823 34.2 %
Asset impairment charges3,094 0.2 %75,276 6.1 %5,126 0.3 %
Net (gains) losses on lease modifications441 0.0 %(450)(0.0 %)— — %
Earnings (loss) from operations179,637 10.0 %(132,369)(10.8 %)44,165 2.4 %
Other income (expense):
Interest expense(17,485)(1.0 %)(17,212)(1.4 %)(11,156)(0.6 %)
Interest income1,322 0.1 %1,608 0.1 %1,166 0.1 %
Other expense, net(11,502)(0.6 %)(20,553)(1.6 %)(4,346)(0.3 %)
Earnings (loss) before income tax expense (benefit)151,972 8.5 %(168,526)(13.7 %)29,829 1.6 %
Income tax expense (benefit)43,588 2.4 %(14,850)(1.2 %)10,649 0.6 %
Net earnings (loss)108,384 6.1 %(153,676)(12.5 %)19,180 1.0 %
Net earnings (loss) attributable to noncontrolling interests5,436 0.3 %(2,028)(0.2 %)2,809 0.1 %
Net earnings (loss) attributable to Guess?, Inc.$102,948 5.8 %$(151,648)(12.3 %)$16,371 0.9 %
Net earnings (loss) per common share attributable to common stockholders:
Basic$1.58 $(2.35)$0.22 
Diluted4
$1.55 $(2.35)$0.22 
Weighted average common shares outstanding attributable to common stockholders:
Basic64,248 64,561 72,275 
Diluted4
65,893 64,561 73,211 
Effective income tax rate28.7 %8.8 %35.7 %
Adjusted selling, general and administrative expenses5:
$614,339 34.3 %$474,993 38.7 %$628,560 34.3 %
Adjusted earnings (loss) from operations5:
$184,909 10.3 %$(54,216)(4.4 %)$48,554 2.6 %
Adjusted net earnings (loss) attributable to Guess?, Inc.5:
$119,504 6.7 %$(82,189)(6.7 %)$22,700 1.2 %
Adjusted diluted earnings (loss) per common share attributable to common stockholders5:
$1.79 $(1.27)$0.31 
Adjusted effective income tax rate5:
24.5 %(2.0 %)35.1 %
______________________________________________________________________
See pages 21 and 22 for footnotes.
10


Guess?, Inc. and Subsidiaries
Reconciliation of GAAP Results to Adjusted Results
(dollars in thousands)
The reconciliations of reported GAAP selling, general and administrative expenses to adjusted selling, general and administrative expenses, reported GAAP earnings (loss) from operations to adjusted earnings (loss) from operations, reported GAAP net earnings (loss) attributable to Guess?, Inc. to adjusted net earnings (loss) attributable to Guess?, Inc. and reported GAAP income tax expense (benefit) to adjusted income tax expense (benefit) follows:
Three Months Ended
October 30, 2021October 31, 2020November 2, 2019
Reported GAAP selling, general and administrative expenses$223,775 $184,739 $205,003 
Certain professional service and legal fees and related credits (costs)6
(550)195 1,414 
Separation charges7
— (703)— 
Adjusted selling, general and administrative expenses5
$223,225 $184,231 $206,417 
Reported GAAP earnings from operations$65,671 $44,467 $22,649 
Certain professional service and legal fees and related (credits) costs6
550 (195)(1,414)
Separation charges7
— 703 — 
Asset impairment charges8
1,152 10,335 1,847 
Net (gains) losses on lease modifications9
3,006 (21)— 
Adjusted earnings from operations5
$70,379 $55,289 $23,082 
Reported GAAP net earnings attributable to Guess?, Inc.$29,880 $26,376 $12,423 
Certain professional service and legal fees and related (credits) costs6
550 (195)(1,414)
Separation charges7
— 703 — 
Asset impairment charges8
1,152 10,335 1,847 
Net (gains) losses on lease modifications9
3,006 (21)— 
Amortization of debt discount10
2,782 2,599 2,447 
Discrete income tax adjustments11
5,912 635 — 
Income tax impact from adjustments12
(1,729)(3,069)(401)
Total adjustments affecting net earnings attributable to Guess?, Inc.11,673 10,987 2,479 
Adjusted net earnings attributable to Guess?, Inc.5
$41,553 $37,363 $14,902 
Reported GAAP income tax expense$20,441 $5,145 $4,548 
Discrete income tax adjustments11
(5,912)(635)— 
Income tax impact from adjustments12
1,729 3,069 401 
Adjusted income tax expense5
$16,258 $7,579 $4,949 
Adjusted effective income tax rate5
27.0 %16.4 %23.6 %
______________________________________________________________________
See pages 21 and 22 for footnotes.
11


