(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |||||||
(Address of principal executive offices and zip code) |
Title of each class | Trading symbol(s) | Name of each exchange on which registered | |||||||||||||||
Large accelerated 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 |
Oct 28, 2023 | Jan 28, 2023 | ||||||||||
(unaudited) | |||||||||||
ASSETS | |||||||||||
Current assets: | |||||||||||
Cash and cash equivalents | $ | $ | |||||||||
Accounts receivable, net | |||||||||||
Inventories | |||||||||||
Other current assets | |||||||||||
Total current assets | |||||||||||
Property and equipment, net | |||||||||||
Goodwill | |||||||||||
Deferred income tax assets | |||||||||||
Operating lease right-of-use assets | |||||||||||
Other assets | |||||||||||
$ | $ | ||||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||
Current liabilities: | |||||||||||
Current portion of borrowings and finance lease obligations | $ | $ | |||||||||
Accounts payable | |||||||||||
Accrued expenses and other current liabilities | |||||||||||
Convertible senior notes due 2024, net | |||||||||||
Current portion of operating lease liabilities | |||||||||||
Total current liabilities | |||||||||||
Convertible senior notes due 2024, net | |||||||||||
Convertible senior notes due 2028, net | |||||||||||
Long-term debt and finance lease obligations | |||||||||||
Long-term operating lease liabilities | |||||||||||
Other long-term liabilities | |||||||||||
Total liabilities | |||||||||||
Redeemable noncontrolling interests | |||||||||||
Commitments and contingencies (Note 13) | |||||||||||
Stockholders’ equity: | |||||||||||
Preferred stock, $ | |||||||||||
Common stock, $ | |||||||||||
Paid-in capital | |||||||||||
Retained earnings | |||||||||||
Accumulated other comprehensive loss | ( | ( | |||||||||
Treasury stock, | ( | ( | |||||||||
Guess?, Inc. stockholders’ equity | |||||||||||
Nonredeemable noncontrolling interests | |||||||||||
Total stockholders’ equity | |||||||||||
$ | $ |
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
Oct 28, 2023 | Oct 29, 2022 | Oct 28, 2023 | Oct 29, 2022 | ||||||||||||||||||||
Product sales | $ | $ | $ | $ | |||||||||||||||||||
Net royalties | |||||||||||||||||||||||
Net revenue | |||||||||||||||||||||||
Cost of product sales | |||||||||||||||||||||||
Gross profit | |||||||||||||||||||||||
Selling, general and administrative expenses | |||||||||||||||||||||||
Asset impairment charges | |||||||||||||||||||||||
Net (gains) losses on lease modifications | ( | ( | ( | ||||||||||||||||||||
Earnings from operations | |||||||||||||||||||||||
Other income (expense): | |||||||||||||||||||||||
Interest expense | ( | ( | ( | ( | |||||||||||||||||||
Interest income | |||||||||||||||||||||||
Loss on extinguishment of debt | ( | ||||||||||||||||||||||
Other, net | ( | ( | ( | ( | |||||||||||||||||||
Total other expense | ( | ( | ( | ( | |||||||||||||||||||
Earnings before income tax expense (benefit) | |||||||||||||||||||||||
Income tax expense (benefit) | ( | ( | |||||||||||||||||||||
Net earnings | |||||||||||||||||||||||
Net earnings attributable to noncontrolling interests | |||||||||||||||||||||||
Net earnings attributable to Guess?, Inc. | $ | $ | $ | $ | |||||||||||||||||||
Net earnings per common share attributable to common stockholders: | |||||||||||||||||||||||
Basic | $ | $ | $ | $ | |||||||||||||||||||
Diluted | $ | $ | $ | $ | |||||||||||||||||||
Weighted average common shares outstanding attributable to common stockholders: | |||||||||||||||||||||||
Basic | |||||||||||||||||||||||
Diluted | |||||||||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
Oct 28, 2023 | Oct 29, 2022 | Oct 28, 2023 | Oct 29, 2022 | ||||||||||||||||||||
Net earnings | $ | $ | $ | $ | |||||||||||||||||||
Other comprehensive income (loss) (“OCI”): | |||||||||||||||||||||||
Foreign currency translation adjustment | |||||||||||||||||||||||
Losses arising during the period | ( | ( | ( | ( | |||||||||||||||||||
Derivative financial instruments designated as cash flow hedges | |||||||||||||||||||||||
Gains arising during the period | |||||||||||||||||||||||
Less income tax effect | ( | ( | ( | ( | |||||||||||||||||||
Reclassification to net earnings for gains realized | ( | ( | ( | ( | |||||||||||||||||||
Less income tax effect | |||||||||||||||||||||||
Defined benefit plans | |||||||||||||||||||||||
Foreign currency and other adjustments | ( | ||||||||||||||||||||||
Less income tax effect | ( | ( | ( | ||||||||||||||||||||
Net actuarial loss amortization | |||||||||||||||||||||||
Prior service credit amortization | ( | ( | ( | ( | |||||||||||||||||||
Less income tax effect | ( | ( | ( | ||||||||||||||||||||
Total comprehensive income | |||||||||||||||||||||||
Less comprehensive income attributable to noncontrolling interests: | |||||||||||||||||||||||
Net earnings | |||||||||||||||||||||||
Foreign currency translation adjustment | ( | ( | |||||||||||||||||||||
Amounts attributable to noncontrolling interests | |||||||||||||||||||||||
Comprehensive income attributable to Guess?, Inc. | $ | $ | $ | $ | |||||||||||||||||||
Nine Months Ended | |||||||||||
Oct 28, 2023 | Oct 29, 2022 | ||||||||||
Cash flows from operating activities: | |||||||||||
Net earnings | $ | $ | |||||||||
Adjustments to reconcile net earnings to net cash provided by (used in) operating activities: | |||||||||||
Depreciation and amortization | |||||||||||
Amortization of debt discount | |||||||||||
Amortization of debt issuance costs | |||||||||||
Share-based compensation expense | |||||||||||
Forward contract (gains) losses | ( | ||||||||||
Deferred income taxes | ( | ||||||||||
Net loss from impairment and disposition of long-term assets | |||||||||||
Loss on extinguishment of debt | |||||||||||
Other items, net | |||||||||||
Changes in operating assets and liabilities: | |||||||||||
Accounts receivable | ( | ( | |||||||||
Inventories | ( | ( | |||||||||
Prepaid expenses and other assets | |||||||||||
Operating lease assets and liabilities, net | ( | ( | |||||||||
Accounts payable and accrued expenses and other current liabilities | ( | ||||||||||
Other long-term liabilities | ( | ||||||||||
Net cash provided by (used in) operating activities | ( | ||||||||||
Cash flows from investing activities: | |||||||||||
Purchases of property and equipment | ( | ( | |||||||||
Purchases of investments | ( | ( | |||||||||
Other investing activities | ( | ||||||||||
Net cash used in investing activities | ( | ( | |||||||||
Cash flows from financing activities: | |||||||||||
Proceeds from borrowings | |||||||||||
Repayments on borrowings and finance lease obligations | ( | ( | |||||||||
Net proceeds from issuance of convertible senior notes | |||||||||||
Proceeds from issuance of warrant | |||||||||||
Purchase of convertible note hedge | ( | ||||||||||
Proceeds from termination of convertible senior note hedge | |||||||||||
Payments for termination of common stock warrant | ( | ||||||||||
Debt issuance costs | ( | ( | |||||||||
Dividends paid | ( | ( | |||||||||
Noncontrolling interest capital distribution | ( | ( | |||||||||
Purchase of redeemable noncontrolling interest | ( | ||||||||||
Issuance of common stock, net of income tax withholdings on vesting of stock awards | |||||||||||
Purchase of treasury stock | ( | ( | |||||||||
Net cash used in financing activities | ( | ( | |||||||||
Effect of exchange rates on cash and cash equivalents | ( | ( | |||||||||
Net change in cash and cash equivalents | ( | ( | |||||||||
Cash and cash equivalents at the beginning of the year | |||||||||||
Cash and cash equivalents at the end of the period | $ | $ | |||||||||
Supplemental cash flow data: | |||||||||||
Interest paid | $ | $ | |||||||||
Income taxes paid, net of refunds | $ | $ | |||||||||
Non-cash investing and financing activity: | |||||||||||
Change in accrual of property and equipment | $ | ( | $ | ( | |||||||
Assets acquired under finance lease obligations | $ | $ | |||||||||
For the three and nine months ended October 28, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Guess?, Inc. Stockholders’ Equity | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Common Stock | Treasury Stock | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Shares | Amount | Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Loss | Shares | Amount | Nonredeemable Noncontrolling Interests | Total | |||||||||||||||||||||||||||||||||||||||||||||
Balance at January 28, 2023 | $ | $ | $ | $ | ( | $ | ( | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||
Net earnings (loss) | — | — | — | ( | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive income (loss), net of income tax benefit of $ | — | — | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||
Issuance of common stock under stock compensation plans | ( | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||
Issuance of stock under Employee Stock Purchase Plan | — | — | — | ( | — | ||||||||||||||||||||||||||||||||||||||||||||||||
Share-based compensation | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
Dividends, net of forfeitures on non-participating securities | — | — | — | ( | — | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||||
Share repurchases | ( | ( | — | — | ( | — | ( | ||||||||||||||||||||||||||||||||||||||||||||||
Equity component value of convertible notes transactions, net | — | — | ( | — | — | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||||
Sale of common stock warrant | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||
Purchase of convertible note hedge | — | — | ( | — | — | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||||
Termination of common stock warrant | — | — | ( | — | — | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||||
Termination of convertible note hedge | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||
Balance at April 29, 2023 | $ | $ | $ | $ | ( | $ | ( | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||
Net earnings | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive income, net of income tax of ($ | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
Issuance of common stock under stock compensation plans | ( | — | — | ( | — | ||||||||||||||||||||||||||||||||||||||||||||||||
Issuance of stock under Employee Stock Purchase Plan | — | — | — | ( | — | ||||||||||||||||||||||||||||||||||||||||||||||||
Share-based compensation | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||
Dividends, net of forfeitures on non-participating securities | — | — | — | ( | — | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||||
Purchase of redeemable noncontrolling interest | — | — | — | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||||||
Noncontrolling interest capital distribution | — | — | — | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||
Balance at July 29, 2023 | $ | $ | $ | $ | ( | $ | ( | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||
Net earnings | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive loss, net of income tax of ($ | — | — | — | — | ( | — | — | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||
Issuance of common stock under stock compensation plans | — | — | ( | — | |||||||||||||||||||||||||||||||||||||||||||||||||
Issuance of stock under Employee Stock Purchase Plan | — | — | — | ( | — | ||||||||||||||||||||||||||||||||||||||||||||||||
Share-based compensation | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
Dividends, net of forfeitures on non-participating securities | — | — | — | ( | — | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||||
Noncontrolling interest capital distribution | — | — | — | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||
Balance at October 28, 2023 | $ | $ | $ | $ | ( | $ | ( | $ | $ |
For the three and nine months ended October 29, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Guess?, Inc. Stockholders’ Equity | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Common Stock | Treasury Stock | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Shares | Amount | Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Loss | Shares | Amount | Nonredeemable Noncontrolling Interests | Total | |||||||||||||||||||||||||||||||||||||||||||||
Balance at January 29, 2022 | $ | $ | $ | $ | ( | $ | ( | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||
Cumulative adjustment from adoption of new accounting guidance | — | — | ( | — | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||
Net earnings | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive loss, net of income tax of ($ | — | — | — | — | ( | — | — | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||
Issuance of common stock under stock compensation plans | ( | — | — | ( | — | ||||||||||||||||||||||||||||||||||||||||||||||||
Issuance of stock under Employee Stock Purchase Plan | — | — | — | ( | — | ||||||||||||||||||||||||||||||||||||||||||||||||
Share-based compensation | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
Dividends, net of forfeitures on non-participating securities | — | — | — | ( | — | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||||
Share repurchases | ( | ( | — | — | ( | — | ( | ||||||||||||||||||||||||||||||||||||||||||||||
Noncontrolling interest capital distribution | — | — | — | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||
Equity forward contract issuance | — | — | ( | — | — | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||||
Balance at April 30, 2022 | $ | $ | $ | $ | ( | $ | ( | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||
Cumulative adjustment from adoption of new accounting guidance | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||
Net earnings | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive loss, net of income tax of ($ | — | — | — | — | ( | — | — | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||
Issuance of common stock under stock compensation plans | ( | — | — | ( | — | ||||||||||||||||||||||||||||||||||||||||||||||||
Issuance of stock under Employee Stock Purchase Plan | — | — | — | ( | — | ||||||||||||||||||||||||||||||||||||||||||||||||
Share-based compensation | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
Dividends, net of forfeitures on non-participating securities | — | — | — | ( | — | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||||
Share repurchases | ( | ( | — | — | ( | — | ( | ||||||||||||||||||||||||||||||||||||||||||||||
Equity forward contract settlement | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||
Balance at July 30, 2022 | $ | $ | $ | $ | ( | $ | ( | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||
Net earnings | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive income (loss), net of income tax of ($ | — | — | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||
Issuance of common stock under stock compensation plans | ( | — | — | — | ( | — | ( | ||||||||||||||||||||||||||||||||||||||||||||||
Issuance of stock under Employee Stock Purchase Plan | — | ( | — | — | ( | — | |||||||||||||||||||||||||||||||||||||||||||||||
Share-based compensation | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
Dividends, net of forfeitures on non-participating securities | — | — | — | ( | — | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||||
Noncontrolling interest capital distribution | — | — | — | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||
Balance at October 29, 2022 | $ | $ | $ | $ | ( | $ | ( | $ | $ |
Oct 28, 2023 | Jan 28, 2023 | |||||||||||||
Assets | Balance Sheet Location | |||||||||||||
Operating | Operating lease right-of-use assets | $ | $ | |||||||||||
