Global lifestyle brand Guess recently provided an update on the potential impact of US tariffs on its operations and financial projections during the release of its first quarter (Q1) fiscal year 2026 performance.
In an earnings call, Guess clarified that a significant portion of its business, approximately 75%, operates outside the US and is therefore not directly affected by the tariffs imposed by the US government. However, the remaining 25% of directly produced and distributed products, amounting to around $200 million in annual purchases, could be impacted by the tariffs.
Guess CEO Carlos Alberini highlighted that the company has been proactive in mitigating the potential effects of tariffs by shifting a substantial portion of production away from China to alternative markets. Negotiations have also been initiated to adjust costs with suppliers and prices with retail partners. These strategic initiatives are expected to result in a marginal reduction of less than $10 million in margins for 2025, a figure that has already been factored into the company’s financial outlook.
The financial update provided by Guess revealed a 9% increase in revenue to $647.8 million, with varying performance across different regions in the first quarter. While Europe experienced an 8% revenue growth and the Americas retail and wholesale segments saw increases of 9% and 63% respectively, Asia witnessed a 20% decline in revenue, with licensing revenues in the region decreasing by 14%.
Guess completed the acquisition of fashion brand Rag & Bone in partnership with brand management firm WHP Global in April 2024, integrating it into Guess’s existing segments. Co-founder and chief creative officer Paul Marciano emphasized the company’s highly diversified business model, supporting 25 different product categories, multiple markets across all regions, and various consumer channels.
The company reported a 67.5% increase in Generally Accepted Accounting Principles (GAAP) loss from operations to $33.3 million, influenced by an unfavorable business mix, higher asset impairment charges, and currency impacts. Guess posted a GAAP net loss of $32.9 million, a significant contrast to the $13 million net earnings reported in the same quarter of the previous year, including a $4.3 million unrealized loss due to changes in the fair value of derivatives.
Adjusted net loss increased by 61% to $22.3 million, with adjusted diluted net loss per share rising by 63% to $0.44, attributed in part to share buybacks and currency impacts. Guess anticipates revenue growth between 2.9% and 4.7% for the second quarter of fiscal 2026 and between 5.5% and 7.4% for the full fiscal year. The company forecasts GAAP operating margins of 2.5% to 3.3% for Q2 and 3.9% to 4.6% for the full year, with adjusted figures slightly higher.
Looking ahead, Alberini expressed optimism for solid revenue growth driven by initiatives such as the expansion of Rag & Bone, the development of Guess Jeans, and a new joint venture with the Chalhoub Group in the Middle East. Guess remains focused on executing strategic initiatives to increase direct-to-consumer sales productivity and enhance profitability through business and portfolio optimization.
In April, Guess disclosed plans to streamline operations and optimize its portfolios in China and North America, indicating a proactive approach to addressing challenges and maximizing opportunities in the ever-evolving retail landscape.
The information provided in this article was originally sourced from Retail Insight Network, a GlobalData-owned brand. It is essential to note that the content is intended for general informational purposes only and should not be relied upon as professional advice. Prior to making any decisions based on the content, it is advisable to seek professional or specialist advice to ensure accuracy and completeness.
