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Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q 
          QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended April 30, 2022
OR 
      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from             to           
Commission file number: 1-11893
GUESS?, INC.
(Exact name of registrant as specified in its charter)
Delaware95-3679695
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
  
Strada Regina 44
Bioggio, Switzerland CH-6934
(Address of principal executive offices and zip code)
+41 91 809 5000
(Registrant’s telephone number, including area code)
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 (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes x  No o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes x  No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filer
  
Non-accelerated filer Smaller reporting company
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.o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes   No x
As of May 27, 2022, the registrant had 59,594,901 shares of Common Stock, $.01 par value per share, outstanding.


Table of Contents
GUESS?, INC.
FORM 10-Q
TABLE OF CONTENTS
   
 
   
 
   
 
   
   
 
 
 
   
   
   
   
   


i

Table of Contents
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements.

GUESS?, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share data) 
 Apr 30, 2022Jan 29, 2022
 (unaudited) 
ASSETS  
Current assets:  
Cash and cash equivalents$147,897 $415,565 
Accounts receivable, net295,430 328,856 
Inventories483,927 462,295 
Other current assets96,128 77,378 
Total current assets1,023,382 1,284,094 
Property and equipment, net232,763 228,765 
Goodwill33,628 34,885 
Deferred income tax assets160,685 165,120 
Operating lease right-of-use assets653,611 685,799 
Other assets145,937 156,965 
 $2,250,006 $2,555,628 
LIABILITIES AND STOCKHOLDERS’ EQUITY  
Current liabilities:  
Current portion of borrowings and finance lease obligations$77,929 $43,379 
Accounts payable288,070 325,797 
Accrued expenses and other current liabilities214,022 253,182 
Current portion of operating lease liabilities178,470 195,516 
Total current liabilities758,491 817,874 
Convertible senior notes, net298,307 270,595 
Long-term debt and finance lease obligations51,560 60,970 
Long-term operating lease liabilities549,293 582,757 
Other long-term liabilities151,262 160,289 
Total liabilities1,808,913 1,892,485 
Redeemable noncontrolling interests9,854 9,500 
Commitments and contingencies (Note 13)
Stockholders’ equity:  
Preferred stock, $.01 par value. Authorized 10,000,000 shares; no shares issued and outstanding
  
Common stock, $.01 par value. Authorized 150,000,000 shares; issued 142,771,946 shares; outstanding 59,330,217 and 62,697,032 shares, as of April 30, 2022 and January 29, 2022, respectively
593 627 
Paid-in capital417,448 565,024 
Retained earnings1,174,379 1,158,664 
Accumulated other comprehensive loss
(146,713)(135,549)
Treasury stock, 83,441,729 and 80,074,914 shares as of April 30, 2022 and January 29, 2022, respectively
(1,042,644)(966,108)
Guess?, Inc. stockholders’ equity403,063 622,658 
Nonredeemable noncontrolling interests28,176 30,985 
Total stockholders’ equity431,239 653,643 
 $2,250,006 $2,555,628 
 
See accompanying notes to condensed consolidated financial statements.
1

Table of Contents

GUESS?, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data)
(unaudited)
 Three Months Ended
 Apr 30, 2022May 1, 2021
Product sales$567,073 $498,477 
Net royalties26,400 21,525 
Net revenue593,473 520,002 
Cost of product sales346,324 308,444 
Gross profit247,149 211,558 
Selling, general and administrative expenses209,831 186,684 
Asset impairment charges1,544 441 
Net gains on lease modifications(601)(2,145)
Earnings from operations36,375 26,578 
Other income (expense):  
Interest expense(3,093)(5,926)
Interest income574 374 
Other, net(16,452)(2,701)
Total other expense(18,971)(8,253)
Earnings before income tax expense17,404 18,325 
Income tax expense6,950 5,455 
Net earnings10,454 12,870 
Net earnings attributable to noncontrolling interests2,484 864 
Net earnings attributable to Guess?, Inc.$7,970 $12,006 
Net earnings per common share attributable to common stockholders:
Basic$0.13 $0.19 
Diluted$0.12 $0.18 
Weighted average common shares outstanding attributable to common stockholders:
Basic61,052 64,035 
Diluted74,469 65,940 

See accompanying notes to condensed consolidated financial statements.