Property and equipment, net | ||||||||||||||
Total lease assets | $ | $ | ||||||||||||
Liabilities | Balance Sheet Location | |||||||||||||
Current: | ||||||||||||||
Operating | Current portion of operating lease liabilities | $ | $ | |||||||||||
Current portion of borrowings and finance lease obligations | ||||||||||||||
Noncurrent: | ||||||||||||||
Operating | Long-term operating lease liabilities | |||||||||||||
Long-term debt and finance lease obligations | ||||||||||||||
Total lease liabilities | $ | $ |
Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||
Income Statement Location | Oct 28, 2023 | Oct 29, 2022 | Oct 28, 2023 | Oct 29, 2022 | ||||||||||||||||||||||
Operating lease costs | Cost of product sales | $ | $ | $ | $ | |||||||||||||||||||||
Operating lease costs | Selling, general and administrative expenses | |||||||||||||||||||||||||
Operating lease costs1 | Net (gains) losses on lease modifications | ( | ( | ( | ||||||||||||||||||||||
Finance lease costs | ||||||||||||||||||||||||||
Amortization of leased assets | Cost of product sales | |||||||||||||||||||||||||
Amortization of leased assets | Selling, general and administrative expenses | |||||||||||||||||||||||||
Interest on lease liabilities | Interest expense | |||||||||||||||||||||||||
Variable lease costs2 | Cost of product sales | |||||||||||||||||||||||||
Variable lease costs2 | Selling, general and administrative expenses | |||||||||||||||||||||||||
Short-term lease costs | Cost of product sales | |||||||||||||||||||||||||
Short-term lease costs | Selling, general and administrative expenses | |||||||||||||||||||||||||
Total lease costs | $ | $ | $ | $ |
Operating Leases | |||||||||||||||||||||||
Maturity of Lease Liabilities | Non-Related Parties | Related Parties | Finance Leases | Total | |||||||||||||||||||
Fiscal 2024 | $ | $ | $ | $ | |||||||||||||||||||
Fiscal 2025 | |||||||||||||||||||||||
Fiscal 2026 | |||||||||||||||||||||||
Fiscal 2027 | |||||||||||||||||||||||
Fiscal 2028 | |||||||||||||||||||||||
After fiscal 2028 | |||||||||||||||||||||||
Total lease payments | |||||||||||||||||||||||
Less: Interest | |||||||||||||||||||||||
Present value of lease liabilities | $ | $ | $ | $ |
Lease Term and Discount Rate | Oct 28, 2023 | ||||
Weighted-average remaining lease term | |||||
Operating leases | |||||
Finance leases | |||||
Weighted-average discount rate | |||||
Operating leases | |||||
Finance leases |
Nine Months Ended | |||||||||||
Supplemental Cash Flow Information | Oct 28, 2023 | Oct 29, 2022 | |||||||||
Cash paid for amounts included in the measurement of lease liabilities | |||||||||||
Operating cash flows from operating leases | $ | $ | |||||||||
New operating ROU assets obtained in exchange for lease liabilities | $ | $ |
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
Oct 28, 2023 | Oct 29, 2022 | Oct 28, 2023 | Oct 29, 2022 | ||||||||||||||||||||
Net earnings attributable to Guess?, Inc. | $ | $ | $ | $ | |||||||||||||||||||
Less net earnings attributable to nonvested restricted stockholders | |||||||||||||||||||||||
Net earnings attributable to common stockholders | |||||||||||||||||||||||
Add interest expense related to the convertible senior notes | |||||||||||||||||||||||
Net earnings attributable to common stockholders used in diluted computations | $ | $ | $ | $ | |||||||||||||||||||
Weighted average common shares used in basic computations | |||||||||||||||||||||||
Effect of dilutive securities: | |||||||||||||||||||||||
Stock options and restricted stock units | |||||||||||||||||||||||
Convertible senior notes | |||||||||||||||||||||||
Weighted average common shares used in diluted computations | |||||||||||||||||||||||
Net earnings per common share attributable to common stockholders: | |||||||||||||||||||||||
Basic | $ | $ | $ | $ | |||||||||||||||||||
Diluted | $ | $ | $ | $ |
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
Oct 28, 2023 | Oct 29, 2022 | Oct 28, 2023 | Oct 29, 2022 | ||||||||||||||||||||
Cash dividend declared per share | $ | $ | $ | $ |
Foreign Currency Translation Adjustment | Derivative Financial Instruments Designated as Cash Flow Hedges | Defined Benefit Plans | Total | ||||||||||||||||||||
Three Months Ended Oct 28, 2023 | |||||||||||||||||||||||
Balance at July 29, 2023 | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
Gains (losses) arising during the period | ( | ( | |||||||||||||||||||||
Reclassification to net earnings for (gains) losses realized | ( | ||||||||||||||||||||||
Net other comprehensive income (loss) | ( | ( | |||||||||||||||||||||
Balance at October 28, 2023 | $ | ( | $ | $ | ( | $ | ( | ||||||||||||||||
Nine Months Ended Oct 28, 2023 | |||||||||||||||||||||||
Balance at January 28, 2023 | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
Gains (losses) arising during the period | ( | ( | ( | ||||||||||||||||||||
Reclassification to net earnings for (gains) losses realized | ( | ( | |||||||||||||||||||||
Net other comprehensive income (loss) | ( | ( | ( | ||||||||||||||||||||
Balance at October 28, 2023 | $ | ( | $ | $ | ( | $ | ( | ||||||||||||||||
Three Months Ended Oct 29, 2022 | |||||||||||||||||||||||
Balance at July 30, 2022 | $ | ( | $ | $ | ( | $ | ( | ||||||||||||||||
Gains (losses) arising during the period | ( | ( | |||||||||||||||||||||
Reclassification to net earnings for gains realized | ( | ( | ( | ||||||||||||||||||||
Net other comprehensive income (loss) | ( | ( | |||||||||||||||||||||
Balance at October 29, 2022 | $ | ( | $ | $ | ( | $ | ( | ||||||||||||||||
Nine Months Ended Oct 29, 2022 | |||||||||||||||||||||||
Balance at January 29, 2022 | $ | ( | $ | $ | ( | $ | ( | ||||||||||||||||
Gains (losses) arising during the period | ( | ( | |||||||||||||||||||||
Reclassification to net earnings for gains realized | ( | ( | ( | ||||||||||||||||||||
Net other comprehensive income (loss) | ( | ( | |||||||||||||||||||||
Balance at October 29, 2022 | $ | ( | $ | $ | ( | $ | ( | ||||||||||||||||
Three Months Ended | Nine Months Ended | Location of (Gain) Loss Reclassified from Accumulated OCI into Earnings | |||||||||||||||||||||||||||
Oct 28, 2023 | Oct 29, 2022 | Oct 28, 2023 | Oct 29, 2022 | ||||||||||||||||||||||||||
Derivative financial instruments designated as cash flow hedges: | |||||||||||||||||||||||||||||
Foreign exchange currency contracts | $ | $ | ( | $ | ( | $ | ( | Cost of product sales | |||||||||||||||||||||
Interest rate swap | ( | ( | ( | Interest expense | |||||||||||||||||||||||||
Less income tax effect | Income tax expense (benefit) | ||||||||||||||||||||||||||||
( | ( | ( | ( | ||||||||||||||||||||||||||
Defined benefit plans: | |||||||||||||||||||||||||||||
Net actuarial loss amortization | Other expense | ||||||||||||||||||||||||||||
Prior service credit amortization | ( | ( | ( | ( | Other expense | ||||||||||||||||||||||||
Less income tax effect | ( | ( | ( | Income tax expense (benefit) | |||||||||||||||||||||||||
( | ( | ||||||||||||||||||||||||||||
Total reclassifications during the period | $ | $ | ( | $ | ( | $ | ( |
Oct 28, 2023 | Jan 28, 2023 | ||||||||||
Trade | $ | $ | |||||||||
Royalty | |||||||||||
Other | |||||||||||
Less allowances | |||||||||||
$ | $ |
Oct 28, 2023 | Jan 28, 2023 | ||||||||||
Raw materials | $ | $ | |||||||||
Work in progress | |||||||||||
Finished goods | |||||||||||
$ | $ |
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
Oct 28, 2023 | Oct 29, 2022 | Oct 28, 2023 | Oct 29, 2022 | ||||||||||||||||||||
Net revenue: | |||||||||||||||||||||||
Europe | $ | $ | $ | $ | |||||||||||||||||||
Americas Retail | |||||||||||||||||||||||
Americas Wholesale | |||||||||||||||||||||||
Asia | |||||||||||||||||||||||
Licensing | |||||||||||||||||||||||
Total net revenue | $ | $ | $ | $ | |||||||||||||||||||
Earnings (loss) from operations: | |||||||||||||||||||||||
Europe | $ | $ | $ | $ | |||||||||||||||||||
Americas Retail | |||||||||||||||||||||||
Americas Wholesale | |||||||||||||||||||||||
Asia | ( | ( | |||||||||||||||||||||
Licensing | |||||||||||||||||||||||
Total segment earnings from operations | |||||||||||||||||||||||
Corporate overhead | ( | ( | ( | ( | |||||||||||||||||||
Asset impairment charges1 | ( | ( | ( | ( | |||||||||||||||||||
Net gains (losses) on lease modifications2 | ( | ||||||||||||||||||||||
Total earnings from operations | $ | $ | $ | $ | |||||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
Oct 28, 2023 | Oct 29, 2022 | Oct 28, 2023 | Oct 29, 2022 | ||||||||||||||||||||
Net revenue: | |||||||||||||||||||||||
U.S. | $ | $ | $ | $ | |||||||||||||||||||
Italy | |||||||||||||||||||||||
Germany | |||||||||||||||||||||||
South Korea | |||||||||||||||||||||||
Canada | |||||||||||||||||||||||
Spain | |||||||||||||||||||||||
Other countries | |||||||||||||||||||||||
Total product sales | |||||||||||||||||||||||
Net royalties | |||||||||||||||||||||||
Net revenue | $ | $ | $ | $ |
Oct 28, 2023 | Jan 28, 2023 | ||||||||||
Borrowings under credit facilities | $ | $ | |||||||||
Term loans | |||||||||||
Finance lease obligations | |||||||||||
Mortgage debt | |||||||||||
Other | |||||||||||
Less current installments | |||||||||||
Long-term debt and finance lease obligations | $ | $ |
Oct 28, 2023 | Jan 28, 2023 | ||||||||||
2028 Notes1 | |||||||||||
Principal | $ | $ | |||||||||
Unamortized debt discount and issuance costs2 | ( | ||||||||||
Net carrying amount | $ | $ | |||||||||
Fair value, net3 | $ | $ | |||||||||
2024 Notes | |||||||||||
Principal | $ | $ | |||||||||
Unamortized debt issuance costs | ( | ( | |||||||||
Net carrying amount | $ | $ | |||||||||
Fair value, net3 | $ | $ |
2028 Notes | 2024 Notes | ||||||||||||||||||||||
Oct 28, 2023 | Oct 29, 2022 | Oct 28, 2023 | Oct 29, 2022 | ||||||||||||||||||||
Three Months Ended | |||||||||||||||||||||||
Coupon interest | $ | $ | $ | $ | |||||||||||||||||||
Amortization of debt discount and issuance costs | |||||||||||||||||||||||
Total | $ | $ | $ | $ |
Nine Months Ended | |||||||||||||||||||||||
Coupon interest | $ | $ | $ | $ | |||||||||||||||||||
Amortization of debt discount and issuance costs | |||||||||||||||||||||||
Total | $ | $ | $ | $ |
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
Oct 28, 2023 | Oct 29, 2022 | Oct 28, 2023 | Oct 29, 2022 | ||||||||||||||||||||
Stock options | $ | $ | $ | $ | |||||||||||||||||||
Stock awards/units | |||||||||||||||||||||||
Employee Stock Purchase Plan | |||||||||||||||||||||||
Total share-based compensation expense | $ | $ | $ | $ |
Number of Units | Weighted Average Grant Date Fair Value | ||||||||||
Nonvested at January 28, 2023 | $ | ||||||||||
Granted | |||||||||||
Vested | ( | ||||||||||
Forfeited | ( | ||||||||||
Nonvested at October 28, 2023 | $ |
Number of Units | Weighted Average Grant Date Fair Value | ||||||||||
Nonvested at January 28, 2023 | $ | ||||||||||
Granted1 | |||||||||||
Vested1 | ( | ||||||||||
Forfeited | |||||||||||
Nonvested at October 28, 2023 | $ |
Nine Months Ended | |||||||||||
Oct 28, 2023 | Oct 29, 2022 | ||||||||||
Beginning balance | $ | $ | |||||||||
Foreign currency translation adjustment | ( | ( | |||||||||
Purchase of redeemable noncontrolling interest | ( | ||||||||||
Ending balance | $ | $ |
SERP | Foreign Pension Plans | Total | |||||||||||||||
Three Months Ended Oct 28, 2023 | |||||||||||||||||
Service cost | $ | $ | $ | ||||||||||||||
Interest cost | |||||||||||||||||
Expected return on plan assets | ( | ( | |||||||||||||||
Net amortization of unrecognized prior service credit | ( | ( | |||||||||||||||
Net amortization of actuarial losses | |||||||||||||||||
Net periodic defined benefit pension cost | $ | $ | $ |
Nine Months Ended Oct 28, 2023 | |||||||||||||||||
Service cost | $ | $ | $ | ||||||||||||||
Interest cost | |||||||||||||||||
Expected return on plan assets | ( | ( | |||||||||||||||
Net amortization of unrecognized prior service credit | ( | ( | |||||||||||||||
Net amortization of actuarial losses | |||||||||||||||||
Net periodic defined benefit pension cost | $ | $ | $ | ||||||||||||||
Three Months Ended Oct 29, 2022 | |||||||||||||||||
Service cost | $ | $ | $ | ||||||||||||||
Interest cost | |||||||||||||||||
Expected return on plan assets | ( | ( | |||||||||||||||
Net amortization of unrecognized prior service credit | ( | ( | |||||||||||||||
Net amortization of actuarial losses | |||||||||||||||||
Net periodic defined benefit pension cost | $ | $ | $ |
Nine Months Ended Oct 29, 2022 | |||||||||||||||||
Service cost | $ | $ | $ | ||||||||||||||
Interest cost | |||||||||||||||||
Expected return on plan assets | ( | ( | |||||||||||||||
Net amortization of unrecognized prior service credit | ( | ( | |||||||||||||||
Net amortization of actuarial losses | |||||||||||||||||
Net periodic defined benefit pension cost | $ | $ | $ | ||||||||||||||
Fair Value Measurements | Fair Value Measurements | |||||||||||||||||||||||||||||||||||||||||||||||||
at Oct 28, 2023 | at Jan 28, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||
Recurring Fair Value Measures | Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||||||||||||||||||||||||
Assets: | ||||||||||||||||||||||||||||||||||||||||||||||||||
Foreign exchange currency contracts | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||
Interest rate swap | ||||||||||||||||||||||||||||||||||||||||||||||||||
Total | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||
Liabilities: | ||||||||||||||||||||||||||||||||||||||||||||||||||
Foreign exchange currency contracts | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||
Interest rate swap | ||||||||||||||||||||||||||||||||||||||||||||||||||
Deferred compensation obligations | ||||||||||||||||||||||||||||||||||||||||||||||||||
Total | $ | $ | $ | $ | $ | $ | $ | $ |
Fair Value at Oct 28, 2023 | Fair Value at Jan 28, 2023 | Derivative Balance Sheet Location | |||||||||||||||
ASSETS: | |||||||||||||||||
Derivatives designated as hedging instruments: | |||||||||||||||||
Cash flow hedges: | |||||||||||||||||
Foreign exchange currency contracts | $ | $ | Other current assets/Other assets | ||||||||||||||
Interest rate swap | Other assets | ||||||||||||||||
Total derivatives designated as hedging instruments | |||||||||||||||||
Derivatives not designated as hedging instruments: | |||||||||||||||||
Foreign exchange currency contracts | Other current assets | ||||||||||||||||
Total | $ | $ | |||||||||||||||
LIABILITIES: | |||||||||||||||||
Derivatives designated as hedging instruments: | |||||||||||||||||
Cash flow hedges: | |||||||||||||||||
Foreign exchange currency contracts | $ | $ | Accrued expenses/ Other long-term liabilities | ||||||||||||||
Total derivatives designated as hedging instruments | |||||||||||||||||
Derivatives not designated as hedging instruments: | |||||||||||||||||
Foreign exchange currency contracts | Accrued expenses | ||||||||||||||||
Total | $ | $ |
Gains Recognized in OCI | Location of Gain (Loss) Reclassified from Accumulated OCI into Earnings | Gains (Losses) Reclassified from Accumulated OCI into Earnings | |||||||||||||||||||||||||||
Oct 28, 2023 | Oct 29, 2022 | Oct 28, 2023 | Oct 29, 2022 | ||||||||||||||||||||||||||
Three Months Ended | |||||||||||||||||||||||||||||
Derivatives designated as cash flow hedges: | |||||||||||||||||||||||||||||
Foreign exchange currency contracts | $ | $ | Cost of product sales | $ | ( | $ | |||||||||||||||||||||||
Interest rate swap | Interest expense |
Nine Months Ended | |||||||||||||||||||||||||||||
Derivatives designated as cash flow hedges: | |||||||||||||||||||||||||||||
Foreign exchange currency contracts | $ | $ | Cost of product sales | $ | $ | ||||||||||||||||||||||||
