Earnings per Share

3 Months Ended

Apr. 30, 2022

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, 2022		May 1, 2021
Net earnings attributable to Guess?, Inc.	$	7,970	$	12,006
Less net earnings attributable to nonvested restricted stockholders	56		130
Net earnings attributable to common stockholders	7,914		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 computations	61,052		64,035

Effect of dilutive securities:
Stock options and restricted stock units	1,666		1,905
The Notes	11,751		—
Weighted average common shares used in diluted computations	74,469		65,940

Net earnings per common share attributable to common stockholders:
Basic	$	0.13	$	0.19
Diluted	$	0.12	$	0.18

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.