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GUESS?, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF
COMPREHENSIVE INCOME (LOSS)
(in thousands)
(unaudited)
 Three Months Ended
 Apr 30, 2022May 1, 2021
Net earnings$10,454 $12,870 
Other comprehensive income (loss) (“OCI”):  
Foreign currency translation adjustment
Losses arising during the period(17,916)(2,216)
Derivative financial instruments designated as cash flow hedges
  
Gains arising during the period8,603 1,781 
Less income tax effect
(1,040)(228)
Reclassification to net earnings for (gains) losses realized(1,613)398 
Less income tax effect
170 62 
Defined benefit plans
  
Foreign currency and other adjustments
168 129 
Less income tax effect
(16)(13)
Net actuarial loss amortization
30 105 
Prior service credit amortization
(23)(17)
Less income tax effect
(3)(11)
Total comprehensive income (loss)(1,186)12,860 
Less comprehensive income attributable noncontrolling interests:  
Net earnings2,484 864 
Foreign currency translation adjustment
(476)217 
Amounts attributable to noncontrolling interests2,008 1,081 
Comprehensive income (loss) attributable to Guess?, Inc.$(3,194)$11,779 

See accompanying notes to condensed consolidated financial statements.

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GUESS?, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
 Three Months Ended
 Apr 30, 2022May 1, 2021
Cash flows from operating activities:  
Net earnings$10,454 $12,870 
Adjustments to reconcile net earnings to net cash used in operating activities:  
Depreciation and amortization15,304 14,188 
Amortization of debt discount 2,781 
Amortization of debt issuance costs354 362 
Share-based compensation expense4,052 4,060 
Forward contract gains(1,462)(101)
Net loss from impairment and disposition of long-term assets1,668 1,011 
Other items, net21,942 2,315 
Changes in operating assets and liabilities:  
Accounts receivable20,317 4,373 
Inventories(37,698)(9,574)
Prepaid expenses and other assets(14,178)(15,328)
Operating lease assets and liabilities, net(16,434)(1,953)
Accounts payable and accrued expenses(59,351)(67,724)
Other long-term liabilities462 (923)
Net cash used in operating activities(54,570)(53,643)
Cash flows from investing activities:  
Purchases of property and equipment(28,742)(9,139)
Proceeds from sale of business and long-term assets147 1,648 
Net cash settlement of forward contract118 (283)
Other investing activities(719)(14)
Net cash used in investing activities(29,196)(7,788)
Cash flows from financing activities:  
Proceeds from borrowings45,507 5,651 
Repayments on borrowings and finance lease obligations(18,736)(9,804)
Purchase of equity forward contract(105,000) 
Dividends paid(13,676)(7,511)
Noncontrolling interest capital distribution(4,817) 
Issuance of common stock, net of income tax withholdings on vesting of stock awards1,675 1,945 
Purchase of treasury stock(81,747) 
Net cash used in financing activities(176,794)(9,719)
Effect of exchange rates on cash, cash equivalents and restricted cash(7,108)(2,834)
Net change in cash, cash equivalents and restricted cash(267,668)(73,984)
Cash, cash equivalents and restricted cash at the beginning of the year415,565 469,345 
Cash, cash equivalents and restricted cash at the end of the period$147,897 $395,361 
Supplemental cash flow data:  
Interest paid$4,030 $3,977 
Income taxes paid, net of refunds$7,214 $5,346 
Non-cash investing and financing activity:
Change in accrual of property and equipment$2,005 $66 
Assets acquired under finance lease obligations$1,182 $2,323 
 