Interest rate swap | Interest expense | ( |
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
Oct 28, 2023 | Oct 29, 2022 | Oct 28, 2023 | Oct 29, 2022 | ||||||||||||||||||||
Beginning balance (loss) gain | $ | ( | $ | $ | ( | $ | |||||||||||||||||
Net gains from changes in cash flow hedges | |||||||||||||||||||||||
Net gains reclassified into earnings | ( | ( | ( | ( | |||||||||||||||||||
Ending balance gain | $ | $ | $ | $ |
Location of Gains Recognized in Earnings | Gains Recognized in Earnings | ||||||||||||||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||||||
Oct 28, 2023 | Oct 29, 2022 | Oct 28, 2023 | Oct 29, 2022 | ||||||||||||||||||||||||||
Foreign exchange currency contracts | Other expense | $ | $ | $ | $ | ||||||||||||||||||||||||
Stores | Concessions | |||||||||||||||||||||||||||||||||||||
Region | Total | Directly-Operated | Partner Operated | Total | Directly-Operated | Partner Operated | ||||||||||||||||||||||||||||||||
United States | 234 | 234 | — | — | — | — | ||||||||||||||||||||||||||||||||
Canada | 57 | 57 | — | — | — | — | ||||||||||||||||||||||||||||||||
Central and South America | 104 | 73 | 31 | 29 | 29 | — | ||||||||||||||||||||||||||||||||
Total Americas | 395 | 364 | 31 | 29 | 29 | — | ||||||||||||||||||||||||||||||||
Europe and the Middle East | 767 | 545 | 222 | 58 | 58 | — | ||||||||||||||||||||||||||||||||
Asia and the Pacific | 397 | 106 | 291 | 241 | 133 | 108 | ||||||||||||||||||||||||||||||||
Total | 1,559 | 1,015 | 544 | 328 | 220 | 108 |
Three Months Ended | ||||||||||||||||||||||||||||||||
Oct 28, 2023 | Oct 29, 2022 | $ change | % change | |||||||||||||||||||||||||||||
Net revenue | $ | 651,170 | 100.0 | % | $ | 633,403 | 100.0 | % | $ | 17,767 | 2.8 | % | ||||||||||||||||||||
Cost of product sales | 360,000 | 55.3 | % | 364,032 | 57.5 | % | (4,032) | (1.1 | %) | |||||||||||||||||||||||
Gross profit | 291,170 | 44.7 | % | 269,371 | 42.5 | % | 21,799 | 8.1 | % | |||||||||||||||||||||||
Selling, general and administrative expenses | 234,123 | 36.0 | % | 212,927 | 33.6 | % | 21,196 | 10.0 | % | |||||||||||||||||||||||
Asset impairment charges | 1,737 | 0.3 | % | 1,789 | 0.3 | % | (52) | (2.9 | %) | |||||||||||||||||||||||
Net (gains) losses on lease modifications | 537 | 0.0 | % | (146) | (0.0 | %) | 683 | (467.8 | %) | |||||||||||||||||||||||
Earnings from operations | 54,773 | 8.4 | % | 54,801 | 8.6 | % | (28) | (0.1 | %) | |||||||||||||||||||||||
Interest expense, net | (2,742) | (0.4 | %) | (2,817) | (0.4 | %) | 75 | (2.7 | %) | |||||||||||||||||||||||
Other expense, net | (11,004) | (1.7 | %) | (15,211) | (2.4 | %) | 4,207 | (27.7 | %) | |||||||||||||||||||||||
Earnings before income tax expense (benefit) | 41,027 | 6.3 | % | 36,773 | 5.8 | % | 4,254 | 11.6 | % | |||||||||||||||||||||||
Income tax expense (benefit) | (18,277) | (2.8 | %) | 11,616 | 1.8 | % | (29,893) | (257.3 | %) | |||||||||||||||||||||||
Net earnings | 59,304 | 9.1 | % | 25,157 | 4.0 | % | 34,147 | 135.7 | % | |||||||||||||||||||||||
Net earnings attributable to noncontrolling interests | 3,603 | 0.5 | % | 3,322 | 0.6 | % | 281 | 8.5 | % | |||||||||||||||||||||||
Net earnings attributable to Guess?, Inc. | $ | 55,701 | 8.6 | % | $ | 21,835 | 3.4 | % | 33,866 | 155.1 | % | |||||||||||||||||||||
Net earnings per common share attributable to common stockholders: | ||||||||||||||||||||||||||||||||
Basic | $ | 1.04 | $ | 0.40 | $ | 0.64 | ||||||||||||||||||||||||||
Diluted | $ | 0.82 | $ | 0.34 | $ | 0.48 | ||||||||||||||||||||||||||
Effective income tax rate | (44.5 | %) | 31.6 | % |
Three Months Ended | |||||||||||||||||||||||
Oct 28, 2023 | Oct 29, 2022 | $ change | % change | ||||||||||||||||||||
Net revenue: | |||||||||||||||||||||||
Europe | $ | 344,472 | $ | 323,754 | $ | 20,718 | 6.4 | % | |||||||||||||||
Americas Retail | 153,872 | 165,603 | (11,731) | (7.1 | %) | ||||||||||||||||||
Americas Wholesale | 55,288 | 53,181 | 2,107 | 4.0 | % | ||||||||||||||||||
Asia | 64,498 | 63,118 | 1,380 | 2.2 | % | ||||||||||||||||||
Licensing | 33,040 | 27,747 | 5,293 | 19.1 | % | ||||||||||||||||||
Total net revenue | $ | 651,170 | $ | 633,403 | 17,767 | 2.8 | % | ||||||||||||||||
Earnings (loss) from operations: | |||||||||||||||||||||||
Europe | $ | 35,555 | $ | 36,222 | $ | (667) | (1.8 | %) | |||||||||||||||
Americas Retail | 8,086 | 11,365 | (3,279) | (28.9 | %) | ||||||||||||||||||
Americas Wholesale | 16,106 | 10,229 | 5,877 | 57.5 | % | ||||||||||||||||||
Asia | 636 | (5) | 641 | (12,820.0 | %) | ||||||||||||||||||
Licensing | 30,770 | 24,849 | 5,921 | 23.8 | % | ||||||||||||||||||
Total segment earnings from operations | 91,153 | 82,660 | 8,493 | 10.3 | % | ||||||||||||||||||
Corporate overhead | (34,106) | (26,216) | (7,890) | 30.1 | % | ||||||||||||||||||
Asset impairment charges | (1,737) | (1,789) | 52 | (2.9 | %) | ||||||||||||||||||
Net gains (losses) on lease modifications | (537) | 146 | (683) | (467.8 | %) | ||||||||||||||||||
Total earnings from operations | $ | 54,773 | $ | 54,801 | (28) | (0.1 | %) | ||||||||||||||||
Operating margins: | |||||||||||||||||||||||
Europe | 10.3 | % | 11.2 | % | |||||||||||||||||||
Americas Retail | 5.3 | % | 6.9 | % | |||||||||||||||||||
Americas Wholesale | 29.1 | % | 19.2 | % | |||||||||||||||||||
Asia | 1.0 | % | (0.0 | %) | |||||||||||||||||||
Licensing | 93.1 | % | 89.6 | % | |||||||||||||||||||
Total Company | 8.4 | % | 8.6 | % |
Nine Months Ended | ||||||||||||||||||||||||||||||||
Oct 28, 2023 | Oct 29, 2022 | $ change | % change | |||||||||||||||||||||||||||||
Net revenue | $ | 1,885,480 | 100.0 | % | $ | 1,869,566 | 100.0 | % | $ | 15,914 | 0.9 | % | ||||||||||||||||||||
Cost of product sales | 1,067,882 | 56.6 | % | 1,082,545 | 57.9 | % | (14,663) | (1.4 | %) | |||||||||||||||||||||||
Gross profit | 817,598 | 43.4 | % | 787,021 | 42.1 | % | 30,577 | 3.9 | % | |||||||||||||||||||||||
Selling, general and administrative expenses | 694,748 | 36.8 | % | 638,801 | 34.2 | % | 55,947 | 8.8 | % | |||||||||||||||||||||||
Asset impairment charges | 6,293 | 0.4 | % | 5,252 | 0.3 | % | 1,041 | 19.8 | % | |||||||||||||||||||||||
Net gains on lease modifications | (1,894) | (0.1 | %) | (1,654) | (0.1 | %) | (240) | 14.5 | % | |||||||||||||||||||||||
Earnings from operations | 118,451 | 6.3 | % | 144,622 | 7.7 | % | (26,171) | (18.1 | %) | |||||||||||||||||||||||
Interest expense, net | (7,326) | (0.4 | %) | (8,112) | (0.4 | %) | 786 | (9.7 | %) | |||||||||||||||||||||||
Loss on extinguishment of debt | (7,696) | (0.4 | %) | — | — | % | (7,696) | 100.0 | % | |||||||||||||||||||||||
Other expense, net | (18,227) | (1.0 | %) | (40,716) | (2.2 | %) | 22,489 | (55.2 | %) | |||||||||||||||||||||||
Earnings before income tax expense (benefit) | 85,202 | 4.5 | % | 95,794 | 5.1 | % | (10,592) | (11.1 | %) | |||||||||||||||||||||||
Income tax expense (benefit) | (5,370) | (0.3 | %) | 32,743 | 1.7 | % | (38,113) | (116.4 | %) | |||||||||||||||||||||||
Net earnings | 90,572 | 4.8 | % | 63,051 | 3.4 | % | 27,521 | 43.6 | % | |||||||||||||||||||||||
Net earnings attributable to noncontrolling interests | 7,643 | 0.4 | % | 9,284 | 0.5 | % | (1,641) | (17.7 | %) | |||||||||||||||||||||||
Net earnings attributable to Guess?. Inc. | $ | 82,929 | 4.4 | % | $ | 53,767 | 2.9 | % | 29,162 | 54.2 | % | |||||||||||||||||||||
Net earnings per common share attributable to common stockholders: | ||||||||||||||||||||||||||||||||
Basic | $ | 1.53 | $ | 0.93 | $ | 0.60 | ||||||||||||||||||||||||||
Diluted | $ | 1.30 | $ | 0.80 | $ | 0.50 | ||||||||||||||||||||||||||
Effective income tax rate | (6.3 | %) | 34.2 | % |
Nine Months Ended | |||||||||||||||||||||||
Oct 28, 2023 | Oct 29, 2022 | $ change | % change | ||||||||||||||||||||
Net revenue: | |||||||||||||||||||||||
Europe | $ | 990,981 | $ | 936,470 | $ | 54,511 | 5.8 | % | |||||||||||||||
Americas Retail | 464,984 | 513,743 | (48,759) | (9.5 | %) | ||||||||||||||||||
Americas Wholesale | 150,361 | 171,733 | (21,372) | (12.4 | %) | ||||||||||||||||||
Asia | 194,210 | 168,705 | 25,505 | 15.1 | % | ||||||||||||||||||
Licensing | 84,944 | 78,915 | 6,029 | 7.6 | % | ||||||||||||||||||
Total net revenue | $ | 1,885,480 | $ | 1,869,566 | 15,914 | 0.9 | % | ||||||||||||||||
Earnings (loss) from operations: | |||||||||||||||||||||||
Europe | $ | 84,344 | $ | 88,650 | $ | (4,306) | (4.9 | %) | |||||||||||||||
Americas Retail | 20,060 | 49,552 | (29,492) | (59.5 | %) | ||||||||||||||||||
Americas Wholesale | 40,264 | 39,068 | 1,196 | 3.1 | % | ||||||||||||||||||
Asia | 3,927 | (6,792) | 10,719 | (157.8 | %) | ||||||||||||||||||
Licensing | 79,419 | 70,499 | 8,920 | 12.7 | % | ||||||||||||||||||
Total segment earnings from operations | 228,014 | 240,977 | (12,963) | (5.4 | %) | ||||||||||||||||||
Corporate overhead | (105,164) | (92,757) | (12,407) | 13.4 | % | ||||||||||||||||||
Asset impairment charges | (6,293) | (5,252) | (1,041) | 19.8 | % | ||||||||||||||||||
Net gains on lease modifications | 1,894 | 1,654 | 240 | 14.5 | % | ||||||||||||||||||
Total earnings from operations | $ | 118,451 | $ | 144,622 | (26,171) | (18.1 | %) | ||||||||||||||||
Operating margins: | |||||||||||||||||||||||
Europe | 8.5 | % | 9.5 | % | |||||||||||||||||||
Americas Retail | 4.3 | % | 9.6 | % | |||||||||||||||||||
Americas Wholesale | 26.8 | % | 22.7 | % | |||||||||||||||||||
Asia | 2.0 | % | (4.0 | %) | |||||||||||||||||||
Licensing | 93.5 | % | 89.3 | % | |||||||||||||||||||
Total Company | 6.3 | % | 7.7 | % |
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
Oct 28, 2023 | Oct 29, 2022 | Oct 28, 2023 | Oct 29, 2022 | ||||||||||||||||||||
Reported GAAP net earnings attributable to Guess?, Inc. | $ | 55,701 | $ | 21,835 | $ | 82,929 | $ | 53,767 | |||||||||||||||
Certain professional service and legal fees and related (credits) costs1 | 849 | 1,508 | 1,961 | 7,185 | |||||||||||||||||||
Asset impairment charges2 | 1,737 | 1,789 | 6,293 | 5,252 | |||||||||||||||||||
Net (gains) losses on lease modifications3 | 537 | (146) | (1,894) | (1,654) | |||||||||||||||||||
Loss on extinguishment of debt4 | — | — | 7,696 | — | |||||||||||||||||||
Amortization of debt discount5 | 163 | — | 351 | — | |||||||||||||||||||
Discrete income tax adjustments6 | (31,166) | 208 | (30,669) | 624 | |||||||||||||||||||
Income tax impact from adjustments7 | (815) | (448) | (3,436) | (2,318) | |||||||||||||||||||
Total adjustments affecting net earnings attributable to Guess?, Inc. | (28,695) | 2,911 | (19,698) | 9,089 | |||||||||||||||||||
Adjusted net earnings attributable to Guess?, Inc. | $ | 27,006 | $ | 24,746 | $ | 63,231 | $ | 62,856 | |||||||||||||||
Net earnings per common share attributable to common stockholders: | |||||||||||||||||||||||
GAAP diluted | $ | 0.82 | $ | 0.34 | $ | 1.30 | $ | 0.80 | |||||||||||||||
Convertible notes if-converted method8 | 0.07 | 0.05 | 0.13 | 0.13 | |||||||||||||||||||
Certain professional service and legal fees and related (credits) costs1 | 0.01 | 0.02 | 0.02 | 0.08 | |||||||||||||||||||
Asset impairment charges2 | 0.02 | 0.02 | 0.07 | 0.06 | |||||||||||||||||||
Net (gains) losses on lease modifications3 | 0.01 | (0.00) | (0.02) | (0.02) | |||||||||||||||||||
Loss on extinguishment of debt4 | — | — | 0.09 | — | |||||||||||||||||||
Amortization of debt discount5 | 0.00 | — | 0.00 | — | |||||||||||||||||||
Discrete income tax adjustments6 | (0.44) | 0.01 | (0.45) | 0.01 | |||||||||||||||||||
Adjusted diluted8 | $ | 0.49 | $ | 0.44 | $ | 1.14 | $ | 1.06 | |||||||||||||||
Weighted average common shares outstanding attributable to common stockholders: | |||||||||||||||||||||||
GAAP diluted | 70,331 | 67,102 | 68,098 | 70,705 | |||||||||||||||||||
Adjusted diluted8 | 54,418 | 55,204 | 54,726 | 58,807 |
Period | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Maximum Number (or Approximate Dollar Value) of Shares That May Yet Be Purchased Under the Plans or Programs | |||||||||||||||||||
July 30, 2023 to August 26, 2023 | |||||||||||||||||||||||
Repurchase program1 | — | — | — | $ | 19,748,066 | ||||||||||||||||||
Employee transactions2 | — | — | — | ||||||||||||||||||||
August 27, 2023 to September 30, 2023 | |||||||||||||||||||||||
Repurchase program1 | — | — | — | $ | 19,748,066 | ||||||||||||||||||
Employee transactions2 | 722 | $ | 23.85 | — | |||||||||||||||||||
October 1, 2023 to October 28, 2023 | |||||||||||||||||||||||
Repurchase program1 | — | — | — | $ | 19,748,066 | ||||||||||||||||||
Employee transactions2 | — | — | — | ||||||||||||||||||||
Total | |||||||||||||||||||||||
Repurchase program1 | — | — | — | ||||||||||||||||||||
Employee transactions2 | 722 | $ | 23.85 | — |
Exhibit Number | Description | |||||||
††32.1. | ||||||||
††32.2. | ||||||||
†101.INS | XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. | |||||||
†101.SCH | XBRL Taxonomy Extension Schema Document | |||||||
†101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document | |||||||
†101.DEF | XBRL Taxonomy Extension Definition Linkbase Document | |||||||
†101.LAB | XBRL Taxonomy Extension Label Linkbase Document | |||||||
†101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document | |||||||
†104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |
† | Filed herewith | |||||||
†† | Furnished herewith |
Guess?, Inc. | |||||||||||
Date: | December 1, 2023 | By: | /s/ CARLOS ALBERINI | ||||||||
Carlos Alberini | |||||||||||
Chief Executive Officer | |||||||||||
Date: | December 1, 2023 | By: | /s/ MARKUS NEUBRAND | ||||||||
Markus Neubrand | |||||||||||
Chief Financial Officer | |||||||||||
(Principal Financial Officer) |
Date: | December 1, 2023 | By: | /s/ CARLOS ALBERINI | ||||||||
Carlos Alberini Chief Executive Officer |
Date: | December 1, 2023 | By: | /s/ MARKUS NEUBRAND | ||||||||
Markus Neubrand Chief Financial Officer |
Date: | December 1, 2023 | By: | /s/ CARLOS ALBERINI | ||||||||
Carlos Alberini Chief Executive Officer |
Date: | December 1, 2023 | By: | /s/ MARKUS NEUBRAND | ||||||||
Markus Neubrand Chief Financial Officer |
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares |
Oct. 28, 2023 |
Jan. 28, 2023 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, authorized (in shares) | 10,000,000 | 10,000,000 |
Preferred stock, issued (in shares) | 0 | 0 |
Preferred stock, outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, authorized (in shares) | 150,000,000 | 150,000,000 |
Common stock, issued (in shares) | 142,771,253 | 142,771,253 |
Common stock, outstanding (in shares) | 53,700,273 | 54,609,786 |
Treasury stock (in shares) | 89,070,980 | 88,161,467 |
CONDENSED CONSOLIDATED STATEMENTS OF INCOME - USD ($) shares in Thousands, $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Oct. 28, 2023 |
Oct. 29, 2022 |
Oct. 28, 2023 |
Oct. 29, 2022 |
|
Net revenue | $ 651,170 | $ 633,403 | $ 1,885,480 | $ 1,869,566 |
Cost of product sales | 360,000 | 364,032 | 1,067,882 | 1,082,545 |
Gross profit | 291,170 | 269,371 | 817,598 | 787,021 |
Selling, general and administrative expenses | 234,123 | 212,927 | 694,748 | 638,801 |
Asset impairment charges | 1,737 | 1,789 | 6,293 | 5,252 |
Net (gains) losses on lease modifications | 537 | (146) | (1,894) | (1,654) |
Earnings from operations | 54,773 | 54,801 | 118,451 | 144,622 |
Other income (expense): | ||||
Interest expense | (5,923) | (3,453) | (15,883) | (9,741) |
Interest income | 3,181 | 636 | 8,557 | 1,629 |
Loss on extinguishment of debt | 0 | 0 | (7,696) | 0 |
Other, net | (11,004) | (15,211) | (18,227) | (40,716) |
Total other expense | (13,746) | (18,028) | (33,249) | (48,828) |
Earnings before income tax expense (benefit) | 41,027 | 36,773 | 85,202 | 95,794 |
