(Commission File Number) | (IRS Employer Identification No.) |
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) | |
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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 class | Trading symbol(s) | Name of each exchange on which registered | ||
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. ☐ |
Exhibit No. | Description | |
104 | Cover Page Interactive Data File - the cover page XBRL tags are embedded within the Inline XBRL document |
Dated: | June 10, 2020 | GUESS?, INC. | |
By: | /s/ Kathryn Anderson | ||
Kathryn Anderson Chief Financial Officer |
Exhibit 99.1 |
• | Americas Retail revenues decreased 57.7% in U.S. dollars and 57.4% in constant currency. |
• | Americas Wholesale revenues decreased 44.0% in U.S. dollars and 41.8% in constant currency. |
• | Europe revenues decreased 49.3% in U.S. dollars and 47.4% in constant currency. |
• | Asia revenues decreased 52.6% in U.S. dollars and 50.6% in constant currency. |
• | Licensing revenues decreased 31.3% in U.S. dollars. |
• | Operating margin for the Company’s Americas Retail segment decreased 48.2% to negative 49.2% in the first quarter of fiscal 2021, from negative 1.0% in the same prior-year quarter, driven primarily by the deleverage impact of temporary store closures as a result of the COVID-19 pandemic. |
• | Operating margin for the Company’s Americas Wholesale segment decreased 10.6% to 6.3% in the first quarter of fiscal 2021, from 16.9% in the same prior-year quarter, due mainly to the negative impacts from the COVID-19 pandemic which resulted in higher markdowns and overall deleveraging of expenses. |
• | Operating margin for the Company’s Europe segment decreased 33.9% to negative 41.7% in the first quarter of fiscal 2021, from negative 7.8% in the same prior-year quarter, driven primarily by overall deleveraging of expenses due to lower revenue as a result of the COVID-19 pandemic. |
• | Operating margin for the Company’s Asia segment decreased 52.6% to negative 56.4% in the first quarter of fiscal 2021, from negative 3.8% in the same prior-year quarter, due mainly to the negative impacts from the COVID-19 pandemic which resulted in significantly higher inventory reserves and overall deleveraging of expenses. |
• | Operating margin for the Company’s Licensing segment decreased 10.4% to 78.0% in the first quarter of fiscal 2021, from 88.4% in the same prior-year quarter. |
Contact: | Guess?, Inc. | |
Fabrice Benarouche | ||
VP, Finance and Investor Relations | ||
(213) 765-5578 | ||
Source: | Guess?, Inc. |
Guess?, Inc. and Subsidiaries | ||||||||||||||
Condensed Consolidated Statements of Loss | ||||||||||||||
(amounts in thousands, except per share data) | ||||||||||||||
Three Months Ended | ||||||||||||||
May 2, 2020 | May 4, 2019 | |||||||||||||
$ | % | $ | % | |||||||||||
Product sales | $ | 247,317 | 95.0 | % | $ | 517,873 | 96.5 | % | ||||||
Net royalties | 12,934 | 5.0 | % | 18,818 | 3.5 | % | ||||||||
Net revenue | 260,251 | 100.0 | % | 536,691 | 100.0 | % | ||||||||
Cost of product sales | 226,022 | 86.8 | % | 354,742 | 66.1 | % | ||||||||
Gross profit | 34,229 | 13.2 | % | 181,949 | 33.9 | % | ||||||||
Selling, general and administrative expenses | 143,288 | 55.0 | % | 204,645 | 38.2 | % | ||||||||
Asset impairment charges | 52,972 | 20.4 | % | 1,775 | 0.3 | % | ||||||||
Net losses on lease terminations | 456 | 0.2 | % | — | — | % | ||||||||
Loss from operations | (162,487 | ) | (62.4 | %) | (24,471 | ) | (4.6 | %) | ||||||
Other income (expense): | ||||||||||||||
Interest expense | (5,462 | ) | (2.1 | %) | (1,259 | ) | (0.2 | %) | ||||||
Interest income | 610 | 0.2 | % | 361 | 0.1 | % | ||||||||
Other income (expense), net | (19,580 | ) | (7.5 | %) | 2,071 | 0.4 | % | |||||||
Loss before income tax benefit | (186,919 | ) | (71.8 | %) | (23,298 | ) | (4.3 | %) | ||||||
Income tax benefit | (26,381 | ) | (10.1 | %) | (2,717 | ) | (0.5 | %) | ||||||