See accompanying notes to condensed consolidated financial statements.
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GUESS?, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(in thousands, except share data)
(unaudited)
For the three months ended April 30, 2022
 Guess?, Inc. Stockholders’ Equity 
Common StockTreasury Stock
 SharesAmountPaid-in
Capital
Retained EarningsAccumulated Other Comprehensive LossSharesAmountNonredeemable
Noncontrolling
Interests
Total
Balance at January 29, 202262,697,032 $627 $565,024 $1,158,664 $(135,549)80,074,914 $(966,108)$30,985 $653,643 
Cumulative adjustment from adoption of new accounting guidance— — (43,078)21,355 — — — — (21,723)
Net earnings— — — 7,970 — — — 2,484 10,454 
Other comprehensive loss, net of income tax of ($889)
— — — — (11,164)— — (476)(11,640)
Issuance of common stock under stock compensation plans411,785 4 (3,608)— — (411,785)5,074 — 1,470 
Issuance of stock under Employee Stock Purchase Plan10,976 — 69 — — (10,976)137 — 206 
Share-based compensation— — 4,003 49 — — — — 4,052 
Dividends, net of forfeitures on non-participating securities— — — (13,659)— — — — (13,659)
Share repurchases(3,789,576)(38)38 — — 3,789,576 (81,747)— (81,747)
Noncontrolling interest capital distribution— — — — — — — (4,817)(4,817)
Equity forward contract issuance— — (105,000)— — — — — (105,000)
Balance at April 30, 202259,330,217 $593 $417,448 $1,174,379 $(146,713)83,441,729 $(1,042,644)$28,176 $431,239 

See accompanying notes to condensed consolidated financial statements.
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GUESS?, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(in thousands, except share data)
(unaudited)
For the three months ended May 1, 2021
 Guess?, Inc. Stockholders’ Equity 
Common StockTreasury Stock
 SharesAmountPaid-in
Capital
Retained EarningsAccumulated Other Comprehensive LossSharesAmountNonredeemable
Noncontrolling
Interests
Total
Balance at January 30, 202164,230,162 $642 $553,111 $1,034,823 $(120,675)78,563,517 $(924,238)$21,917 $565,580 
Net earnings— — — 12,006 — — — 864 12,870 
Other comprehensive income (loss), net of income tax of ($190)
— — — — (227)— — 217 (10)
Issuance of common stock under stock compensation plans689,653 7 (6,417)— — (690,492)8,123 — 1,713 
Issuance of stock under Employee Stock Purchase Plan12,798 — 81 — — (12,798)151 — 232 
Share-based compensation— — 4,056 4 — — — — 4,060 
Dividends, net of forfeitures on non-participating securities— — — (7,252)— — — — (7,252)
Balance at May 1, 202164,932,613 $649 $550,831 $1,039,581 $(120,902)77,860,227 $(915,964)$22,998 $577,193 