Income tax expense (benefit) | (18,277) | 11,616 | (5,370) | 32,743 |
Net earnings | 59,304 | 25,157 | 90,572 | 63,051 |
Net earnings attributable to Guess?, Inc. | 3,603 | 3,322 | 7,643 | 9,284 |
earnings | $ 55,701 | $ 21,835 | $ 82,929 | $ 53,767 |
Net earnings per common share attributable to common stockholders: | ||||
Basic (in dollars per share) | $ 1.04 | $ 0.40 | $ 1.53 | $ 0.93 |
Diluted (in dollars per share) | $ 0.82 | $ 0.34 | $ 1.30 | $ 0.80 |
Weighted average common shares outstanding attributable to common stockholders: | ||||
Basic (in shares) | 53,052 | 53,894 | 53,450 | 57,300 |
Diluted (in shares) | 70,331 | 67,102 | 68,098 | 70,705 |
Product sales | ||||
Net revenue | $ 618,130 | $ 605,656 | $ 1,800,536 | $ 1,790,651 |
Net royalties | ||||
Net revenue | $ 33,040 | $ 27,747 | $ 84,944 | $ 78,915 |
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Parenthetical) - USD ($) $ in Thousands |
3 Months Ended | |||||
---|---|---|---|---|---|---|
Oct. 28, 2023 |
Jul. 29, 2023 |
Apr. 29, 2023 |
Oct. 29, 2022 |
Jul. 30, 2022 |
Apr. 30, 2022 |
|
Statement of Stockholders' Equity [Abstract] | ||||||
Other comprehensive income (loss), income tax (expense) benefit | $ (747) | $ (270) | $ 811 | $ (414) | $ (69) | $ (889) |
Basis of Presentation |
9 Months Ended |
---|---|
Oct. 28, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | 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 women, men 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. Reclassifications The Company has made certain reclassifications to prior period amounts to conform to the current period presentation within the accompanying condensed consolidated financial statements and notes to the condensed consolidated financial statements. 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 October 28, 2023 and January 28, 2023, and the condensed consolidated statements of income, comprehensive income, cash flows and stockholders’ equity for the three and nine months ended October 28, 2023 and October 29, 2022. 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 United States 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 and nine months ended October 28, 2023 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 28, 2023. Fiscal Periods The Company operates on a 52/53-week fiscal year calendar, which ends on the Saturday nearest to January 31 of each year. The three and nine months ended October 28, 2023 had the same number of days as the three and nine months ended October 29, 2022. All references herein to “fiscal 2023” and “fiscal 2022” represent the results of the 52-week fiscal years ended January 28, 2023 and January 29, 2022, respectively. All references herein to “fiscal 2024” represent the 53-week fiscal year ending February 3, 2024, with the extra week occurring in the fourth quarter of the year. Business Update, Market Trends and Uncertainties Macroeconomic conditions, including inflation, higher interest rates, foreign exchange rate fluctuations, declines in consumer spending, the impact of the war in Ukraine and the lingering effects of public health crises continue to negatively impact the Company’s businesses. 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 residual effect of supply chain disruptions. The duration and scope of these conditions cannot be predicted, and therefore, any anticipated negative financial impact to the Company’s operating results cannot be reasonably estimated. 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 2023 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 income taxes, unrecognized income 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. These estimates and assumptions may change as a result of the impact of global economic conditions, such as the uncertainty regarding the impact of public health crises, the ongoing Russia-Ukraine conflict, global inflationary pressures, volatility in foreign exchange rates and declining consumer spending. Actual results could differ from those estimates. Revisions in estimates could materially impact the results of operations and financial position. The Company’s operations could be impacted in ways the Company is not able to predict today. 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 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 October 28, 2023, the Company had $4.8 million and $11.8 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 $4.8 million and $15.2 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 28, 2023. During the three and nine months ended October 28, 2023, the Company recognized $3.6 million and $10.7 million in net royalties, respectively, related to the amortization of deferred royalties. During the three and nine months ended October 29, 2022, the Company recognized $3.3 million and $10.0 million in net royalties, respectively, related to the amortization of deferred royalties. 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 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 to make required payments and records a provision for doubtful accounts based on these evaluations. As of October 28, 2023, approximately 48% of the Company’s total net trade accounts receivable and 62% 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 Issued Accounting Guidance Reference Rate Reform The Financial Accounting Standards Board (“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 the London Interbank Offered Rate (“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 modified 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 (as defined in Note 9), credit facilities and interest rate swap agreements were impacted by this guidance. In May 2023, the Company amended the terms of the Mortgage Debt for the interest rate to be based on Secured Overnight Financing Rate (“SOFR”) effective May 1, 2023. The Company also amended its existing interest rate swap agreement, resulting in a swap fixed rate of approximately 3.14%. As of October 28, 2023, the Company does not have any financial instruments with attributes directly or indirectly influenced by LIBOR.
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Lease Accounting |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Oct. 28, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Lease Accounting | 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 October 2028. 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 25%. In addition to the amounts as disclosed below, the Company has estimated additional operating lease commitments of approximately $19.3 million for leases where the Company has not yet taken possession of the underlying asset as of October 28, 2023. 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 October 28, 2023. The components of leases are (in thousands):
The components of lease costs are (in thousands):
______________________________________________________________________ Notes: 1During the three and nine months ended October 28, 2023 and October 29, 2022, net (gains) losses on lease modifications related primarily to the early termination of certain lease agreements. Operating lease costs for these locations prior to the early termination were included in cost of product sales. 2During the three and nine months ended October 28, 2023, variable lease costs included certain rent concessions of approximately $0.4 million and $1.4 million, respectively, received by the Company, primarily in Europe. During the three and nine months ended October 29, 2022, variable lease costs included certain rent concessions of approximately $1.1 million and $4.6 million, respectively, received by the Company, primarily in Europe, related to the COVID-19 pandemic. Maturities of the Company’s operating and finance lease liabilities as of October 28, 2023 are (in thousands):
Other supplemental information is (in thousands):
Impairment During the three and nine months ended October 28, 2023 and October 29, 2022, there were immaterial ROU asset impairment charges. Asset impairment charges are generally 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.
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Lease Accounting | 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 October 2028. 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 25%. In addition to the amounts as disclosed below, the Company has estimated additional operating lease commitments of approximately $19.3 million for leases where the Company has not yet taken possession of the underlying asset as of October 28, 2023. 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 October 28, 2023. The components of leases are (in thousands):
The components of lease costs are (in thousands):
______________________________________________________________________ Notes: 1During the three and nine months ended October 28, 2023 and October 29, 2022, net (gains) losses on lease modifications related primarily to the early termination of certain lease agreements. Operating lease costs for these locations prior to the early termination were included in cost of product sales. 2During the three and nine months ended October 28, 2023, variable lease costs included certain rent concessions of approximately $0.4 million and $1.4 million, respectively, received by the Company, primarily in Europe. During the three and nine months ended October 29, 2022, variable lease costs included certain rent concessions of approximately $1.1 million and $4.6 million, respectively, received by the Company, primarily in Europe, related to the COVID-19 pandemic. Maturities of the Company’s operating and finance lease liabilities as of October 28, 2023 are (in thousands):
Other supplemental information is (in thousands):
Impairment During the three and nine months ended October 28, 2023 and October 29, 2022, there were immaterial ROU asset impairment charges. Asset impairment charges are generally 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.
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Earnings per Share |
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Earnings per Share | Earnings per Share The computation of basic and diluted net earnings per common share attributable to common stockholders is (in thousands, except per share data):
During the three months ended October 28, 2023 and October 29, 2022, equity awards granted for 159,950 and 1,319,998 shares, respectively, of the Company’s common stock and for the nine months ended October 28, 2023 and October 29, 2022, equity awards granted for 1,011,089 and 1,261,633 shares, respectively, of the Company’s common stock were outstanding but were excluded from the computation of diluted weighted average common shares and common equivalent shares outstanding because the assumed proceeds resulted in these awards being antidilutive. For the three and nine months ended October 28, 2023, the Company excluded 640,042 nonvested stock units which were subject to the achievement of performance-based or 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 October 28, 2023. For the three and nine months ended October 29, 2022, there were 594,985 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 not achieved as of October 29, 2022. Warrants related to the 2.00% convertible senior notes due April 2024 (the “2024 Notes”) to purchase approximately 4.6 million and 11.6 million shares of the Company’s common shares at an initial strike price of $46.88 per share were outstanding as of October 28, 2023 and October 29, 2022, respectively. Warrants related to the 3.75% convertible senior notes due April 2028 (the “2028 Notes”, and together with the 2024 Notes, the “Notes”) to purchase approximately 11.1 million shares of the Company’s common shares at an initial strike price of $41.80 per share were outstanding as of October 28, 2023. These warrants were excluded from the computation of diluted net 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 and nine months ended October 28, 2023 and October 29, 2022. See Note 10 for more information regarding the Notes.
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Stockholders' Equity |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stockholders' Equity | 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. During March 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 in exchange for approximately 8.5 million shares of its common stock in the first half of fiscal 2023. During the three months ended October 28, 2023, there were no share repurchases. During the nine months ended October 28, 2023, the Company repurchased 2.2 million shares under its 2021 Share Repurchase Program at an aggregate cost of $42.8 million, including excise tax. These shares were repurchased through broker assisted market transactions in connection with the exchange and subscription offering related to the 2024 Notes and the 2028 Notes. During the three months ended October 29, 2022, there were no share repurchases. During the nine months ended October 29, 2022, the Company repurchased 9.0 million shares of the Company’s common stock under its 2021 Share Repurchase Program at an aggregate cost of $186.7 million, which is inclusive of the shares repurchased under the 2022 ASR Contract. As of October 28, 2023, the Company had remaining authority under the 2021 Share Repurchase Program to purchase $19.7 million of its common stock. Dividends The following sets forth the cash dividend declared per share:
The indenture governing the 2024 Notes requires an adjustment to the conversion rate and the conversion price of the 2024 Notes for quarterly dividends exceeding $0.1125 per share. The indenture governing the 2028 Notes requires an adjustment to the conversion rate and the conversion price of the 2028 Notes for quarterly dividends exceeding $0.225 per share. On May 24, 2023, the Company announced an increase to its regular quarterly cash dividend from $0.225 to $0.30 per share on the Company’s common stock. In accordance with the terms of the indentures governing the respective Notes, the Company has adjusted the conversion rates and the conversion prices of the 2024 Notes and the 2028 Notes for quarterly dividends exceeding $0.1125 per share and $0.225 per share, respectively. Corresponding adjustments have been made to the strike prices with respect to the convertible note hedges and the warrants entered into by the Company in connection with the offerings of the corresponding Notes, each of which was decreased in accordance with the terms of the applicable convertible note hedge confirmations and warrant confirmations. Refer to Note 10 for more information. 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):
Details on reclassifications out of accumulated other comprehensive income (loss) to net earnings are (in thousands):
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Accounts Receivable |
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Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounts Receivable | Accounts Receivable Accounts receivable is summarized as follows (in thousands):
Accounts receivable consists of trade receivables relating primarily to the Company’s wholesale business in Europe and, to a lesser extent, to its wholesale businesses in the Americas and Asia, royalty receivables relating to its licensing operations, credit card and retail concession receivables related to its retail businesses and certain other receivables. Other receivables generally relate to amounts due to the Company that result from activities that are not related to the direct sale of the Company’s products or collection of royalties.
