Authentic Brands Group (AUTH) is in the process of formulating a competing bid for Guess? Inc. (GES, Financial), potentially disrupting the current $13-per-share cash proposal that Guess? received from WHP Global in March. Sources close to the situation indicate that AUTH is actively working on a proposal that would rival WHP's existing offer.
This development follows WHP Global's earlier proposal to acquire Guess? at a valuation that was announced earlier this year. The involvement of AUTH suggests heightened interest and competition in securing a deal with the well-known American apparel company.
As both parties consider their positions, the potential counteroffer from AUTH could significantly impact the acquisition landscape for Guess?, influencing investor sentiment and strategic directions within the fashion retail sector.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 3 analysts, the average target price for Guess? Inc (GES, Financial) is $15.67 with a high estimate of $23.00 and a low estimate of $11.00. The average target implies an upside of 34.13% from the current price of $11.68. More detailed estimate data can be found on the Guess? Inc (GES) Forecast page.
Based on the consensus recommendation from 3 brokerage firms, Guess? Inc's (GES, Financial) average brokerage recommendation is currently 2.7, indicating "Hold" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for Guess? Inc (GES, Financial) in one year is $31.13, suggesting a upside of 166.52% from the current price of $11.68. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the Guess? Inc (GES) Summary page.
GES Key Business Developments
Release Date: April 03, 2025
- Revenue: Increased by 5% to $932 million in Q4; full-year revenue grew by 8% to $3 billion.
- Adjusted Operating Margin: Q4 margin at 11.4%; full-year margin at 6%.
- Adjusted Earnings Per Share (EPS): $1.48 for Q4; $1.96 for the full year.
- Gross Margin: 44.1% in Q4, below expectations due to margin pressure and currency impact.
- SG&A Expenses: Increased by 11% to $305 million in Q4, driven by rag & bone acquisition and marketing investments.
- Inventory: Ended Q4 with $563 million, up 21% year-over-year.
- Cash Position: Ended Q4 with $188 million in cash, down from $360 million a year ago.
- Store Closures: Plan to reduce North American store fleet by roughly 20 stores by year-end.
- Licensing Revenue: Grew 18% in Q4 with a segment operating margin of 94.8%.
- Adjusted Operating Profit: $107 million in Q4.
- Free Cash Flow: $30 million for the year.
- Fiscal 2026 Outlook: Revenue growth expected between 3.9% and 6.2%; adjusted EPS between $1.32 and $1.76.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Guess? Inc (GES, Financial) reported a 5% increase in Q4 revenues, reaching $932 million, with a significant contribution from the acquisition of rag & bone.
- The company's European Wholesale business showed strong performance with mid-single-digit growth despite currency headwinds.
- Guess? Inc (GES) successfully launched Guess? Jeans globally, targeting a younger demographic with sustainable and affordable denim.
- The licensing business exceeded revenue expectations, growing 18% in Q4, driven by strong performance in footwear, fragrances, handbags, and eyewear.
- The company entered a joint venture with Chalhoub Group to manage its Middle East business, expected to contribute meaningfully to growth.
Negative Points
- The Guess? Retail business in the Americas did not meet revenue expectations, with a 14% constant currency comp decline in the US and Canadian stores and e-commerce.
- The Guess? Asia business underperformed, with revenue declines in the upper teens, particularly in South Korea and China due to challenging retail traffic.
- Total company gross margin was below expectations at 44.1%, impacted by higher margin pressure and unfavorable currency effects.
- Adjusted SG&A expenses increased by 11%, driven by the addition of rag & bone and increased marketing investments.
- The company anticipates a challenging consumer environment in fiscal 2026 due to inflationary pressures and unresolved geopolitical issues, impacting growth prospects.