See accompanying notes to condensed consolidated financial statements.
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GUESS?, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
April 30, 2022
(unaudited) 
(1)Basis of Presentation
Description of the Business
Guess?, Inc. (the “Company” or “GUESS?”) designs, markets, distributes and licenses a leading lifestyle collection of contemporary apparel and accessories for men, women and children that reflect the American lifestyle and European fashion sensibilities. The Company’s designs are sold in GUESS? owned stores, to a network of wholesale accounts that includes better department stores, selected specialty retailers and upscale boutiques and through the Internet. GUESS? branded products, some of which are produced under license, are also sold internationally through a series of retail store licensees and wholesale distributors.
Interim Financial Statements
In the opinion of management, the accompanying unaudited condensed consolidated financial statements of the Company contain all adjustments, consisting of normal recurring adjustments, considered necessary for a fair presentation of the condensed consolidated balance sheets as of April 30, 2022 and January 29, 2022, and the condensed consolidated statements of income, comprehensive income (loss), cash flows and stockholders’ equity for the three months ended April 30, 2022 and May 1, 2021. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”) for interim financial information and the instructions to Rule 10-01 of Regulation S-X of the Securities and Exchange Commission (the “SEC”). Accordingly, they have been condensed and do not include all of the information and footnotes required by GAAP for complete financial statements. The results of operations and cash flows for the three months ended April 30, 2022 are not necessarily indicative of the results of operations to be expected for the full fiscal year.
These financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended January 29, 2022.
Fiscal Periods
The three months ended April 30, 2022 had the same number of days as the three months ended May 1, 2021. All references herein to “fiscal 2022” and “fiscal 2021” represent the results of the 52-week fiscal year ended January 29, 2022 and January 30, 2021, respectively. All references herein to “fiscal 2023” represent the 52-week fiscal year ending January 28, 2023.
COVID-19 Business Update
The COVID-19 pandemic is continuing to negatively impact certain regions of the Company’s business, especially in Asia where the Company’s operations for the quarter ended April 30, 2022 were impacted by capacity restrictions and temporary store closures. Overall, this resulted in the closure of a limited number of its directly operated stores as of April 30, 2022, mostly in China, the impact of which was minimal to the Company’s first quarter results.
The COVID-19 crisis has also contributed to disruptions in the overall global supply chain, leading to industry-wide product delays and higher product and freight costs. The Company has been working actively to mitigate these headwinds to the extent possible through a number of global supply chain initiatives.
In light of the fluid nature of the pandemic, the Company continues to carefully monitor global and regional developments and respond appropriately. The Company also continues to strategically manage expenses in order to protect profitability and to mitigate, to the extent possible, the effect of the supply chain disruptions.
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Summary of Significant Accounting Policies
The accounting policies of the Company are set forth in further detail in Note 1 to the Company's Consolidated Financial Statements contained in the Company’s fiscal 2022 Annual Report on Form 10-K. The Company includes herein certain updates to those policies.
Use of Estimates
The preparation of the financial statements in conformity with accounting principles generally accepted in the U.S. requires management to make estimates and assumptions that affect the amounts reported in the financial statements and disclosed in the accompanying notes. Significant areas requiring the use of management estimates relate to the allowances for doubtful accounts, sales return and markdown allowances, gift card and loyalty accruals, valuation of inventories, share-based compensation, income taxes, recoverability of deferred taxes, unrecognized tax benefits, the useful life of assets for depreciation and amortization, evaluation of asset impairment (including goodwill and long-lived assets, such as property and equipment and operating lease right-of-use (“ROU”) assets), pension obligations, workers’ compensation and medical self-insurance expense and accruals, litigation reserves and restructuring expense and accruals. Actual results could differ from those estimates. Revisions in estimates could materially impact the results of operations and financial position.
As discussed above, the COVID-19 pandemic negatively impacted the Company’s results during the three months ended April 30, 2022 and May 1, 2021. The Company’s operations could continue to be impacted in ways the Company is not able to predict today due to the evolving situation. While the Company believes it has made reasonable accounting estimates based on the facts and circumstances that were available as of the reporting date, to the extent there are differences between these estimates and actual results, the Company’s results of operations and financial position could be materially impacted.