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Inventories |
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Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventories | Inventories Inventories consist of the following (in thousands):
The above balances include an allowance to write down inventories to the lower of cost or net realizable value of $25.0 million and $30.3 million as of October 28, 2023 and January 28, 2023, respectively.
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Income Taxes |
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Oct. 28, 2023 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes Effective Income Tax Rate Income tax expense for the interim periods is computed using the income tax rate estimated to be applicable for the full fiscal year, adjusted for discrete items. The Company’s effective income tax rate was a benefit of 6.3% for the nine months ended October 28, 2023 compared to an expense of 34.2% for the nine months ended October 29, 2022. The change in the effective income tax rate was primarily due to a discrete income tax benefit recognized during the third quarter of fiscal 2024 as a result of the consolidation of certain business functions into Switzerland as described below and, to a lesser extent, the lower losses incurred in certain tax jurisdictions during the nine months ended October 28, 2023 compared to the same prior-year period. Intra-Entity Transactions During the third quarter of fiscal 2022, the Company completed an intra-entity transfer of intellectual property rights from certain U.S. entities to a wholly-owned Swiss subsidiary, more closely aligning the Company’s intellectual property rights with its business operations. This transaction resulted in a taxable gain in the U.S. The U.S. taxable gain generated by this intercompany transfer of intellectual property was primarily offset by the recognition of a deferred income tax asset in the Swiss subsidiary. During the third quarter of fiscal 2024, the Company recognized a one-time net tax benefit of €34.8 million ($36.8 million) related to the consolidation of certain business functions into Switzerland that was approved by the Switzerland tax authority during the third quarter of fiscal 2024. Changes in Income Tax Law During calendar 2019, Switzerland implemented income tax reform (“Swiss tax reform”) that was effective as of January 1, 2020. The Swiss tax reform eliminated certain preferential income tax treatments and included transitional relief measures which provided for future income tax deductions. During the fourth quarter of fiscal 2020, the Company recognized a one-time income tax benefit of approximately $8.1 million related primarily to the recognition of a deferred income tax asset associated with the estimated value of an income tax basis step-up of the Company’s Switzerland subsidiary’s assets. During the fourth quarter of fiscal 2023, the Company recorded a $2.3 million reserve for uncertain income tax positions related to such deferred income tax asset. During the third quarter of fiscal 2024, based on recent developments among European Union tax authorities, the Company wrote off the $8.1 million tax benefit related to the value of the income tax basis step-up of the Company’s Switzerland subsidiary’s assets, resulting in a net income tax expense of $5.8 million during the quarter. Unrecognized Income Tax Benefit The Company and its subsidiaries are subject to U.S. federal and foreign income tax, as well as income tax of multiple state and foreign local jurisdictions. From time-to-time, the Company is subject to routine income and other audits on various income tax matters around the world in the ordinary course of business. As of October 28, 2023, no major income tax or other tax audits were ongoing. As of October 28, 2023 and January 28, 2023, the Company had $64.3 million and $64.4 million, respectively, of aggregate accruals for uncertain income tax positions, including penalties and interest. This includes an accrual of $19.9 million for the estimated transition tax (excluding interest) related to the 2017 Tax Cuts and Jobs Act (the “Tax Reform”) and $20.6 million for the intra-entity transfer of intellectual property rights from certain U.S. entities to a wholly-owned Swiss subsidiary, substantially offset by the related deferred income tax benefit recorded by the Swiss subsidiary. The Company reviews and updates the estimates used in the accrual for uncertain income tax positions, as appropriate, as more definitive information or interpretations become available from income taxing authorities, and on the completion of income tax audits, the receipt of assessments, expiration of statutes of limitations, or occurrence of other events. During the second quarter of fiscal 2021, the Company became aware of a foreign withholding income tax regulation that could be interpreted to apply to certain of its previous transactions. The Company currently does not expect its exposure, if any, will have a material impact on its consolidated financial position, results of operations or cash flows. Indefinite Reinvestment Assertion The Company has historically considered the undistributed earnings of its foreign subsidiaries to be indefinitely reinvested. As a result of the Tax Reform, the Company had a substantial amount of previously taxed earnings that could be distributed to the U.S. without additional U.S. taxation. As of October 28, 2023, the Company determined that approximately $67.1 million of such foreign earnings are not indefinitely reinvested. The incremental tax cost to repatriate these earnings to the U.S. is immaterial. The Company intends to indefinitely reinvest the remaining earnings from the Company’s foreign subsidiaries for which a deferred income tax liability has not already been recorded. The Company continues to evaluate its plans for reinvestment or repatriation of unremitted foreign earnings and regularly reviews its cash positions and determination of indefinite reinvestment of foreign earnings. If the Company determines that all or a portion of such foreign earnings are no longer indefinitely reinvested, the Company may be subject to additional foreign withholding taxes and U.S. state income taxes, beyond the one-time transition tax.
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Segment Information |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Information | Segment Information The Company’s businesses are grouped into five reportable segments for management and internal financial reporting purposes: Europe, Americas Retail, Americas Wholesale, Asia and Licensing. The Company’s Europe, Americas Retail, Americas Wholesale and Licensing reportable segments are the same as their respective operating segments. Certain components of the Company’s Asia operating segment are separate operating segments based on region, which have been aggregated into the Asia reportable segment for disclosure purposes. Management evaluates segment performance based primarily on revenues and earnings (loss) from operations before corporate performance-based compensation costs, asset impairment charges, net gains (losses) on lease modifications, restructuring charges and certain non-recurring credits (charges), if any. The Company believes this segment reporting reflects how its business segments are managed and how each segment’s performance is evaluated by the Company’s chief operating decision maker to assess performance and make resource allocation decisions. Net revenue and earnings (loss) from operations are summarized (in thousands):
Notes: 1During the three and nine months ended October 28, 2023 and October 29, 2022, the Company recognized asset impairment charges related primarily to impairment of property and equipment and operating right-of-use assets related to certain retail locations resulting from under-performance and expected store closures. Refer to Note 2 and Note 15 for more information regarding these asset impairment charges. 2During the three and nine months ended October 28, 2023 and October 29, 2022, the Company recorded net gains (losses) on lease modifications related primarily to the early termination of certain lease agreements. The below presents information regarding geographic areas in which the Company operated. Net revenue is classified primarily based on the country where the Company’s customer is located (in thousands):
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Borrowings and Finance Lease Obligations |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Borrowings and Finance Lease Obligations | Borrowings and Finance Lease Obligations Borrowings and finance lease obligations are summarized (in thousands):
Term Loans The Company entered into term loans with certain banks primarily in Europe during fiscal 2021. These loans are primarily unsecured, have remaining terms of approximately two years and incur interest at annual rates ranging between 1.5% to 6.4%. As of October 28, 2023 and January 28, 2023, the Company had outstanding borrowings of $13.9 million and $25.5 million, respectively, under these borrowing arrangements. Finance Lease Obligations The Company leases its European distribution center in the Netherlands under a finance lease which primarily provides for monthly minimum lease payments through May 2027 with an effective interest rate of approximately 6%. The Company has also entered into finance leases for equipment used in its European distribution centers. These finance lease obligations totaled $11.7 million and $15.0 million as of October 28, 2023 and January 28, 2023, respectively. The Company also has smaller finance leases related primarily to computer hardware and software. As of October 28, 2023 and January 28, 2023, these finance lease obligations totaled $6.1 million and $4.9 million, respectively. Mortgage Debt During fiscal 2017, the Company entered into a ten-year $21.5 million real estate secured loan (the “Mortgage Debt”) which is secured by the Company’s U.S. distribution center based in Louisville, Kentucky. The Mortgage Debt requires the Company to comply with a fixed charge coverage ratio on a trailing four-quarter basis if consolidated cash, cash equivalents, short-term investment balances and availability under borrowing arrangements fall below certain levels. In addition, the Mortgage Debt contains customary covenants, including covenants that limit or restrict the Company’s ability to incur liens on the mortgaged property and enter into certain contractual obligations. Upon the occurrence of an event of default under the Mortgage Debt, the lender may terminate the Mortgage Debt and declare all amounts outstanding to be immediately due and payable. The Mortgage Debt specifies a number of events of default (some of which are subject to applicable grace or cure periods), including, among other things, non-payment defaults, covenant defaults, cross-defaults to other material indebtedness, bankruptcy and insolvency defaults and material judgment defaults. Interest on the Mortgage Debt was payable at a variable rate based on LIBOR. In May 2023, the Company amended the terms of the Mortgage Debt for the interest rate to be based on SOFR, effective May 1, 2023. The Company also amended its existing interest rate swap agreement, resulting in a swap fixed rate of approximately 3.14%. Credit Facilities Long-Term 2023 Credit Facility During fiscal 2023, the Company amended and restated its senior secured asset-based revolving credit facility with Bank of America, N.A. and other lenders party thereto to extend the maturity date of the credit facility to December 20, 2027, among other changes (as amended, the “2023 Credit Facility”). In addition, the Company entered into an amendment agreement to permit, among other things, the exchange and subscription offering on April 12, 2023. Pursuant to the amendment, the 2023 Credit Facility is subject to earlier maturity as of 60 days before the maturity date of the Company’s 2024 Notes if satisfactory payment conditions have not been met during such 60 days period. The amendment retains the 2023 Credit Facility’s existing provisions for earlier maturity as of 60 days before the maturity date of the Company’s 2024 Notes if (1) such notes have not been refinanced or converted into equity by that date or (2) arrangements satisfactory to the Lenders for the refinancing or conversion of the 2024 Notes have not been made. The 2023 Credit Facility provides for a borrowing capacity in an amount up to $150 million, including a Canadian sub-facility up to $20 million, subject to a borrowing base. Based on applicable accounts receivable, inventory and eligible cash, subject to certain allowances, the Company could have borrowed up to $137.4 million under the 2023 Credit Facility as of October 28, 2023. The 2023 Credit Facility has an option to expand the borrowing capacity by up to $150 million subject to certain terms and conditions, including the willingness of existing or new lenders to assume such increased amount. The 2023 Credit Facility is available for direct borrowings and the issuance of letters of credit, subject to certain letters of credit sublimits, and may be used for repayment of debt, working capital and other general corporate purposes. As of both October 28, 2023 and January 28, 2023, the Company had $8.1 million in outstanding standby letters of credit, no outstanding documentary letters of credit and no outstanding borrowings under the 2023 Credit Facility. Direct borrowings under the 2023 Credit Facility made by the Company and its domestic subsidiaries bear interest at the U.S. base rate plus an applicable margin (varying from 0.25% to 0.75%) or at Term SOFR plus a spread adjustment plus an applicable margin (varying from 1.25% to 1.75%), provided that Term SOFR may not be less than zero. The U.S. base rate is based on the greater of (i) the U.S. prime rate, (ii) the federal funds rate, plus 0.5%, and (iii) Term SOFR plus a spread adjustment for a 30-day interest period, plus 1.0%, provided that the U.S. base rate may not be less than zero. Direct borrowings under the 2023 Credit Facility made by the Company’s Canadian subsidiaries bear interest at the Canadian prime rate plus an applicable margin (varying from 0.25% to 0.75%) or at the Canadian BA rate plus an applicable margin (varying from 1.25% to 1.75%), provided that the Canadian BA rate may not be less than zero. The Canadian rate is based on the greater of (i) the Canadian prime rate and (ii) the Canadian BA rate for a one-month interest period, plus 1.0%, provided that the Canadian prime rate may not be less than zero. The applicable margins are calculated quarterly and vary based on the average daily availability of the aggregate borrowing base. The Company is also obligated to pay certain commitment, letter of credit and other fees customary for a credit facility of this size and type. The 2023 Credit Facility contains various annual sustainability key performance targets, the achievement of which would result in an adjustment to the interest margin ranging from plus 5 basis points to minus 5 basis points per year and the commitment fee ranging from plus 1 basis point to minus 1 basis point per year. The 2023 Credit Facility requires the Company to comply with a fixed charge coverage ratio on a trailing four-quarter basis if a default or an event of default occurs under the 2023 Credit Facility or availability under the 2023 Credit Facility falls below the greater of 10% of the aggregate borrowing base or $12.5 million. In addition, the 2023 Credit Facility contains customary covenants, including covenants that limit or restrict the Company and certain of its subsidiaries’ ability to: incur liens, incur indebtedness, make investments, dispose of assets, make certain restricted payments, merge or consolidate and enter into certain transactions with affiliates. Upon the occurrence of an event of default under the 2023 Credit Facility, the lenders may cease making loans, terminate the 2023 Credit Facility and declare all amounts outstanding to be immediately due and payable. The 2023 Credit Facility specifies a number of events of default (some of which are subject to applicable grace or cure periods), including, among other things, non-payment defaults, covenant defaults, cross-defaults to other material indebtedness, bankruptcy and insolvency defaults, and material judgment defaults. The 2023 Credit Facility allows for both secured and unsecured borrowings outside of the 2023 Credit Facility up to specified amounts. Long-Term 2022 Credit Facility During fiscal 2023, Guess Europe Sagl, a wholly owned subsidiary of the Company, entered into a credit agreement (the “Credit Agreement”) for a €250 million revolving credit facility (the “2022 Credit Facility”) with an initial five-year term. The Company has an option to extend the maturity date by up to two years and an option to expand the 2022 Credit Facility by up to €100 million, subject to certain conditions. Borrowings under the 2022 Credit Facility bear interest based on the daily balance outstanding at the Euro Interbank Offered Rate (EURIBOR) plus an applicable margin (varying from 0.85% to 1.20%), provided that EURIBOR may not be less than zero. The 2022 Credit Facility carries a commitment fee equal to the available but unused borrowing capacity multiplied by 35% of an applicable margin (varying from 0.85% to 1.20%). The Company is also required to pay a utilization fee on the total amount of the loans outstanding under the 2022 Credit Facility at rates varying from 0.10% to 0.20%, depending on the balance outstanding. The applicable margins are calculated quarterly and vary based on the leverage ratio of the guarantor and its subsidiaries as set forth in the Credit Agreement. The Credit Agreement contains various annual sustainability key performance targets, the achievement of which would result in an adjustment to the interest margin ranging from a plus 5 basis points to a minus 5 basis points per year. The Credit Agreement includes a financial covenant requiring a maximum leverage ratio of the guarantor and its subsidiaries. In addition, the Credit Agreement includes customary representations and warranties, affirmative and negative covenants and events of default. As of October 28, 2023, the Company had $100.4 million of outstanding borrowings and $163.8 million available for future borrowings under the 2022 Credit Facility. As of January 28, 2023, the Company had $54.4 million of outstanding borrowings and $217.4 million available for future borrowings under the 2022 Credit Facility. Other Credit Facilities The Company, through its Chinese subsidiary, maintains a short-term uncommitted bank borrowing agreement that provides for a borrowing capacity up to $30 million, primarily for working capital purposes. The Company had $17.1 million and $14.0 million in outstanding borrowings under this agreement as of October 28, 2023 and January 28, 2023, respectively. The Company, through its Japanese subsidiary, maintains a short-term uncommitted bank borrowing agreement that provides for a borrowing capacity up to ¥800 million ($5.3 million), primarily for working capital purposes. The Company had $4.3 million and $1.9 million in outstanding borrowings under this agreement as of October 28, 2023 and January 28, 2023, respectively. From time-to-time, the Company will obtain other financing in foreign countries for working capital to finance its local operations. Convertible Senior Notes and Related TransactionsExchange and Subscription Agreements In April 2023, the Company issued $275 million principal amount of the 2028 Notes in a private placement pursuant to separate, privately negotiated exchange and subscription agreements (the “Exchange and Subscription Agreements”) with a limited number of holders of its 2024 Notes and certain other investors, in each case pursuant to exemptions from registration under the Securities Act of 1933, as amended. Pursuant to the Exchange and Subscription Agreements, the Company exchanged approximately $184.9 million in aggregate principal amount of its 2024 Notes for $163.0 million in aggregate principal amount of new 2028 Notes and an aggregate of approximately $33.3 million in cash, representing accrued and unpaid interest and other consideration on the 2024 Notes, and issued $112.0 million aggregate principal amount of 2028 Notes for cash at par. Immediately following the closing of the aforementioned transactions, $115.1 million in aggregate principal amount of the 2024 Notes remained outstanding. In addition, the Company concurrently repurchased $42.8 million, including excise tax, of its common stock through broker-assisted market transactions, pursuant to the Company’s 2021 Share Repurchase Program. The Company evaluated all exchanges and determined approximately 74% of the exchanged notes were accounted for as extinguishment of debt and approximately 26% were accounted for as modification of debt. As a result of these transactions, the Company recognized a $7.7 million loss on extinguishment of debt during the first quarter of fiscal 2024. 