Guess?, Inc. and Subsidiaries
Reconciliation of GAAP Results to Adjusted Results (Continued)
(dollars in thousands)
Nine Months Ended
October 30, 2021October 31, 2020November 2, 2019
Reported GAAP selling, general and administrative expenses$616,076 $478,320 $627,823 
Certain professional service and legal fees and related credits (costs)6
(1,737)56 737 
Separation charges7
— (3,383)— 
Adjusted selling, general and administrative expenses5
$614,339 $474,993 $628,560 
Reported GAAP earnings (loss) from operations$179,637 $(132,369)$44,165 
Certain professional service and legal fees and related (credits) costs6
1,737 (56)(737)
Separation charges7
— 3,383 — 
Asset impairment charges8
3,094 75,276 5,126 
Net (gains) losses on lease modifications9
441 (450)— 
Adjusted earnings (loss) from operations5
$184,909 $(54,216)$48,554 
Reported GAAP net earnings (loss) attributable to Guess?, Inc.$102,948 $(151,648)$16,371 
Certain professional service and legal fees and related (credits) costs6
1,737 (56)(737)
Separation charges7
— 3,383 — 
Asset impairment charges8
3,094 75,276 5,126 
Net (gains) losses on lease modifications9
441 (450)— 
Amortization of debt discount10
8,344 7,796 5,109 
Discrete income tax adjustments11
6,140 805 — 
Income tax impact from adjustments12
(3,200)(17,295)(3,169)
Total adjustments affecting net earnings (loss) attributable to Guess?, Inc.16,556 69,459 6,329 
Adjusted net earnings (loss) attributable to Guess?, Inc.5
$119,504 $(82,189)$22,700 
Reported GAAP income tax expense (benefit)$43,588 $(14,850)$10,649 
Discrete income tax adjustments11
(6,140)(805)— 
Income tax impact from adjustments12
3,200 17,295 3,169 
Adjusted income tax expense5
$40,648 $1,640 $13,818 
Adjusted effective income tax rate5
24.5 %(2.0 %)35.1 %
______________________________________________________________________
See pages 21 and 22 for footnotes.
12


Guess?, Inc. and Subsidiaries
Consolidated Segment Data
(dollars in thousands)
Three Months Ended % change
October 30, 2021October 31, 2020November 2, 2019October 31, 2020November 2, 2019
Net revenue:
Americas Retail$169,617 $130,328 $177,824 30%(5%)
Americas Wholesale58,999 35,971 56,398 64%5%
Europe330,736 321,574 277,253 3%19%
Asia57,137 61,978 82,261 (8%)(31%)
Licensing26,581 19,433 22,208 37%20%
Total net revenue
$643,070 $569,284 $615,944 13%4%
Earnings (loss) from operations:
Americas Retail$24,070 $473 $1,601 4,989%1,403%
Americas Wholesale17,316 8,247 11,216 110%54%
Europe44,509 51,476 19,475 (14%)129%
Asia(2,399)1,415 (2,432)(270%)(1%)
Licensing24,402 18,228 19,372 34%26%
Total segment earnings from operations107,898 79,839 49,232 35%119%
Corporate overhead(38,069)(25,058)(24,736)52%54%
Asset impairment charges(1,152)(10,335)(1,847)(89%)(38%)
Net gains (losses) on lease modifications (3,006)21 — (14,414%)
Total earnings from operations$65,671 $44,467 $22,649 48%190%
Operating margins:
Americas Retail14.2 %0.4 %0.9 %
Americas Wholesale29.3 %22.9 %19.9 %
Europe13.5 %16.0 %7.0 %
Asia(4.2 %)2.3 %(3.0 %)
Licensing91.8 %93.8 %87.2 %
GAAP operating margin for total Company10.2 %7.8 %3.7 %
Certain professional service and legal fees and related (credits) costs5, 6
0.1 %(0.0 %)(0.3 %)
Separation charges5, 7
— %0.1 %— %
Asset impairment charges5, 8
0.2 %1.8 %0.3 %
Net (gains) losses on lease modifications5, 9
0.4 %(0.0 %)— %
Adjusted operating margin for total Company5
10.9 %9.7 %3.7 %
______________________________________________________________________
See pages 21 and 22 for footnotes.
13