Revenue Recognition
The Company recognizes the majority of its revenue from its direct-to-consumer (brick-and-mortar retail stores and concessions as well as e-commerce) and wholesale distribution channels at a point in time when it satisfies a performance obligation and transfers control of the product to the respective customer.
The Company also recognizes royalty revenue from its trademark license agreements. The Company’s trademark license agreements represent symbolic licenses that are dependent on the Company’s continued support over the term of the license agreement. The amount of revenue that is recognized from the licensing arrangements is based on sales-based royalty and advertising fund contributions as well as specific fixed payments, where applicable. The Company’s trademark license agreements customarily provide for a multi-year initial term ranging from three to ten years and may contain options to renew prior to expiration for an additional multi-year period. The unrecognized portion of upfront payments is included in deferred royalties in accrued expenses and other long-term liabilities depending on the short or long-term nature of the payments to be recognized. As of April 30, 2022, the Company had $5.1 million and $13.5 million of deferred royalties related to these upfront payments included in accrued expenses and other current liabilities and other long-term liabilities, respectively. This compares to $5.1 million and $14.3 million of deferred royalties related to these upfront payments included in accrued expenses and other current liabilities and other long-term liabilities, respectively, at January 29, 2022. During the three months ended April 30, 2022 and May 1, 2021, the Company recognized $3.4 million and $3.5 million in net royalties related to the amortization of deferred royalties, respectively.
Refer to Note 8 for further information on disaggregation of revenue by segment and country.
Allowance for Doubtful Accounts
In the normal course of business, the Company grants credit directly to certain wholesale customers after a credit analysis is performed based on financial and other criteria. Accounts receivable are recorded net of an allowance for doubtful accounts. The Company maintains allowances for doubtful accounts for estimated losses that may result from the inability of its wholesale customers and licensing partners to make their
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required payments. The Company bases its allowances on analysis of the aging of accounts receivable at the date of the financial statements, assessments of historical and current collection trends, evaluation of the impact of current and future forecasted economic conditions and whether the Company has obtained credit insurance or other guarantees. Management performs regular evaluations concerning the ability of its customers and records a provision for doubtful accounts based on these evaluations.
As of April 30, 2022, approximately 45% of the Company’s total net trade accounts receivable and 61% of its European net trade receivables were subject to credit insurance coverage, certain bank guarantees or letters of credit for collection purposes. The Company’s credit insurance coverage contains certain terms and conditions specifying deductibles and annual claim limits. Management evaluates the creditworthiness of the counterparties to the credit insurance, bank guarantees, and letters of credit and records a provision for the risk of loss on these instruments based on these evaluations as considered necessary.
The Company’s credit losses for the periods presented were not significant compared to sales and did not significantly exceed management’s estimates. Refer to Note 5 for further information on the Company’s allowance for doubtful accounts.
Recently Adopted Accounting Guidance
Convertible Instruments and Contracts in an Entity’s Own Equity
The Company adopted guidance to simplify the accounting for convertible instruments and contracts in an entity’s own equity and the diluted earnings per share computations for these instruments on January 30, 2022, using the modified retrospective transition method. The cumulative effect of the accounting change increased the carrying amount of the 2.00% convertible senior notes due 2024 (the “Notes”) by $27.5 million, reduced deferred income tax liabilities by $5.8 million, reduced additional paid-in capital by $43.1 million and increased retained earnings by $21.4 million, with no restatement of prior periods. Refer to Note 3 for the impact on the earnings per share calculation and Note 10 for the impact on the Notes.
Modifications or Exchanges of Freestanding Equity-Classified Written Call Options
The Financial Accounting Standards Board (“FASB”) issued authoritative guidance as to how an issuer should account for a modification of the terms or conditions or an exchange of a freestanding equity-classified written call option (i.e., a warrant) that remains classified in equity after modification or exchange of the original instrument for a new instrument. An issuer should measure the effect of a modification or exchange as the difference between the fair value of the modified or exchanged warrant and the fair value of that warrant immediately before modification or exchange and then apply a recognition model that comprises four categories of transactions and the corresponding accounting treatment for each category (equity issuance, debt origination, debt modification, and modifications unrelated to equity issuance and debt origination or modification). The Company adopted this guidance on January 30, 2022 which had no impact on the Company’s consolidated financial statement presentation or disclosures.