3.75% Convertible Senior Notes due 2028 In connection with the issuance of the 2028 Notes, the Company entered into an indenture (the “2028 Indenture”) with respect to the 2028 Notes with U.S. Bank Trust Company, N.A., as trustee (the “2028 Trustee”). The 2028 Notes are senior unsecured obligations of the Company and bear interest at an annual rate of 3.75% payable semi-annually in arrears on April 15 and October 15 of each year, beginning on October 15, 2023. The 2028 Notes will mature on April 15, 2028, unless earlier repurchased or converted in accordance with their terms. The 2028 Notes are convertible in certain circumstances into cash, shares of the Company’s common stock, or a combination of cash and shares of the Company’s common stock, at the Company’s election, at an initial conversion rate of 40.4858 shares of common stock per $1,000 principal amount of 2028 Notes, which is equivalent to an initial conversion price of approximately $24.70 per share, subject to adjustment upon the occurrence of certain events. In accordance with the terms of the 2028 Indenture, the Company has adjusted the conversion rate and the conversion price of the 2028 Notes for quarterly dividends exceeding $0.225 per share (the conversion price is currently approximately $24.53 per share). Prior to November 15, 2027, the 2028 Notes are convertible only upon the occurrence of certain events and during certain periods, and thereafter, at any time until the close of business on the second scheduled trading day immediately preceding the maturity date of the 2028 Notes. Following certain corporate events described in the 2028 Indenture that occur prior to the maturity date, the conversion rate will be increased for a holder who elects to convert its 2028 Notes in connection with such corporate event in certain circumstances. The 2028 Notes are not redeemable prior to maturity, and no sinking fund is provided for the 2028 Notes. As of October 28, 2023, none of the conditions allowing holders of the 2028 Notes to convert had been met. The Company expects to settle the principal amount of the 2028 Notes in fiscal 2029 in cash and any excess in shares. The Company incurred approximately $5.9 million of debt issuance costs related to the 2028 Notes including third-party offering costs during the first quarter of fiscal 2024. Debt issuance costs were recorded as a contra-liability (other than $0.5 million expensed related to 2024 Notes that were subject to modification accounting) and are presented net against the 2028 Notes balance on the Company’s condensed consolidated balance sheets. These costs are being amortized to interest expense over the term of the 2028 Notes. 2.00% Convertible Senior Notes due 2024 In April 2019, the Company issued $300 million principal amount of the 2024 Notes in a private offering. In connection with the issuance of the 2024 Notes, the Company entered into an indenture (the “2024 Indenture”) with respect to the Notes with U.S. Bank N.A., as trustee (the “2024 Trustee”). The Notes are senior unsecured obligations of the Company and bear interest at an annual rate of 2.00% payable semi-annually in arrears on April 15 and October 15 of each year. The Company incurred $5.3 million debt issuance costs, which was comprised of $3.8 million of discounts and commissions payable to the initial purchasers and third-party offering costs of approximately $1.5 million. These costs have been amortized to interest expense over the term of the 2024 Notes. As previously noted, $115.1 million of the 2024 Notes remains outstanding and will mature on April 15, 2024, unless earlier repurchased or converted in accordance with their terms. The 2024 Notes are convertible as described below into cash, shares of the Company’s common stock, or a combination of cash and shares of the Company’s common stock, at the Company’s election, at an initial conversion rate of 38.7879 shares of common stock per $1,000 principal amount of 2024 Notes, which is equivalent to an initial conversion price of approximately $25.78 per share, subject to adjustment upon the occurrence of certain events. In accordance with the terms of the 2024 Indenture, the Company has adjusted the conversion rate and the conversion price of the 2024 Notes for quarterly dividends exceeding $0.1125 per share (the conversion price is currently approximately $24.49 per share). Prior to November 15, 2023, the 2024 Notes were convertible only upon the occurrence of certain events and during certain periods and, as of October 28, 2023, none of the conditions allowing holders of the 2024 Notes to convert had been met. Beginning November 15, 2023, the 2024 Notes became convertible at any time until the close of business on the second scheduled trading day immediately preceding the maturity date of the 2024 Notes. Following certain corporate events described in the 2024 Indenture that occur prior to such maturity date, the conversion rate will be adjusted under certain circumstances. The 2024 Notes are not redeemable prior to maturity, and no sinking fund is provided for the 2024 Notes. The Company expects to settle the principal amount of the 2024 Notes in fiscal 2025 in cash and any excess in shares. The Notes consist of the following (in thousands):
Notes: 1For the three and nine months ended October 28, 2023, the weighted average effective interest rate including amortization of debt discount and issuance costs on the 2028 Notes was 4.5%. 2The unamortized debt discount related to the 2028 Notes is due to the result of the modification accounting for a portion of the exchanged notes. This discount represents both an increase in the fair value of the embedded conversion option, which is calculated as the difference between the fair value of the embedded conversion option immediately before and after the exchange, and cash paid to modified noteholders. The change in conversion option value reduces the carrying amount of the convertible debt instrument with a corresponding increase in additional paid-in capital. The additional cash paid to modified noteholders increased the debt discount. This debt discount is being amortized to interest expense over five years. 3The fair value of the Notes is determined based on inputs that are observable in the market and have been classified as Level 2 in the fair value hierarchy. Interest expense for the Notes for the three and nine months ended October 28, 2023 and October 29, 2022 consists of the following (in thousands):
Convertible Bond Hedge and Warrant Transactions In April 2023, in connection with the offering of the 2028 Notes, the Company entered into convertible note hedge transactions whereby the Company had the option to purchase a total of approximately 11.1 million shares of its common stock at an initial strike price of approximately $24.70 per share. The total cost of the convertible note hedge transactions was $51.8 million. In addition, the Company sold warrants whereby the holders of the warrants had the option to purchase a total of approximately 11.1 million shares of the Company’s common stock at an initial strike price of $41.80 per share. The Company received $20.2 million in cash proceeds from the sale of these warrants. Both the number of shares underlying the convertible note hedges and warrants and the strike price of the instruments are subject to customary adjustments. In accordance with the original terms of the convertible note hedge confirmations and warrant confirmations, the Company has adjusted the strike prices with respect to the convertible note hedges and warrants for quarterly dividends exceeding $0.225 per share (currently approximately $24.53 per share and $41.51 per share, respectively). The purchase of the convertible note hedges is intended to offset dilution from the conversion of the 2028 Notes to the extent the market price per share of the Company’s common stock exceeds the then-applicable strike price of the convertible note hedges. The warrant transaction may have a dilutive effect with respect to the Company’s common stock to the extent the market price per share of the Company’s common stock exceeds the then-applicable strike price of the warrants. The convertible note hedges and warrants are recorded in stockholders’ equity, are not accounted for as derivatives and are not remeasured each reporting period. Concurrently, in connection with the retirement of $184.9 million in principal amount of the 2024 Notes, the Company entered into Partial Termination Agreements with certain financial institutions to unwind a portion of the convertible note hedge transactions and warrant transactions the Company had entered into in connection with the issuance of the 2024 Notes. The terminated portion is in a notional amount corresponding to the amount of exchanged 2024 Notes. As a result, the Company received $7.2 million, which reduced the number of purchase options to approximately 4.6 million shares of common stock at an adjusted strike price of approximately $24.92 per share. Additionally, the Company paid $1.0 million related to terminated warrants, which reduced the number of shares that may be purchased pursuant to the warrants to 4.6 million shares of common stock at an adjusted strike price of approximately $45.31 per share. This transaction resulted in a $6.2 million net increase in additional paid-in capital in the Company’s consolidated balance sheet as of April 29, 2023. For the remaining portion of the convertible note hedge transactions and warrant transactions entered into in connection with the 2024 Notes, both the number of shares underlying the instruments and the strike price of the instruments are subject to customary adjustments pursuant to their original terms. In accordance with the original terms of the convertible note hedge confirmations and warrant confirmations, respectively, the Company has adjusted the strike prices with respect to the convertible note hedges and warrants for quarterly dividends exceeding $0.1125 per share (currently approximately $24.49 per share and $44.53 per share, respectively). The remaining convertible note hedges and warrant transactions continue to serve to partially offset the potential dilution arising from the conversion of the 2024 Notes that remain outstanding.
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Convertible Senior Notes and Related Transactions |
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Convertible Senior Notes and Related Transactions | Borrowings and Finance Lease Obligations Borrowings and finance lease obligations are summarized (in thousands):
Term Loans The Company entered into term loans with certain banks primarily in Europe during fiscal 2021. These loans are primarily unsecured, have remaining terms of approximately two years and incur interest at annual rates ranging between 1.5% to 6.4%. As of October 28, 2023 and January 28, 2023, the Company had outstanding borrowings of $13.9 million and $25.5 million, respectively, under these borrowing arrangements. Finance Lease Obligations The Company leases its European distribution center in the Netherlands under a finance lease which primarily provides for monthly minimum lease payments through May 2027 with an effective interest rate of approximately 6%. The Company has also entered into finance leases for equipment used in its European distribution centers. These finance lease obligations totaled $11.7 million and $15.0 million as of October 28, 2023 and January 28, 2023, respectively. The Company also has smaller finance leases related primarily to computer hardware and software. As of October 28, 2023 and January 28, 2023, these finance lease obligations totaled $6.1 million and $4.9 million, respectively. Mortgage Debt During fiscal 2017, the Company entered into a ten-year $21.5 million real estate secured loan (the “Mortgage Debt”) which is secured by the Company’s U.S. distribution center based in Louisville, Kentucky. The Mortgage Debt requires the Company to comply with a fixed charge coverage ratio on a trailing four-quarter basis if consolidated cash, cash equivalents, short-term investment balances and availability under borrowing arrangements fall below certain levels. In addition, the Mortgage Debt contains customary covenants, including covenants that limit or restrict the Company’s ability to incur liens on the mortgaged property and enter into certain contractual obligations. Upon the occurrence of an event of default under the Mortgage Debt, the lender may terminate the Mortgage Debt and declare all amounts outstanding to be immediately due and payable. The Mortgage Debt specifies a number of events of default (some of which are subject to applicable grace or cure periods), including, among other things, non-payment defaults, covenant defaults, cross-defaults to other material indebtedness, bankruptcy and insolvency defaults and material judgment defaults. Interest on the Mortgage Debt was payable at a variable rate based on LIBOR. In May 2023, the Company amended the terms of the Mortgage Debt for the interest rate to be based on SOFR, effective May 1, 2023. The Company also amended its existing interest rate swap agreement, resulting in a swap fixed rate of approximately 3.14%. Credit Facilities Long-Term 2023 Credit Facility During fiscal 2023, the Company amended and restated its senior secured asset-based revolving credit facility with Bank of America, N.A. and other lenders party thereto to extend the maturity date of the credit facility to December 20, 2027, among other changes (as amended, the “2023 Credit Facility”). In addition, the Company entered into an amendment agreement to permit, among other things, the exchange and subscription offering on April 12, 2023. Pursuant to the amendment, the 2023 Credit Facility is subject to earlier maturity as of 60 days before the maturity date of the Company’s 2024 Notes if satisfactory payment conditions have not been met during such 60 days period. The amendment retains the 2023 Credit Facility’s existing provisions for earlier maturity as of 60 days before the maturity date of the Company’s 2024 Notes if (1) such notes have not been refinanced or converted into equity by that date or (2) arrangements satisfactory to the Lenders for the refinancing or conversion of the 2024 Notes have not been made. The 2023 Credit Facility provides for a borrowing capacity in an amount up to $150 million, including a Canadian sub-facility up to $20 million, subject to a borrowing base. Based on applicable accounts receivable, inventory and eligible cash, subject to certain allowances, the Company could have borrowed up to $137.4 million under the 2023 Credit Facility as of October 28, 2023. The 2023 Credit Facility has an option to expand the borrowing capacity by up to $150 million subject to certain terms and conditions, including the willingness of existing or new lenders to assume such increased amount. The 2023 Credit Facility is available for direct borrowings and the issuance of letters of credit, subject to certain letters of credit sublimits, and may be used for repayment of debt, working capital and other general corporate purposes. As of both October 28, 2023 and January 28, 2023, the Company had $8.1 million in outstanding standby letters of credit, no outstanding documentary letters of credit and no outstanding borrowings under the 2023 Credit Facility. Direct borrowings under the 2023 Credit Facility made by the Company and its domestic subsidiaries bear interest at the U.S. base rate plus an applicable margin (varying from 0.25% to 0.75%) or at Term SOFR plus a spread adjustment plus an applicable margin (varying from 1.25% to 1.75%), provided that Term SOFR may not be less than zero. The U.S. base rate is based on the greater of (i) the U.S. prime rate, (ii) the federal funds rate, plus 0.5%, and (iii) Term SOFR plus a spread adjustment for a 30-day interest period, plus 1.0%, provided that the U.S. base rate may not be less than zero. Direct borrowings under the 2023 Credit Facility made by the Company’s Canadian subsidiaries bear interest at the Canadian prime rate plus an applicable margin (varying from 0.25% to 0.75%) or at the Canadian BA rate plus an applicable margin (varying from 1.25% to 1.75%), provided that the Canadian BA rate may not be less than zero. The Canadian rate is based on the greater of (i) the Canadian prime rate and (ii) the Canadian BA rate for a one-month interest period, plus 1.0%, provided that the Canadian prime rate may not be less than zero. The applicable margins are calculated quarterly and vary based on the average daily availability of the aggregate borrowing base. The Company is also obligated to pay certain commitment, letter of credit and other fees customary for a credit facility of this size and type. The 2023 Credit Facility