Guess?, Inc. and Subsidiaries
Consolidated Segment Data
(dollars in thousands)
Nine Months Ended% change
October 30, 2021October 31, 2020November 2, 2019October 31, 2020November 2, 2019
Net revenue:
Americas Retail$511,449 $314,977 $553,213 62%(8%)
Americas Wholesale154,287 82,131 144,505 88%7%
Europe895,311 633,898 827,817 41%8%
Asia160,610 152,554 250,752 5%(36%)
Licensing70,039 44,514 59,568 57%18%
Total net revenue
$1,791,696 $1,228,074 $1,835,855 46%(2%)
Earnings (loss) from operations:
Americas Retail$82,260 $(40,904)$5,746 (301%)1,332%
Americas Wholesale41,815 11,559 27,452 262%52%
Europe100,124 27,865 54,742 259%83%
Asia(9,054)(24,729)(10,435)(63%)(13%)
Licensing63,987 39,833 51,563 61%24%
Total segment earnings from operations279,132 13,624 129,068 1,949%116%
Corporate overhead(95,960)(71,167)(79,777)35%20%
Asset impairment charges(3,094)(75,276)(5,126)(96%)(40%)
Net gains (losses) on lease modifications (441)450 — (198%)
Total earnings (loss) from operations$179,637 $(132,369)$44,165 (236%)307%
Operating margins:
Americas Retail16.1 %(13.0 %)1.0 %
Americas Wholesale27.1 %14.1 %19.0 %
Europe11.2 %4.4 %6.6 %
Asia(5.6 %)(16.2 %)(4.2 %)
Licensing91.4 %89.5 %86.6 %
GAAP operating margin for total Company10.0 %(10.8 %)2.4 %
Certain professional service and legal fees and related (credits) costs5, 6
0.1 %(0.0 %)(0.1 %)
Separation charges5, 7
— %0.3 %— %
Asset impairment charges5, 8
0.2 %6.1 %0.3 %
Net (gains) losses on lease modifications5, 9
0.0 %(0.0 %)— %
Adjusted operating margin for total Company5
10.3 %(4.4 %)2.6 %
______________________________________________________________________
See pages 21 and 22 for footnotes.

14


Guess?, Inc. and Subsidiaries
Constant Currency Financial Measures
(dollars in thousands)
As ReportedForeign Currency ImpactConstant CurrencyAs ReportedAs ReportedConstant Currency
Three Months Ended% change
October 30, 2021October 31, 2020
Net revenue:
Americas Retail$169,617 $(2,090)$167,527 $130,328 30%29%
Americas Wholesale58,999 (1,103)57,896 35,971 64%61%
Europe330,736 2,394 333,130 321,574 3%4%
Asia57,137 (169)56,968 61,978 (8%)(8%)
Licensing26,581 — 26,581 19,433 37%37%
Total net revenue
$643,070 $(968)$642,102 $569,284 13%13%
October 30, 2021November 2, 2019
Net revenue:
Americas Retail$169,617 $(841)$168,776 $177,824 (5%)(5%)
Americas Wholesale58,999 67 59,066 56,398 5%5%
Europe330,736 (11,680)319,056 277,253 19%15%
Asia57,137 (1,677)55,460 82,261 (31%)(33%)
Licensing26,581 — 26,581 22,208 20%20%
Total net revenue
$643,070 $(14,131)$628,939 $615,944 4%2%
Nine Months Ended
October 30, 2021October 31, 2020
Net revenue:
Americas Retail$511,449 $(7,527)$503,922 $314,977 62%60%
Americas Wholesale154,287 (4,016)150,271 82,131 88%83%
Europe895,311 (34,193)861,118 633,898 41%36%
Asia160,610 (6,303)154,307 152,554 5%1%
Licensing70,039 — 70,039 44,514 57%57%
Total net revenue
$1,791,696 $(52,039)$1,739,657 $1,228,074 46%42%
October 30, 2021November 2, 2019
Net revenue:
Americas Retail$511,449 $(2,148)$509,301 $553,213 (8%)(8%)
Americas Wholesale154,287 361 154,648 144,505 7%7%
Europe895,311 (37,425)857,886 827,817 8%4%
Asia160,610 (4,755)155,855 250,752 (36%)(38%)
Licensing70,039 — 70,039 59,568 18%18%
Total net revenue
$1,791,696 $(43,967)$1,747,729 $1,835,855 (2%)(5%)