Recently Issued Accounting Guidance
Reference Rate Reform
The FASB issued guidance to provide temporary optional expedients to ease the potential burden in accounting for reference rate reform. This guidance provides optional expedients and exceptions for applying generally accepted accounting principles to contract modifications and hedging relationships, subject to certain criteria, referencing LIBOR or another reference rate expected to be discontinued. The FASB issued subsequent amendments to further clarify the scope of optional expedients and exceptions to derivatives affected by the transition. The guidance is intended to help stakeholders during the global market-wide reference rate transition period.
The Company identified and will modify, if necessary, its loans and other financial instruments with attributes directly or indirectly influenced by LIBOR. The Company determined, of its current LIBOR references as outlined in Note 9 Borrowings and Finance Lease Obligations, Note 15 Fair Value Measurements, and Note 16 Derivative Financial Instruments, only the obligations under Mortgage Debt,
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Credit Facilities, and Interest Rate Swap Agreements are impacted by this guidance. The Company does not expect this guidance to have a material impact on its consolidated financial position, results of operations or cash flows.
Government Assistance
In November 2021, the FASB issued authoritative guidance to increase the transparency of government assistance. This guidance is effective for financial statements issued for annual periods beginning after December 15, 2021 with early adoption permitted. The Company is currently evaluating this guidance and does not expect the adoption of this guidance to have a material impact on its consolidated financial statements.
(2)    Lease Accounting
The Company primarily leases its showrooms, advertising, licensing, sales and merchandising offices, remote distribution and warehousing facilities and retail and factory outlet store locations under operating lease agreements expiring on various dates through January 2039. The Company also leases some of its equipment, as well as computer hardware and software, under operating and finance lease agreements expiring on various dates through May 2027.
The Company’s lease agreements primarily provide for lease payments based on a minimum annual rental amount, a percentage of annual sales volume, periodic adjustments related to inflation or a combination of such lease payments. Certain retail store leases provide for lease payments based upon the minimum annual rental amount and a percentage of annual sales volume, generally ranging from 3% to 28%, when specific sales volumes are exceeded. The Company’s retail concession leases also provide for lease payments primarily based upon a percentage of annual sales volume, which averages approximately 32%.
In addition to the amounts as disclosed below, the Company has estimated additional operating lease commitments of approximately $25.4 million for leases where the Company has not yet taken possession of the underlying asset as of April 30, 2022. As such, the related operating lease ROU assets and operating lease liabilities have not been recognized in the Company’s condensed consolidated balance sheet as of April 30, 2022.
The components of leases are (in thousands):
Apr 30, 2022Jan 29, 2022
AssetsBalance Sheet Location
OperatingOperating lease right-of-use assets$653,611 $685,799 
FinanceProperty and equipment, net20,557 21,898 
Total lease assets$674,168 $707,697 
LiabilitiesBalance Sheet Location
Current:
OperatingCurrent portion of operating lease liabilities$178,470 $195,516 
FinanceCurrent portion of borrowings and finance lease obligations5,729 5,806 
Noncurrent:
OperatingLong-term operating lease liabilities549,293 582,757 
FinanceLong-term debt and finance lease obligations16,050 17,137 
Total lease liabilities$749,542 $801,216 
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The components of lease costs are (in thousands):
Three Months Ended
Income Statement LocationApr 30, 2022May 1, 2021
Operating lease costsCost of product sales$44,372 $46,684 
Operating lease costsSelling, general and administrative expenses6,301 6,357 
Operating lease costs1
Net gains on lease modifications(601)(2,145)
Finance lease costs
Amortization of leased assetsCost of product sales19 11 
Amortization of leased assetsSelling, general and administrative expenses1,502 1,361 
Interest on lease liabilitiesInterest expense287 366 
Variable lease costs2
Cost of product sales21,996 15,739 
Variable lease costs2
Selling, general and administrative expenses956 574 
Short-term lease costsCost of product sales96 105 
Short-term lease costsSelling, general and administrative expenses1,558 1,171 
Total lease costs$76,486 $70,223 
____________________________________________________________________
Notes:
1During the three months ended April 30, 2022 and May 1, 2021, net gains on lease modifications related primarily to the early termination of lease agreements for certain of the Company’s retail locations. Operating lease costs for these retail locations prior to the early termination were included in cost of product sales.