contains various annual sustainability key performance targets, the achievement of which would result in an adjustment to the interest margin ranging from plus 5 basis points to minus 5 basis points per year and the commitment fee ranging from plus 1 basis point to minus 1 basis point per year. The 2023 Credit Facility requires the Company to comply with a fixed charge coverage ratio on a trailing four-quarter basis if a default or an event of default occurs under the 2023 Credit Facility or availability under the 2023 Credit Facility falls below the greater of 10% of the aggregate borrowing base or $12.5 million. In addition, the 2023 Credit Facility contains customary covenants, including covenants that limit or restrict the Company and certain of its subsidiaries’ ability to: incur liens, incur indebtedness, make investments, dispose of assets, make certain restricted payments, merge or consolidate and enter into certain transactions with affiliates. Upon the occurrence of an event of default under the 2023 Credit Facility, the lenders may cease making loans, terminate the 2023 Credit Facility and declare all amounts outstanding to be immediately due and payable. The 2023 Credit Facility specifies a number of events of default (some of which are subject to applicable grace or cure periods), including, among other things, non-payment defaults, covenant defaults, cross-defaults to other material indebtedness, bankruptcy and insolvency defaults, and material judgment defaults. The 2023 Credit Facility allows for both secured and unsecured borrowings outside of the 2023 Credit Facility up to specified amounts. Long-Term 2022 Credit Facility During fiscal 2023, Guess Europe Sagl, a wholly owned subsidiary of the Company, entered into a credit agreement (the “Credit Agreement”) for a €250 million revolving credit facility (the “2022 Credit Facility”) with an initial five-year term. The Company has an option to extend the maturity date by up to two years and an option to expand the 2022 Credit Facility by up to €100 million, subject to certain conditions. Borrowings under the 2022 Credit Facility bear interest based on the daily balance outstanding at the Euro Interbank Offered Rate (EURIBOR) plus an applicable margin (varying from 0.85% to 1.20%), provided that EURIBOR may not be less than zero. The 2022 Credit Facility carries a commitment fee equal to the available but unused borrowing capacity multiplied by 35% of an applicable margin (varying from 0.85% to 1.20%). The Company is also required to pay a utilization fee on the total amount of the loans outstanding under the 2022 Credit Facility at rates varying from 0.10% to 0.20%, depending on the balance outstanding. The applicable margins are calculated quarterly and vary based on the leverage ratio of the guarantor and its subsidiaries as set forth in the Credit Agreement. The Credit Agreement contains various annual sustainability key performance targets, the achievement of which would result in an adjustment to the interest margin ranging from a plus 5 basis points to a minus 5 basis points per year. The Credit Agreement includes a financial covenant requiring a maximum leverage ratio of the guarantor and its subsidiaries. In addition, the Credit Agreement includes customary representations and warranties, affirmative and negative covenants and events of default. As of October 28, 2023, the Company had $100.4 million of outstanding borrowings and $163.8 million available for future borrowings under the 2022 Credit Facility. As of January 28, 2023, the Company had $54.4 million of outstanding borrowings and $217.4 million available for future borrowings under the 2022 Credit Facility. Other Credit Facilities The Company, through its Chinese subsidiary, maintains a short-term uncommitted bank borrowing agreement that provides for a borrowing capacity up to $30 million, primarily for working capital purposes. The Company had $17.1 million and $14.0 million in outstanding borrowings under this agreement as of October 28, 2023 and January 28, 2023, respectively. The Company, through its Japanese subsidiary, maintains a short-term uncommitted bank borrowing agreement that provides for a borrowing capacity up to ¥800 million ($5.3 million), primarily for working capital purposes. The Company had $4.3 million and $1.9 million in outstanding borrowings under this agreement as of October 28, 2023 and January 28, 2023, respectively. From time-to-time, the Company will obtain other financing in foreign countries for working capital to finance its local operations. Convertible Senior Notes and Related TransactionsExchange and Subscription Agreements In April 2023, the Company issued $275 million principal amount of the 2028 Notes in a private placement pursuant to separate, privately negotiated exchange and subscription agreements (the “Exchange and Subscription Agreements”) with a limited number of holders of its 2024 Notes and certain other investors, in each case pursuant to exemptions from registration under the Securities Act of 1933, as amended. Pursuant to the Exchange and Subscription Agreements, the Company exchanged approximately $184.9 million in aggregate principal amount of its 2024 Notes for $163.0 million in aggregate principal amount of new 2028 Notes and an aggregate of approximately $33.3 million in cash, representing accrued and unpaid interest and other consideration on the 2024 Notes, and issued $112.0 million aggregate principal amount of 2028 Notes for cash at par. Immediately following the closing of the aforementioned transactions, $115.1 million in aggregate principal amount of the 2024 Notes remained outstanding. In addition, the Company concurrently repurchased $42.8 million, including excise tax, of its common stock through broker-assisted market transactions, pursuant to the Company’s 2021 Share Repurchase Program. The Company evaluated all exchanges and determined approximately 74% of the exchanged notes were accounted for as extinguishment of debt and approximately 26% were accounted for as modification of debt. As a result of these transactions, the Company recognized a $7.7 million loss on extinguishment of debt during the first quarter of fiscal 2024. 3.75% Convertible Senior Notes due 2028 In connection with the issuance of the 2028 Notes, the Company entered into an indenture (the “2028 Indenture”) with respect to the 2028 Notes with U.S. Bank Trust Company, N.A., as trustee (the “2028 Trustee”). The 2028 Notes are senior unsecured obligations of the Company and bear interest at an annual rate of 3.75% payable semi-annually in arrears on April 15 and October 15 of each year, beginning on October 15, 2023. The 2028 Notes will mature on April 15, 2028, unless earlier repurchased or converted in accordance with their terms. The 2028 Notes are convertible in certain circumstances into cash, shares of the Company’s common stock, or a combination of cash and shares of the Company’s common stock, at the Company’s election, at an initial conversion rate of 40.4858 shares of common stock per $1,000 principal amount of 2028 Notes, which is equivalent to an initial conversion price of approximately $24.70 per share, subject to adjustment upon the occurrence of certain events. In accordance with the terms of the 2028 Indenture, the Company has adjusted the conversion rate and the conversion price of the 2028 Notes for quarterly dividends exceeding $0.225 per share (the conversion price is currently approximately $24.53 per share). Prior to November 15, 2027, the 2028 Notes are convertible only upon the occurrence of certain events and during certain periods, and thereafter, at any time until the close of business on the second scheduled trading day immediately preceding the maturity date of the 2028 Notes. Following certain corporate events described in the 2028 Indenture that occur prior to the maturity date, the conversion rate will be increased for a holder who elects to convert its 2028 Notes in connection with such corporate event in certain circumstances. The 2028 Notes are not redeemable prior to maturity, and no sinking fund is provided for the 2028 Notes. As of October 28, 2023, none of the conditions allowing holders of the 2028 Notes to convert had been met. The Company expects to settle the principal amount of the 2028 Notes in fiscal 2029 in cash and any excess in shares. The Company incurred approximately $5.9 million of debt issuance costs related to the 2028 Notes including third-party offering costs during the first quarter of fiscal 2024. Debt issuance costs were recorded as a contra-liability (other than $0.5 million expensed related to 2024 Notes that were subject to modification accounting) and are presented net against the 2028 Notes balance on the Company’s condensed consolidated balance sheets. These costs are being amortized to interest expense over the term of the 2028 Notes. 2.00% Convertible Senior Notes due 2024 In April 2019, the Company issued $300 million principal amount of the 2024 Notes in a private offering. In connection with the issuance of the 2024 Notes, the Company entered into an indenture (the “2024 Indenture”) with respect to the Notes with U.S. Bank N.A., as trustee (the “2024 Trustee”). The Notes are senior unsecured obligations of the Company and bear interest at an annual rate of 2.00% payable semi-annually in arrears on April 15 and October 15 of each year. The Company incurred $5.3 million debt issuance costs, which was comprised of $3.8 million of discounts and commissions payable to the initial purchasers and third-party offering costs of approximately $1.5 million. These costs have been amortized to interest expense over the term of the 2024 Notes. As previously noted, $115.1 million of the 2024 Notes remains outstanding and will mature on April 15, 2024, unless earlier repurchased or converted in accordance with their terms. The 2024 Notes are convertible as described below into cash, shares of the Company’s common stock, or a combination of cash and shares of the Company’s common stock, at the Company’s election, at an initial conversion rate of 38.7879 shares of common stock per $1,000 principal amount of 2024 Notes, which is equivalent to an initial conversion price of approximately $25.78 per share, subject to adjustment upon the occurrence of certain events. In accordance with the terms of the 2024 Indenture, the Company has adjusted the conversion rate and the conversion price of the 2024 Notes for quarterly dividends exceeding $0.1125 per share (the conversion price is currently approximately $24.49 per share). Prior to November 15, 2023, the 2024 Notes were convertible only upon the occurrence of certain events and during certain periods and, as of October 28, 2023, none of the conditions allowing holders of the 2024 Notes to convert had been met. Beginning November 15, 2023, the 2024 Notes became convertible at any time until the close of business on the second scheduled trading day immediately preceding the maturity date of the 2024 Notes. Following certain corporate events described in the 2024 Indenture that occur prior to such maturity date, the conversion rate will be adjusted under certain circumstances. The 2024 Notes are not redeemable prior to maturity, and no sinking fund is provided for the 2024 Notes. The Company expects to settle the principal amount of the 2024 Notes in fiscal 2025 in cash and any excess in shares. The Notes consist of the following (in thousands):
Notes: 1For the three and nine months ended October 28, 2023, the weighted average effective interest rate including amortization of debt discount and issuance costs on the 2028 Notes was 4.5%. 2The unamortized debt discount related to the 2028 Notes is due to the result of the modification accounting for a portion of the exchanged notes. This discount represents both an increase in the fair value of the embedded conversion option, which is calculated as the difference between the fair value of the embedded conversion option immediately before and after the exchange, and cash paid to modified noteholders. The change in conversion option value reduces the carrying amount of the convertible debt instrument with a corresponding increase in additional paid-in capital. The additional cash paid to modified noteholders increased the debt discount. This debt discount is being amortized to interest expense over five years. 3The fair value of the Notes is determined based on inputs that are observable in the market and have been classified as Level 2 in the fair value hierarchy. Interest expense for the Notes for the three and nine months ended October 28, 2023 and October 29, 2022 consists of the following (in thousands):
Convertible Bond Hedge and Warrant Transactions In April 2023, in connection with the offering of the 2028 Notes, the Company entered into convertible note hedge transactions whereby the Company had the option to purchase a total of approximately 11.1 million shares of its common stock at an initial strike price of approximately $24.70 per share. The total cost of the convertible note hedge transactions was $51.8 million. In addition, the Company sold warrants whereby the holders of the warrants had the option to purchase a total of approximately 11.1 million shares of the Company’s common stock at an initial strike price of $41.80 per share. The Company received $20.2 million in cash proceeds from the sale of these warrants. Both the number of shares underlying the convertible note hedges and warrants and the strike price of the instruments are subject to customary adjustments. In accordance with the original terms of the convertible note hedge confirmations and warrant confirmations, the Company has adjusted the strike prices with respect to the convertible note hedges and warrants for quarterly dividends exceeding $0.225 per share (currently approximately $24.53 per share and $41.51 per share, respectively). The purchase of the convertible note hedges is intended to offset dilution from the conversion of the 2028 Notes to the extent the market price per share of the Company’s common stock exceeds the then-applicable strike price of the convertible note hedges. The warrant transaction may have a dilutive effect with respect to the Company’s common stock to the extent the market price per share of the Company’s common stock exceeds the then-applicable strike price of the warrants. The convertible note hedges and warrants are recorded in stockholders’ equity, are not accounted for as derivatives and are not remeasured each reporting period. Concurrently, in connection with the retirement of $184.9 million in principal amount of the 2024 Notes, the Company entered into Partial Termination Agreements with certain financial institutions to unwind a portion of the convertible note hedge transactions and warrant transactions the Company had entered into in connection with the issuance of the 2024 Notes. The terminated portion is in a notional amount corresponding to the amount of exchanged 2024 Notes. As a result, the Company received $7.2 million, which reduced the number of purchase options to approximately 4.6 million shares of common stock at an adjusted strike price of approximately $24.92 per share. Additionally, the Company paid $1.0 million related to terminated warrants, which reduced the number of shares that may be purchased pursuant to the warrants to 4.6 million shares of common stock at an adjusted strike price of approximately $45.31 per share. This transaction resulted in a $6.2 million net increase in additional paid-in capital in the Company’s consolidated balance sheet as of April 29, 2023. For the remaining portion of the convertible note hedge transactions and warrant transactions entered into in connection with the 2024 Notes, both the number of shares underlying the instruments and the strike price of the instruments are subject to customary adjustments pursuant to their original terms. In accordance with the original terms of the convertible note hedge confirmations and warrant confirmations, respectively, the Company has adjusted the strike prices with respect to the convertible note hedges and warrants for quarterly dividends exceeding $0.1125 per share (currently approximately $24.49 per share and $44.53 per share, respectively). The remaining convertible note hedges and warrant transactions continue to serve to partially offset the potential dilution arising from the conversion of the 2024 Notes that remain outstanding.
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Share-Based Compensation |
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Share-Based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-Based Compensation | Share-Based Compensation The following summarizes the share-based compensation expense recognized under all of the Company’s stock plans (in thousands):
As of October 28, 2023, there was no unrecognized compensation cost related to nonvested stock options and approximately $27.1 million of unrecognized compensation cost related to nonvested stock awards/units. This cost is expected to be recognized over a weighted average period of 1.6 years. Grants On May 12, 2023 and July 3, 2023, the Company granted 471,373 and 5,153 nonvested stock units, respectively, to certain of its executive employees. These nonvested stock units are subject to certain performance-based or market-based vesting conditions. Performance-Based Awards The Company has granted certain nonvested stock units subject to performance-based vesting conditions to select executive officers. Each award of nonvested stock units generally has an initial vesting period from the date of the grant through either (i) the end of the first fiscal year or (ii) the first anniversary of the date of grant, followed by annual vesting periods which may range from -to-three years. The following summarizes the activity for nonvested performance-based units during the nine months ended October 28, 2023:
Market-Based Awards The Company has granted certain nonvested stock units subject to market-based vesting conditions to select executive officers. These market-based awards include (i) units where the number of shares that may ultimately vest will equal 0% to 150% of the target number of shares, subject to the performance of the Company’s total stockholder return (“TSR”) relative to the TSR of a select group of peer companies over a three-year period and (ii) units scheduled to vest based on the attainment of certain absolute stock price levels over a four-year period. Vesting is also subject to continued service requirements through the vesting date. The following summarizes the activity for nonvested market-based units during the nine months ended October 28, 2023:
______________________________________________________________________ Notes: 1As a result of the achievement of certain market-based vesting conditions, there were 145,003 shares that vested in addition to the original target number of shares granted in fiscal 2021.