Net loss | (160,538 | ) | (61.7 | %) | (20,581 | ) | (3.8 | %) | ||||||
Net earnings (loss) attributable to noncontrolling interests | (2,872 | ) | (1.1 | %) | 793 | 0.2 | % | |||||||
Net loss attributable to Guess?, Inc. | $ | (157,666 | ) | (60.6 | %) | $ | (21,374 | ) | (4.0 | %) | ||||
Net loss per common share attributable to common stockholders: | ||||||||||||||
Basic | $ | (2.40 | ) | $ | (0.27 | ) | ||||||||
Diluted | $ | (2.40 | ) | $ | (0.27 | ) | ||||||||
Weighted average common shares outstanding attributable to common stockholders: | ||||||||||||||
Basic | 65,715 | 79,925 | ||||||||||||
Diluted | 65,715 | 79,925 | ||||||||||||
Effective tax rate | 14.1 | % | 11.7 | % | ||||||||||
Adjusted selling, general and administrative expenses1: | $ | 142,825 | 54.9 | % | $ | 204,373 | 38.1 | % | ||||||
Adjusted loss from operations1: | $ | (108,596 | ) | (41.7 | %) | $ | (22,424 | ) | (4.2 | %) | ||||
Adjusted net loss attributable to Guess?, Inc.1: | $ | (118,913 | ) | (45.7 | %) | $ | (19,616 | ) | (3.7 | %) | ||||
Adjusted diluted loss per common share attributable to common stockholders1: | $ | (1.81 | ) | $ | (0.25 | ) | ||||||||
Adjusted effective tax rate1: | 6.6 | % | 10.5 | % | ||||||||||
______________________________________________________________________ | ||||||||||||||
Notes: |
1 | The adjusted results for the three months ended May 2, 2020 reflect the exclusion of certain professional service and legal fees and related costs, certain separation charges, asset impairment charges, net losses on lease terminations, non-cash amortization of debt discount on the Company’s convertible senior notes, the related tax impacts of these adjustments as well as certain discrete tax adjustments, where applicable. The adjusted results for the three months ended May 4, 2019 reflect the exclusion of certain professional service and legal fees and related costs, asset impairment charges, non-cash amortization of debt discount on the Company’s convertible senior notes and the related tax impacts of these adjustments, where applicable. A complete reconciliation of actual results to adjusted results is presented in the table entitled “Reconciliation of GAAP Results to Adjusted Results.” |
Guess?, Inc. and Subsidiaries |
Reconciliation of GAAP Results to Adjusted Results |
(dollars in thousands) |
Three Months Ended | |||||||||||
May 2, 2020 | May 4, 2019 | ||||||||||
Reported GAAP selling, general and administrative expenses | $ | 143,288 | $ | 204,645 | |||||||
Certain professional service and legal fees and related costs1 | (290 | ) | (272 | ) | |||||||
Separation charges2 | (173 | ) | — | ||||||||
Adjusted selling, general and administrative expenses | $ | 142,825 | $ | 204,373 | |||||||
Reported GAAP loss from operations | $ | (162,487 | ) | $ | (24,471 | ) | |||||
Certain professional service and legal fees and related costs1 | 290 | 272 | |||||||||
Separation charges2 | 173 | — | |||||||||
Asset impairment charges3 | 52,972 | 1,775 | |||||||||
Net losses on lease terminations4 | 456 | — | |||||||||
Adjusted loss from operations | $ | (108,596 | ) | $ | (22,424 | ) | |||||
Reported GAAP net loss attributable to Guess?, Inc. | $ | (157,666 | ) | $ | (21,374 | ) | |||||
Certain professional service and legal fees and related costs1 | 290 | 272 | |||||||||
Separation charges2 | 173 | — | |||||||||
Asset impairment charges3 | 52,972 | 1,775 | |||||||||
Net losses on lease terminations4 | 456 | — | |||||||||
Amortization of debt discount5 | 2,599 | 213 | |||||||||
Discrete tax adjustments6 | (7,891 | ) | — | ||||||||
Income tax impact from adjustments7 | (9,846 | ) | (502 | ) | |||||||
Total adjustments affecting net loss attributable to Guess?, Inc. | 38,753 | 1,758 | |||||||||
Adjusted net loss attributable to Guess?, Inc. | $ | (118,913 | ) | $ | (19,616 | ) | |||||
Reported GAAP income tax benefit | $ | (26,381 | ) | $ | (2,717 | ) | |||||
Discrete tax adjustments6 | 7,891 | — | |||||||||