15


Guess?, Inc. and Subsidiaries
Selected Condensed Consolidated Balance Sheet Data
(in thousands)
October 30,
2021
January 30,
2021
October 31,
2020
November 2,
2019
ASSETS
Cash and cash equivalents$391,065 $469,110 $365,259 $110,095 
Receivables, net321,296 314,147 300,432 300,197 
Inventories482,475 389,144 393,162 519,875 
Other current assets76,414 60,123 74,063 67,425 
Property and equipment, net212,126 216,196 220,996 298,036 
Restricted cash224 235 226 522 
Operating lease right-of-use assets706,161 764,804 789,742 874,945 
Other assets353,606 252,109 236,126 219,805 
Total assets$2,543,367 $2,465,868 $2,380,006 $2,390,900 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current portion of borrowings and finance lease obligations$32,960 $38,710 $34,079 $37,484 
Current operating lease liabilities209,072 222,800 227,209 189,582 
Other current liabilities562,606 501,029 474,085 429,701 
Long-term debt and finance lease obligations67,456 68,554 70,069 34,712 
Convertible senior notes, net267,599 258,614 255,801 244,696 
Long-term operating lease liabilities599,472 662,657 689,251 740,484 
Other long-term liabilities140,746 144,004 147,065 123,638 
Redeemable and nonredeemable noncontrolling interests38,119 25,837 22,644 23,543 
Guess?, Inc. stockholders’ equity625,337 543,663 459,803 567,060 
Total liabilities and stockholders’ equity$2,543,367 $2,465,868 $2,380,006 $2,390,900 

16


Guess?, Inc. and Subsidiaries
Condensed Consolidated Cash Flow Data
(in thousands)
Nine Months Ended
October 30,
2021
October 31,
2020
November 2,
2019
Net cash provided by (used in) operating activities13
$4,581 $98,351 $(28,005)
Net cash used in investing activities(40,375)(14,578)(47,950)
Net cash used in financing activities(28,494)(4,548)(21,691)
Effect of exchange rates on cash, cash equivalents and restricted cash(13,768)1,432 (2,732)
Net change in cash, cash equivalents and restricted cash(78,056)80,657 (100,378)
Cash, cash equivalents and restricted cash at the beginning of the year469,345 284,828 210,995 
Cash, cash equivalents and restricted cash at the end of the period$391,289 $365,485 $110,617 
Supplemental information:
Depreciation and amortization$41,613 $48,009 $53,989 
Total lease costs (excluding finance lease cost)$213,712 $219,820 $268,900 

Guess?, Inc. and Subsidiaries
Reconciliation of Net Cash Provided By (Used In) Operating Activities to Free Cash Flow
(in thousands)
Nine Months Ended
October 30,
2021
October 31,
2020
November 2,
2019
Net cash provided by (used in) operating activities13
$4,581 $98,351 $(28,005)
Less: Purchases of property and equipment(40,598)(12,364)(49,020)
Less: Payments for property and equipment under finance leases(4,583)(2,924)(2,081)
Free cash flow$(40,600)$83,063 $(79,106)
______________________________________________________________________
See pages 21 and 22 for footnotes
17


Guess?, Inc. and Subsidiaries
Retail Store Data
Global Store and Concession Count
StoresConcessions
RegionTotalDirectly OperatedPartner OperatedTotalDirectly OperatedPartner Operated
As of October 30, 2021
United States244243111
Canada7474
Central and South America10570352929
Total Americas4233873630291
Europe and the Middle East7605402204646
Asia and the Pacific427125302268103165
Total1,6101,052558344178166
As of October 31, 2020
United States254252211
Canada7878
Central and South America10772352727
Total Americas4394023728271
Europe and the Middle East7425112314343
Asia and the Pacific423155268297109188
Total1,6041,068536368179189
As of November 2, 2019
United States287285211
Canada8282
Central and South America11272402727
Total Americas4814394228271
Europe and the Middle East7435162274040
Asia and the Pacific519219300327154173
Total1,7431,174569395221174