2During the three months ended April 30, 2022, and May 1, 2021, variable lease costs included certain rent concessions of approximately $1.3 million and $6.1 million, respectively, received by the Company, primarily in Europe.
Maturities of the Company’s operating and finance lease liabilities as of April 30, 2022 are (in thousands):
Operating Leases
Maturity of Lease Liabilities Non-Related PartiesRelated PartiesFinance LeasesTotal
Fiscal 2023$151,147 $6,164 $5,246 $162,557 
Fiscal 2024161,805 7,826 6,711 176,342 
Fiscal 2025117,452 7,204 4,894 129,550 
Fiscal 202686,607 6,811 4,142 97,560 
Fiscal 202768,756 7,513 2,346 78,615 
After fiscal 2027154,161 28,431 705 183,297 
Total lease payments739,928 63,949 24,044 827,921 
Less: Interest66,182 9,932 2,265 78,379 
Present value of lease liabilities$673,746 $54,017 $21,779 $749,542 
Other supplemental information is (in thousands):
Lease Term and Discount RateApr 30, 2022
Weighted-average remaining lease term
Operating leases6.0 years
Finance leases4.1 years
Weighted-average discount rate
Operating leases3.4%
Finance leases5.2%
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Three Months Ended
Supplemental Cash Flow InformationApr 30, 2022May 1, 2021
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases$63,896 $53,428 
New operating ROU assets obtained in exchange for lease liabilities$35,378 $22,596 
Impairment
During the three months ended April 30, 2022 there were no ROU asset impairment charges. During the three months ended May 1, 2021 there were immaterial ROU asset impairment charges recorded. The asset impairment charges were determined based on the excess of carrying value over the fair value of the ROU assets. The Company uses estimates of market participant rents to calculate fair value of the ROU assets. Refer to Note 15 for more information on the Company’s impairment testing.
(3)Earnings per Share
On January 30, 2022, the Company adopted new authoritative guidance which simplifies the accounting for convertible instruments and contracts in an entity’s own equity using the modified retrospective method. Following adoption, diluted EPS related to the Notes is calculated using the if-converted method. The number of dilutive shares is based on the initial conversion rate associated with the Notes.
Prior to adoption, the Company applied the treasury stock method when calculating the potential dilutive effect of the Notes, if any. As the Company expects to settle the principal amount of its outstanding Notes in cash and any excess in shares, only the amounts in excess of the principal amount were considered in diluted earnings per share, if applicable. Refer to Note 1 and Note 10 for more information regarding the Notes.
In addition, the Company granted certain nonvested stock units, subject to certain performance-based or market-based vesting conditions, as well as continued service requirements through the respective vesting periods. These nonvested stock units are included in the computation of diluted net earnings per common share attributable to common stockholders only to the extent the underlying performance-based or market-based vesting conditions are satisfied as of the end of the reporting period, or would be considered satisfied if the end of the reporting period was the end of the related contingency period, and the results would be dilutive under the treasury stock method.
The computation of basic and diluted net earnings per common share attributable to common stockholders is (in thousands, except per share data):
 Three Months Ended
 Apr 30, 2022May 1, 2021
Net earnings attributable to Guess?, Inc.$7,970 $12,006 
Less net earnings attributable to nonvested restricted stockholders56 130 
Net earnings attributable to common stockholders7,914 11,876 
Add interest expense related to the Notes
902  
Net earnings attributable to common stockholders used in diluted computations
$8,816 $11,876 
Weighted average common shares used in basic computations61,052 64,035 
Effect of dilutive securities:
Stock options and restricted stock units1,666 1,905 
The Notes11,751  
Weighted average common shares used in diluted computations74,469 65,940 
Net earnings per common share attributable to common stockholders:
Basic
$0.13 $0.19 
Diluted
$0.12 $0.18 
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During the three months ended April 30, 2022 and May 1, 2021, equity awards granted for 1,183,823 and 390,243, respectively, of the Company’s common shares were outstanding but were excluded from the computation of diluted weighted average common shares and common equivalent shares outstanding because the assumed proceeds, as calculated under the treasury stock method, resulted in these awards being antidilutive. For the three months ended April 30, 2022, the Company excluded 300,000 nonvested stock units which were subject to the achievement of market-based vesting conditions from the computation of diluted weighted average common shares and common equivalent shares outstanding because these conditions were not achieved as of April 30, 2022. For the three months ended May 1, 2021, there were no nonvested stock units subject to the achievement of performance-based or market-based vesting conditions that were excluded from the computation of diluted weighted average common shares and common equivalent shares outstanding as the respective conditions were achieved as of May 1, 2021.