Income tax impact from adjustments7 | 9,846 | 502 | |||||||||
Adjusted income tax benefit | $ | (8,644 | ) | $ | (2,215 | ) | |||||
Adjusted effective tax rate | 6.6 | % | 10.5 | % | |||||||
______________________________________________________________________ | |||||||||||
Notes: |
1 | During the three months ended May 2, 2020 and May 4, 2019, the Company recorded certain professional service and legal fees and related costs, which it otherwise would not have incurred as part of its business operations. |
2 | During the three months ended May 2, 2020, the Company recorded $0.2 million in separation-related charges mainly related to certain cash severance payments, partially offset by adjustments to non-cash stock-based compensation expense related to our former Chief Executive Officer resulting from changes in expected performance conditions of certain previously granted stock awards that were no longer subject to service vesting requirements after his departure. There were no separation charges recorded during the three months ended May 4, 2019. |
3 | During the three months ended May 2, 2020, the Company recognized asset impairment charges related primarily to impairment of certain operating lease right-of-use assets and impairment of property and equipment related to certain retail locations resulting from lower revenue and future cash flow projections resulting from the ongoing effects of the COVID-19 pandemic. During the three months ended May 4, 2019, the Company’s asset impairment charges related primarily to impairment of property and equipment related to certain retail locations resulting from under-performance and expected store closures. |
4 | During the three months ended May 2, 2020, the Company recorded net losses on lease terminations related primarily to the early termination of certain lease agreements. |
5 | 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, will be amortized as non-cash interest expense over the term of the Notes. |
6 | During the three months ended May 2, 2020, the discrete tax adjustments related primarily to a tax benefit from a tax rate change due to net operating loss carrybacks, partially offset by the negative impact from a cumulative valuation allowance. The Company recognized a tax benefit of approximately $11.8 million from a tax rate change related to the ability to carryback net operating losses to tax years with a higher federal corporate tax rate as allowed under the CARES Act enacted in March 2020. This was partially offset by a valuation allowance of $3.7 million resulting from jurisdictions where there have been cumulative net operating losses, limiting the Company’s ability to consider other subjective evidence to continue to recognize the existing deferred tax assets. |
7 | The income tax effect of certain professional service and legal fees and related costs, separation charges, asset impairment charges, net losses on lease terminations and the amortization of debt discount was based on the Company’s assessment of deductibility using the statutory tax rate (inclusive of the impact of valuation allowances) of the tax jurisdiction in which the charges were incurred. |
Guess?, Inc. and Subsidiaries | |||||||||||||||
Consolidated Segment Data | |||||||||||||||
(dollars in thousands) | |||||||||||||||
Three Months Ended | |||||||||||||||
May 2, 2020 | May 4, 2019 | % change | |||||||||||||
Net revenue: | |||||||||||||||
Americas Retail | $ | 74,584 | $ | 176,423 | (58 | %) | |||||||||
Americas Wholesale | 25,875 | 46,205 | (44 | %) | |||||||||||
Europe | 106,473 | 210,055 | (49 | %) | |||||||||||
Asia | 40,385 | 85,190 | (53 | %) | |||||||||||
Licensing | 12,934 | 18,818 | (31 | %) | |||||||||||
Total net revenue | $ | 260,251 | $ | 536,691 | (52 | %) | |||||||||
Earnings (loss) from operations: | |||||||||||||||
Americas Retail | $ | (36,673 | ) | $ | (1,812 | ) | (1,924 | %) | |||||||
Americas Wholesale | 1,624 | 7,814 | (79 | %) | |||||||||||