18




Guess?, Inc. and Subsidiaries
Adjusted Earnings Per Share for the Fiscal Year
(in thousands)
FY2020
FY2024E*,15
Reported GAAP net earnings attributable to Guess?, Inc.$95,975 
Certain professional service and legal fees and related (credits) costs6
(857)
Separation charges7
438 
Asset impairment charges8
9,977 
Amortization of debt discount10
7,558 
Income tax impact from adjustments12, 14
(8,055)
Total adjustments affecting net earnings attributable to Guess?, Inc.9,061 
Adjusted net earnings attributable to Guess?, Inc.5
$105,036 
GAAP earnings per share4
$1.33 $3.36 
Certain professional service and legal fees and related (credits) costs6
(0.01)— 
Separation charges7
— — 
Asset impairment charges8
0.12 — 
Amortization of debt discount10
0.08 0.14 
Income tax impact from adjustments12, 14
(0.07)— 
Adjusted earnings per share5
$1.45 $3.50 
______________________________________________________________________
* Amounts represent estimates for future fiscal years.
See pages 21 and 22 for footnotes


19


Guess?, Inc. and Subsidiaries
Return on Invested Capital for the Fiscal Year
(in thousands)
FY2019FY2020FY2020
2-Year Average
FY2023EFY2024EFY2024E
2-Year Average
Total assets16
$1,649,205 $2,428,962 $2,039,084 $2,747,000 $2,953,000 $2,850,000 
Less: Cash and cash equivalents(210,460)(284,613)(247,537)(634,000)(806,000)(720,000)
Less: Operating right-of-use assets16
— (851,990)(425,995)(760,000)(764,000)(762,000)
Less: Accounts payable(286,657)(232,761)(259,709)(333,000)(346,000)(339,500)
Less: Accrued expenses(252,392)(204,096)(228,244)(208,000)(209,000)(208,500)
Add: Accrual for European Commission fine17
45,619 — 22,809 — — — 
Average invested capital$945,315 $855,502 $900,408 $812,000 $828,000 $820,000 
FY2020FY2024E
Reported GAAP earnings from operations$140,671 $335,000 
Less: Certain professional service and legal fees and related (credits) costs6
(857)— 
Add: Asset impairment charges8
9,977 — 
Add: Separation charges7
438 — 
Adjusted earnings from operations18
$150,229 $335,000 
Less: Asset impairments8
(9,977)— 
Less: Other income (expense), net(2,529)(1,400)
Less: Income tax expense19
(29,886)(83,400)
Adjusted net operating profit after taxes5
$107,837 $250,200 
Non-GAAP return on invested capital20
12%31%
______________________________________________________________________
See pages 21 and 22 for footnotes

20


Guess?, Inc. and Subsidiaries
Footnotes to Condensed Consolidated Financial Data

Footnotes:

1    Amounts for the full fiscal year include certain professional service and legal fees and related (credits) costs recognized during the nine months ended October 30, 2021 which the Company otherwise would not have incurred as part of its business operations. The Company is unable to predict future amounts as these expenditures are inconsistent in amount and frequency and certain elements used to estimate such items have not yet occurred or are out of the Company’s control. As such, the Company has not considered any future charges in the accompanying GAAP outlook.
2    Amounts for the full fiscal year include asset impairment charges related primarily to impairment of operating lease right-of-use assets and property and equipment related to certain retail locations recognized during the nine months ended October 30, 2021 that resulted from lower revenue and future cash flow projections from the ongoing effects of the COVID-19 pandemic and expected store closures. The adjusted results do not assume any additional future asset impairment charges because of the uncertainty and variability of the nature and amount. As such, the Company has not considered any future asset impairment charges and recorded amounts currently determined under GAAP.
3    Amounts for the full fiscal year represent net (gains) losses on lease modifications related primarily to the early termination of certain lease agreements recognized during the nine months ended October 30, 2021. The Company is unable to predict future amounts as these (gains) losses are inconsistent in amount and frequency and certain elements used to estimate such items have not yet occurred or are out of the Company’s control. As such, the Company has not considered any future (gains) losses in the accompanying GAAP outlook.
4    For GAAP purposes, the Company incurs dilution above the strike price of the Company’s convertible senior notes of $25.78. However, the Company excludes from its adjusted diluted shares outstanding calculation the dilutive impact of the convertible notes between $25.78 and $46.88, based on the bond hedge contracts in place that will deliver shares to offset dilution in these ranges. At stock prices in excess of $46.88, the Company incurs dilution related to the notes, and it would have an obligation to deliver additional shares in excess of the dilution protection provided by the bond hedges. Diluted net income per share for the three and nine months ended October 30, 2021 is calculated based on GAAP net income and diluted weighted-average shares of 65,852,024 and 65,892,772, respectively. There was no dilution related to the convertible notes for either period.
5    The adjusted results reflect the exclusion of certain professional service and legal fees and related (credits) costs, certain separation charges, asset impairment charges, net (gains) losses on lease modifications, non-cash amortization of debt discount on the Company’s convertible senior notes, the related income tax impacts of these adjustments, as well as certain discrete income tax adjustments related primarily to an intra-entity transfer of intellectual property rights to a wholly-owned Swiss subsidiary, in each case where applicable. A complete reconciliation of actual results to adjusted results is presented in the “Reconciliation of GAAP Results to Adjusted Results.”
6    Amounts recorded represent certain professional service and legal fees and related (credits) costs which the Company otherwise would not have incurred as part of its business operations.
7    Amounts represent certain separation-related charges due to headcount reduction in response to the pandemic and due to the separation of our former Chief Executive Officer.
8    Amounts represent asset impairment charges related primarily to impairment of operating lease right-of-use assets and property and equipment related to certain retail locations resulting from lower revenue and future cash flow projections from the ongoing effects of the COVID-19 pandemic and expected store closures.
9    Amounts recorded represent net (gains) losses on lease modifications related primarily to the early termination of certain lease agreements.
10    In April 2019, the Company issued $300 million principal amount of 2.00% convertible senior notes due 2024 (the “Notes”) in a private offering. The Company has separated the Notes into liability (debt) and equity (conversion option) components. The debt discount, which represents an amount equal to the fair value of the equity component, is amortized as non-cash interest expense over the term of the Notes. Estimates of adjusted earnings per share for the full fiscal year 2024 exclude the amortization anticipated to be recorded in those years as such amounts are known. The Company has not assumed any potential share dilution related to the convert or related warrants.
11    Amounts represent discrete income tax adjustments related primarily to the impacts from an intra-entity transfer of intellectual property rights to a wholly-owned Swiss subsidiary during the quarter ended October 30, 2021, impacts from cumulative valuation allowances and the income tax benefits from an income tax rate change due to net operating loss carrybacks.
12    The income tax effect of certain professional service and legal fees and related (credits) costs, separation charges, asset impairment charges, net (gains) losses on lease modifications and the amortization of debt discount was based on the Company’s assessment of deductibility using the statutory income tax rate (inclusive of the impact of valuation allowances) of the tax jurisdiction in which the charges were incurred.
13    The Company made a U.S. income tax payment of $80.4 million in the three months ended October 30, 2021, with a remaining estimated $27.0 million currently expected to be paid in January 2022 due to an intra-entity transfer of intellectual property rights to a wholly-owned Swiss subsidiary.
14    During fiscal year 2020, the Company recorded the impact from changes in the income tax law on deferred income taxes in certain tax jurisdictions, net income tax settlements and adjustments to specific uncertain income tax positions.
15    The Company is unable to predict future amounts for items excluded for non-GAAP for fiscal year 2024, with the exception of amounts related to the amortization of debt discount, as these expenditures and credits are inconsistent in amount and frequency and certain elements used to estimate such items have not yet occurred or are out of the Company's control. As such, the Company has not considered any future charges in the accompanying GAAP outlook.
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16    During fiscal year 2020, the Company adopted a comprehensive new lease standard which superseded previous lease guidance. The standard requires a lessee to recognize an asset related to the right to use the underlying asset and a liability that approximates the present value of the lease payments over the term of contracts that qualify as leases under the new guidance. The adoption of the standard resulted in the recording of operating lease right-of-use assets and operating lease liabilities.
17    During fiscal year 2019, the Company recognized a charge of €39.8 million ($45.6 million) related to a fine by the European Commission related to its inquiry concerning potential violations of European Union competition rules by the Company.
18    The adjusted earnings from operations for fiscal year 2020 reflect the exclusion of certain items which the Company believes are not indicative of the underlying performance of its business.
19    Income taxes are calculated using the adjusted effective income tax rate for fiscal year 2020 of 21.7% and a projection of 25% for the fiscal 2024 effective income tax rate.
20    The Company defines return on invested capital (or "ROIC") as adjusted net operating profit after taxes divided by two-year average invested capital.
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