Warrants to purchase approximately 11.6 million shares of the Company’s common shares at an initial strike price of $46.88 per share were outstanding as of April 30, 2022 and May 1, 2021. These warrants were excluded from the computation of diluted earnings per share since the warrants’ adjusted strike price was greater than the average market price of the Company’s common stock during the three months ended April 30, 2022 and May 1, 2021.
(4)Stockholders' Equity
Share Repurchase Program
During fiscal 2022, the Board of Directors terminated its previous 2012 $500 million share repurchase program (the “2012 Share Repurchase Program”) and authorized a new $200 million share repurchase program (the “2021 Share Repurchase Program”). On March 14, 2022, the Board of Directors expanded its repurchase authorization under the 2021 Share Repurchase Program by $100 million. Repurchases may be made on the open market or in privately negotiated transactions, pursuant to Rule 10b5-1 trading plans or other available means. There is no minimum or maximum number of shares to be repurchased under the program and the program may be discontinued at any time, without prior notice.
On March 18, 2022, pursuant to existing share repurchase authorizations, the Company entered into an accelerated share repurchase agreement (the “2022 ASR Contract”) with a financial institution (the “2022 ASR Counterparty”) to repurchase an aggregate of $175.0 million of the Company’s common stock. Under the 2022 ASR Contract, the Company made a payment of $175.0 million to the 2022 ASR Counterparty and received an initial delivery of approximately 3.3 million shares of common stock on March 21, 2022, representing approximately 40% ($70.0 million) of the total shares expected to be repurchased under the 2022 ASR Contract. The remaining balance of $105.0 million was classified as an equity forward contract and recorded in additional paid-in capital within shareholders’ equity.
The exact number of shares the Company will repurchase under the 2022 ASR Contract will be based generally upon the average daily volume weighted average price of the common stock during the repurchase period, less a discount. At settlement, under certain circumstances, the 2022 ASR Counterparty may be required to deliver additional shares of common stock to the Company, or under certain circumstances, the Company may be required either to deliver shares of common stock or to make a cash payment to the 2022 ASR Counterparty. Final settlement of the transactions under the 2022 ASR Contract is expected to be completed by the end of July 2022. The terms of the 2022 ASR Contract are subject to adjustment, including, but not limited to, adjustments arising if the Company were to enter into or announce certain types of transactions or to take certain corporate actions. The 2022 ASR Contract contains the principal terms and provisions governing the accelerated share repurchases, including, but not limited to, the mechanism used to determine the number of shares that will be delivered, the required timing of delivery of the shares, the circumstances under which the 2022 ASR Counterparty is permitted to make adjustments to valuation and calculation periods and various acknowledgments, representations and warranties made by the Company and the 2022 ASR Counterparty to one another.
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During the three months ended April 30, 2022, the Company repurchased 3,789,576 shares under the Company’s 2021 Share Repurchase Program at an aggregate cost of $81.7 million, which is inclusive of the shares repurchased under the 2022 ASR Contract. There were no shares repurchased under the 2012 Share Repurchase Program during the three months ended May 1, 2021. As of April 30, 2022, the Company had remaining authority under the 2021 Share Repurchase Program to purchase $62.3 million of its common stock.
Dividends
The following sets forth the cash dividend declared per share:
Three Months Ended
Apr 30, 2022May 1, 2021
Cash dividend declared per share$0.225 $0.1125 
In accordance with the terms of the indenture governing the Notes, the Company has adjusted the conversion rate and the conversion price of the Notes for quarterly dividends exceeding $0.1125 per share.
For each of the periods presented, dividends paid also included the impact from vesting of restricted stock units that are considered non-participating securities and are only entitled to dividend payments once the respective awards vest.
Decisions on whether, when and in what amounts to continue making any future dividend distributions will remain at all times entirely at the discretion of the Company’s Board of Directors, which reserves the right to change or terminate the Company’s dividend practices at any time and for any reason without prior notice. The payment of cash dividends in the future will be based upon a number of business, legal and other considerations, including the Company’s cash flow from operations, capital expenditures, debt service and covenant requirements, cash paid for income taxes, earnings, share repurchases, economic conditions and U.S. and global liquidity.
Accumulated Other Comprehensive Income (Loss)
The changes in accumulated other comprehensive income (loss), net of related income taxes, are (in thousands):
Foreign Currency Translation AdjustmentDerivative Financial Instruments Designated as Cash Flow HedgesDefined Benefit PlansTotal
Three Months Ended Apr 30, 2022
Balance at January 29, 2022$(135,861)$7,280 $(6,968)$(135,549)