Europe | (44,406 | ) | (16,327 | ) | (172 | %) | |||||||||
Asia | (22,777 | ) | (3,203 | ) | (611 | %) | |||||||||
Licensing | 10,094 | 16,644 | (39 | %) | |||||||||||
Total segment earnings (loss) from operations | (92,138 | ) | 3,116 | (3,057 | %) | ||||||||||
Corporate overhead | (16,921 | ) | (25,812 | ) | (34 | %) | |||||||||
Asset impairment charges | (52,972 | ) | (1,775 | ) | 2,884 | % | |||||||||
Net losses on lease terminations | (456 | ) | — | ||||||||||||
Total loss from operations | $ | (162,487 | ) | $ | (24,471 | ) | (564 | %) | |||||||
Operating margins: | |||||||||||||||
Americas Retail | (49.2 | %) | (1.0 | %) | |||||||||||
Americas Wholesale | 6.3 | % | 16.9 | % | |||||||||||
Europe | (41.7 | %) | (7.8 | %) | |||||||||||
Asia | (56.4 | %) | (3.8 | %) | |||||||||||
Licensing | 78.0 | % | 88.4 | % | |||||||||||
GAAP operating margin for total Company | (62.4 | %) | (4.6 | %) | |||||||||||
Certain professional service and legal fees and related costs | 0.1 | % | 0.1 | % | |||||||||||
Separation charges | 0.0 | % | — | % | |||||||||||
Asset impairment charges | 20.4 | % | 0.3 | % | |||||||||||
Net losses on lease terminations | 0.2 | % | — | % | |||||||||||
Adjusted operating margin for total Company | (41.7 | %) | (4.2 | %) |
Guess?, Inc. and Subsidiaries | ||||||||||||||||||||
Constant Currency Financial Measures | ||||||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||
Three Months Ended | ||||||||||||||||||||
May 2, 2020 | May 4, 2019 | % change | ||||||||||||||||||
As Reported | Foreign Currency Impact | Constant Currency | As Reported | As Reported | Constant Currency | |||||||||||||||
Net revenue: | ||||||||||||||||||||
Americas Retail | $ | 74,584 | $ | 594 | $ | 75,178 | $ | 176,423 | (58%) | (57%) | ||||||||||
Americas Wholesale | 25,875 | 1,026 | 26,901 | 46,205 | (44%) | (42%) | ||||||||||||||
Europe | 106,473 | 4,077 | 110,550 | 210,055 | (49%) | (47%) | ||||||||||||||
Asia | 40,385 | 1,696 | 42,081 | 85,190 | (53%) | (51%) | ||||||||||||||
Licensing | 12,934 | — | 12,934 | 18,818 | (31%) | (31%) | ||||||||||||||
Total net revenue | $ | 260,251 | $ | 7,393 | $ | 267,644 | $ | 536,691 | (52%) | (50%) | ||||||||||
Guess?, Inc. and Subsidiaries | ||||||||||||||||||
Selected Condensed Consolidated Balance Sheet Data | ||||||||||||||||||
(in thousands) | ||||||||||||||||||
May 2, 2020 | February 1, 2020 | May 4, 2019 | ||||||||||||||||
ASSETS | ||||||||||||||||||
Cash and cash equivalents | $ | 419,415 | $ | 284,613 | $ | 112,933 | ||||||||||||
Receivables, net | 239,532 | 327,281 | 250,521 | |||||||||||||||
Inventories | 392,490 | 393,129 | 478,223 | |||||||||||||||
Other current assets | 58,961 | 59,212 | 76,308 | |||||||||||||||
Property and equipment, net | 244,681 | 288,112 | 308,136 | |||||||||||||||
Restricted cash | 213 | 215 | 523 | |||||||||||||||
Operating lease right-of-use assets | 778,030 | 851,990 | 921,084 | |||||||||||||||
Other assets | 213,430 | 224,410 | 234,032 | |||||||||||||||
Total assets | $ | 2,346,752 | $ | 2,428,962 | $ | 2,381,760 | ||||||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||||||||||
Current portion of borrowings and finance lease obligations | $ | 160,501 | $ | 9,490 | $ | 49,141 | ||||||||||||
Current operating lease liabilities | 226,967 | 192,066 | 217,110 | |||||||||||||||
Other current liabilities | 334,756 | 436,857 | 379,549 | |||||||||||||||
Long-term debt and finance lease obligations | 94,804 | 32,770 | 34,573 | |||||||||||||||
Convertible senior notes, net | 250,176 | 247,363 | 239,394 | |||||||||||||||
Long-term operating lease liabilities | 659,947 | 714,079 | 764,202 | |||||||||||||||
Other long-term liabilities | 128,878 | 130,259 | 127,939 | |||||||||||||||
Redeemable and nonredeemable noncontrolling interests | 19,069 | 26,364 | 22,295 | |||||||||||||||
Guess?, Inc. stockholders’ equity | 471,654 | 639,714 | 547,557 | |||||||||||||||
Total liabilities and stockholders’ equity | $ | 2,346,752 | $ | 2,428,962 | $ | 2,381,760 |
Guess?, Inc. and Subsidiaries | ||||||||||||||
Condensed Consolidated Cash Flow Data | ||||||||||||||
(in thousands) | ||||||||||||||
Three Months Ended | ||||||||||||||
May 2, 2020 | May 4, 2019 | |||||||||||||
Net cash used in operating activities | $ | (61,553 | ) | $ | (96,501 | ) | ||||||||
Net cash used in investing activities | (5,716 | ) | (17,182 | ) | ||||||||||
Net cash provided by financing activities | 210,083 | 18,723 | ||||||||||||
Effect of exchange rates on cash, cash equivalents and restricted cash | (8,014 | ) | (2,579 | ) | ||||||||||
Net change in cash, cash equivalents and restricted cash | 134,800 | (97,539 | ) | |||||||||||
Cash, cash equivalents and restricted cash at the beginning of the year | 284,828 | 210,995 | ||||||||||||
Cash, cash equivalents and restricted cash at the end of the period | $ | 419,628 | $ | 113,456 | ||||||||||
Supplemental information: | ||||||||||||||
Depreciation and amortization | $ | 17,024 | $ | 18,598 | ||||||||||
Total lease costs | $ | 77,500 | $ | 89,944 |
Guess?, Inc. and Subsidiaries | ||||||||||||||
Reconciliation of Net Cash Used In Operating Activities to Free Cash Flow | ||||||||||||||
(in thousands) | ||||||||||||||
Three Months Ended | ||||||||||||||
May 2, 2020 | May 4, 2019 | |||||||||||||
Net cash used in operating activities | $ | (61,553 | ) | $ | (96,501 | ) | ||||||||
Less: Purchases of property and equipment | (5,973 | ) | (17,865 | ) | ||||||||||
Less: Payments for property and equipment under finance leases | (921 | ) | (433 | ) | ||||||||||
Free cash flow | $ | (68,447 | ) | $ | (114,799 | ) |
Guess?, Inc. and Subsidiaries | ||||||||||||||
Retail Store Data | ||||||||||||||
Global Store and Concession Count | ||||||||||||||
As of May 2, 2020 | ||||||||||||||
Stores | Concessions | |||||||||||||
Region | Total | Directly Operated | Partner Operated | Total | Directly Operated | Partner Operated | ||||||||
United States | 280 | 278 | 2 | 1 | — | 1 | ||||||||
Canada | 80 | 80 | — | — | — | — | ||||||||
Central and South America | 111 | 73 | 38 | 27 | 27 | — | ||||||||
Total Americas | 471 | 431 | 40 | 28 | 27 | 1 | ||||||||
Europe and the Middle East | 744 | 517 | 227 | 38 | 38 | — | ||||||||
Asia and the Pacific | 466 | 193 | 273 | 318 | 114 | 204 | ||||||||
Total | 1,681 | 1,141 | 540 | 384 | 179 | 205 | ||||||||
As of May 4, 2019 | ||||||||||||||
Stores | Concessions | |||||||||||||
Region | Total | Directly Operated | Partner Operated | Total | Directly Operated | Partner Operated | ||||||||
United States | 289 | 287 | 2 | 1 | — | 1 | ||||||||
Canada | 88 | 88 | — | — | — | — | ||||||||
Central and South America | 107 | 70 | 37 | 27 | 27 | — | ||||||||
Total Americas | 484 | 445 | 39 | 28 | 27 | 1 | ||||||||
Europe and the Middle East | 713 | 498 | 215 | 37 | 37 | — | ||||||||
Asia and the Pacific | 527 | 231 | 296 | 349 | 168 | 181 | ||||||||
Total | 1,724 | 1,174 | 550 | 414 | 232 | 182 |
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Cover Page |
Jun. 10, 2020 |
---|---|
Cover [Abstract] | |
Document Type | 8-K |
Document Period End Date | Jun. 10, 2020 |
Entity Registrant Name | GUESS INC |
Entity Incorporation, State or Country Code | DE |
Entity File Number | 1-11893 |
Entity Tax Identification Number | 95-3679695 |
Entity Address, Address Line One | 1444 S. Alameda Street |
Entity Address, City or Town | Los Angeles |
Entity Address, State or Province | CA |
Entity Address, Postal Zip Code | 90021 |
City Area Code | 213 |
Local Phone Number | 765-3100 |
Written Communications | false |
Soliciting Material | false |
Pre-commencement Tender Offer | false |
Pre-commencement Issuer Tender Offer | false |
Title of 12(b) Security | Common Stock, par value $0.01 per share |
Trading Symbol | GES |
Security Exchange Name | NYSE |
Entity Emerging Growth Company | false |
Entity Central Index Key | 0000912463 |
Amendment Flag | false |
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