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Related Party Transactions |
9 Months Ended |
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Oct. 28, 2023 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Related Party Transactions The Company and its subsidiaries periodically enter into transactions with other entities or individuals that are considered related parties, including certain transactions with entities owned by, affiliated with, or for the respective benefit of, Paul Marciano, who is an executive and member of the Board of the Company, and Maurice Marciano, who is the brother of Paul Marciano and was a member of the Board until his retirement in September 2023, and certain of their children (the “Marciano Entities”). Leases The Company leases warehouse and administrative facilities, including the Company’s North American corporate headquarters in Los Angeles, California, from partnerships affiliated with the Marciano Entities and certain of their affiliates. There were four of these leases in effect as of October 28, 2023 with expiration or option exercise dates ranging from calendar years 2025 to 2030. In August 2023, the Company (through a wholly-owned Canadian subsidiary) entered into a three-year lease extension through August 2026 with the related party landlord for the Company’s existing Canadian warehouse and administrative facility in Montreal, Quebec. All other material terms in the previously existing Canada lease (including base rent of approximately CAD$0.6 million (US$0.4 million) per year) remain the same. Aggregate lease costs recorded under these four related party leases were approximately $6.8 million and $6.7 million for the nine months ended October 28, 2023 and October 29, 2022, respectively. The Company believes that the terms of the related party leases are no less favorable to the Company than would have been available from unaffiliated third parties. Refer to Note 2 for more information on lease commitments. Aircraft Arrangements The Company periodically charters aircraft owned by the Marciano Entities through informal arrangements with the Marciano Entities and independent third-party management companies contracted by such Marciano Entities to manage their aircraft. The Company believes that the terms of the charter arrangements are no less favorable to the Company than would have been available from unaffiliated third parties. The total fees paid under these arrangements for the nine months ended October 28, 2023 and October 29, 2022 were approximately $2.6 million and $2.1 million, respectively. Minority Investment The Company owns a 30% interest in a privately held men’s footwear company (the “Footwear Company”) in which the Marciano Entities own a 45% interest. In December 2020, the Company provided the Footwear Company with a $2.0 million revolving credit facility at an annual interest rate of 2.75% and a maturity date of November 30, 2023. In October 2023, the Company and the Footwear Company amended the revolving credit facility to extend the term by three years to November 30, 2026 and to adjust the interest rate, effective December 1, 2023, to a floating rate equal to the one month term SOFR plus 1.75% per annum. As of both October 28, 2023 and January 28, 2023, the Company had a note receivable of $0.4 million included in other assets in its condensed consolidated balance sheets related to outstanding borrowings by the Footwear Company under this revolving credit facility. In May 2022, the Company entered into a Fulfillment Services Agreement with the Footwear Company under which the Company will provide certain fulfillment services for the Footwear Company’s U.S. wholesale and e-commerce businesses from the Company’s U.S distribution center on a cost-plus 5% basis. The Footwear Company also pays rent to the Company for the use of a small office space in the Company’s U.S. headquarters. In June 2022, the Company (through a wholly-owned Swiss subsidiary) entered into a Distributorship Agreement with the Footwear Company under which the Company was designated as the exclusive distributor (excluding e-commerce) for the Footwear Company in the European Union and other specified countries. The Distributorship Agreement provided for (i) the Company to receive a 35% discount from the Footwear Company’s wholesale prices, (ii) no minimum sales requirements or advertising spending requirements for the Company, (iii) an initial 15 month term with annual renewals thereafter and (iv) other standard terms and conditions for similar arrangements. In May 2023, the Distributorship Agreement was amended to (i) reflect a reduction in the amount of sales services to be performed by the Company, (ii) revise the wholesale discount to 22% and (iii) provide an annual 2% advertising commitment by the Company. During the nine months ended October 28, 2023, there were approximately $9,500 in fees received with respect to the U.S. fulfillment services, approximately $13,000 in fees received with respect to office rent and approximately $26,000 in amounts paid related to the distributorship arrangements. During the nine months ended October 29, 2022, there were no fees received with respect to the U.S. fulfillment services, approximately $13,000 in fees received with respect to office rent and less than $5,000 in amounts paid related to the distributorship arrangements. Vendor Purchases The Company purchases faux fur products from a privately-held fashion accessories company (the “Fashion Company”). Mr. Maurice Marciano, Mr. Paul Marciano and Mr. Carlos Alberini own on a combined basis 20% of the outstanding common equity interests in the Fashion Company (with the Marcianos jointly owning 16% and Mr. Alberini owning 4%). The total payments made by the Company to the Fashion Company were approximately $3.0 million and $3.4 million for the nine months ended October 28, 2023 and October 29, 2022, respectively. The Company believes that the price paid by the Company for the Fashion Company’s products and the terms of the transactions between the Company and the Fashion Company have not been affected by this passive investment of Messrs. Marciano and Mr. Alberini in the Fashion Company. Vendor Collaboration During April 2023, the Company entered into a co-branding collaboration arrangement in connection with a large-scale music festival with a privately-held alcoholic beverage company (the “Beverage Company”) in which the Marciano Entities hold an approximately 15% ownership interest. The co-branding arrangement provided for (i) the Beverage Company to pay a $100,000 fee, provide certain beverage products, facilitate the acquisition of additional third-party sponsors for the event and co-brand its social media posts with the Company and (ii) the Company to engage social-media influencers to attend the event and promote both companies through social-media posts, and provide promotional travel, lodging, hospitality and other ancillary expenses for select attendees at the co-branded event.
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Commitments and Contingencies |
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Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies | Commitments and Contingencies Investment Commitments As of October 28, 2023, the Company had an unfunded commitment to invest €7.9 million ($8.3 million) in certain private equity funds. Refer to Note 15 for further information. Legal and Other Proceedings The Company is involved in legal proceedings, arising both in the ordinary course of business and otherwise, including the proceedings described below as well as various other claims and other matters incidental to the Company’s business. Unless otherwise stated, the resolution of any particular proceeding is not currently expected to have a material adverse impact on the Company’s financial position, results of operations or cash flows. Even if such an impact could be material, the Company may not be able to estimate the reasonably possible loss or range of loss until developments in the proceedings have provided sufficient information to support an assessment. The Company has received customs tax assessment notices from the Italian Customs Agency (“ICA”) regarding its customs tax audit of one of the Company’s European subsidiaries for the period from July 2010 through December 2012. Such assessments totaled €9.8 million ($10.4 million), including potential penalties and interest through such assessment dates. The Company strongly disagreed with the ICA’s positions and therefore filed appeals with the Milan First Degree Tax Court (“MFDTC”). Those appeals were split into a number of different cases that were then heard by different sections of the MFDTC. The MFDTC ruled in favor of the Company on all of these appeals. The ICA subsequently appealed €9.7 million ($10.2 million) of these favorable MFDTC judgments with the Appeals Court. As of the end of the third quarter of fiscal 2024, €8.5 million ($9.0 million) have been decided in favor of the Company and €1.2 million ($1.3 million) have been decided in favor of the ICA. The Company believes that the unfavorable Appeals Court ruling is incorrect and inconsistent with the prior rulings on similar matters by both the MFDTC and other judges within the Appeals Court, and has appealed the decision to the Supreme Court. The ICA has appealed most of the favorable Appeals Court rulings to the Supreme Court. As of the end of the third quarter of fiscal 2024, of the cases that have been appealed to the Supreme Court, €0.4 million ($0.4 million) have been decided in favor of the Company based on the merits of the case and €1.3 million ($1.4 million) have been remanded back to the lower court for further consideration. There can be no assurances the Company will be successful in the remaining appeals. It also continues to be possible that the Company will receive similar or even larger assessments for periods subsequent to December 2012 or other claims or charges (including additional interest amounts) related to the matter in the future. Although the Company believes that it has a strong position and will continue to vigorously defend this matter, it is unable to predict with certainty whether or not these efforts will ultimately be successful or whether the outcome will have a material impact on the Company’s financial position, results of operations or cash flows. On January 11, 2022, Legion Partners Holdings, LLC (“Legion”), a stockholder of Guess common stock, sent two letters to the Board of Directors of Guess (the “Board”). One letter sought books and records pursuant to Section 220 of the Delaware General Corporation Law (the “220 Demand”) to purportedly investigate potential breaches of fiduciary duties by the Board in connection with the Board’s renomination of Mr. Maurice Marciano to the Board and certain related party transactions. The second letter demanded that the Board take action to cause the Company to investigate and commence legal proceedings for breach of fiduciary duty claims the Company may have in connection with alleged misconduct of Mr. Paul Marciano, the Board’s oversight of and response to such alleged misconduct, and the Board’s review and approval of certain related-party transactions (the “Litigation Demand”). On January 31, 2022, the Company responded to both letters informing Legion that the Company was reviewing the formation of a committee in response to the Litigation Demand and detailing the deficiencies with the 220 Demand under Delaware law, including that Legion failed to state a proper purpose and that the scope of Legion’s requested books and records was overbroad. The Company subsequently formed a Demand Review Committee (the “DRC”), which has been engaged in an ongoing review of the matters detailed in the Litigation Demand. On April 14, 2022, the Employees Retirement System of Rhode Island (“ERSRI”), a stockholder of Guess common stock, sent a letter to the Company seeking books and records pursuant to Section 220 of the Delaware General Corporation Law to purportedly investigate potential breaches of fiduciary duties by the Board in connection with alleged misconduct of Mr. Paul Marciano, the Board’s oversight of and response to such alleged misconduct, and the Board’s review and approval of certain related-party transactions. The Company responded to the letter on April 19, 2022, negotiated a Confidentiality Agreement, and has completed its production of books and records to ERSRI. On September 19, 2022, ERSRI filed a stockholder derivative lawsuit styled Employees Retirement System of Rhode Island, derivatively on behalf of Guess?, Inc. v. Paul Marciano, et al., in the Court of Chancery of the State of Delaware against the Company, as the nominal defendant, Mr. Paul Marciano and other members of the Board, alleging breach of fiduciary duties relating to the continued service of Mr. Paul Marciano as a director of the Board and as the Company’s Chief Creative Officer following prior allegations of improper conduct by him relating to the treatment of models and other women. ERSRI did not make a demand on the Board before instituting the lawsuit and alleged such demand would have been futile. On October 28, 2022, ERSRI amended the complaint to include an additional basis for alleging demand futility. ERSRI sought monetary damages and possible injunctive relief. On September 29, 2023, the Company and all defendants in the ERSRI action entered into a Stipulation and Agreement of Compromise, Settlement, and Release (the “Stipulation”). If approved by the Court of Chancery of the State of Delaware, the Stipulation would resolve all claims asserted against all defendants in the ERSRI action without any admission or finding of wrongdoing attributed to them personally or to the Company. Under the terms of the Stipulation, the Company will implement certain governance and compliance enhancements. These enhancements include the establishment of a Diversity, Equity, and Inclusion Council (the “DEI Council”), which will be comprised of one independent director and two consultants, including one consultant to be selected by ERSRI. The DEI Council will report directly to the Board and be responsible for overseeing the development and implementation of the Company’s policies and procedures related to harassment, discrimination and retaliation, including, in certain circumstances, having the authority to conduct investigations and to recommend disciplinary action, up to and including termination, of senior executives or Board members found to have engaged in misconduct. The DEI Council will also be responsible for overseeing a commitment to be added to the Company’s Governance Guidelines regarding the Company’s measures to prevent and respond to sexual harassment and discrimination. Pursuant to the Stipulation, the Company will appoint two new independent directors to the Board, including one to be selected by ERSRI and mutually agreed to by the Company. The Stipulation also includes certain agreements by Mr. Paul Marciano relating to meetings or activities with current or prospective Company models. In addition to the governance enhancements, pursuant to the Stipulation, (a) the defendants in the ERSRI action will cause the Company to receive (i) a payment of $22 million upon Court approval of the settlement pursuant to the terms of the Stipulation, and (ii) the right to receive an additional payment of $8 million contingent on the recovery from the insurers currently being sought by the Company and the insureds in pending litigation against the insurers, and (b) the Company will be responsible to pay an attorney’s fee award to ERSRI’s counsel in an amount to be determined by the Court, but not to exceed $8 million, as disclosed to stockholders in a notice that was distributed in connection with the settlement approval process. On October 20, 2023, the Court granted a scheduling order agreed upon by the parties for the disposition of the settlement and a settlement hearing is scheduled for January 4, 2024. The $22 million to be received by the Company and the related attorney’s fee award of up to $8 million to be paid by the Company under the terms of the Stipulation will be accounted for by the Company when approved by the Court. On February 16, 2023, Legion filed a stockholder derivative lawsuit styled Legion Partners Holdings, LLC, derivatively on behalf of Guess?, Inc. v. Paul Marciano, et al. in the Court of Chancery of the State of Delaware against the Company, as the nominal defendant, Mr. Paul Marciano and other members of the Board, alleging breach of fiduciary duties relating to the continued service of Mr. Paul Marciano to the Company following the prior allegations described in the ERSRI stockholder derivative lawsuit. Legion seeks monetary damages and possible injunctive relief. On March 15, 2023, the Company moved for a more definite statement and moved to dismiss or stay the action. On May 9, 2023, Legion voluntarily dismissed the claims against Mr. Paul Marciano without prejudice. On June 3, 2023, the Company received a letter from an individual seeking to settle certain claims against Mr. Paul Marciano and the Company relating to allegations of improper treatment of the individual by Mr. Paul Marciano. The letter did not make an assertion of damages. The individual is represented by the same attorney who represented plaintiffs in similar actions in 2021 and 2022, which were settled out of court in 2022 to avoid the cost of litigation and without admitting liability or fault. No complaint has been filed with respect to the allegations in the June 2023 letter, and Mr. Paul Marciano and the Company dispute the allegations fully. Redeemable Noncontrolling Interests The Company is party to a put arrangement with respect to the common securities that represent the remaining noncontrolling interest for its majority-owned subsidiary, Guess Brasil Comércio e Distribuição S.A. (“Guess Brazil”). The put arrangement for Guess Brazil, representing 40% of the total outstanding equity interest of that subsidiary, may be exercised at the discretion of the noncontrolling interest holder by providing written notice to the Company every third anniversary beginning in March 2019, subject to certain time restrictions. The redemption value of the Guess Brazil put arrangement is based on a multiple of Guess Brazil’s earnings before interest, taxes, depreciation and amortization subject to certain adjustments and is classified as a redeemable noncontrolling interest outside of permanent equity in the Company’s condensed consolidated balance sheet. As of both October 28, 2023 and January 28, 2023, the carrying value of the redeemable noncontrolling interest related to Guess Brazil was $0.5 million. The Company (through a wholly-owned European subsidiary) was previously party to a put arrangement with respect to the securities that represented the remaining noncontrolling interest for its majority-owned Russian subsidiary, Guess? CIS, LLC (“Guess CIS”), which was established through a majority-owned joint venture during fiscal 2016. The put arrangement for Guess CIS (the “Put Option”), representing 30% of the total outstanding equity interest of that subsidiary, was exercisable at the sole discretion of the noncontrolling interest holder (the “Minority Holder”) by providing written notice to the Company through December 31, 2025. The redemption value of the Put Option was based on a multiple of Guess CIS’s earnings before interest, taxes, depreciation and amortization subject to certain adjustments and was classified as a redeemable noncontrolling interest outside of permanent equity in the Company’s condensed consolidated balance sheet. The carrying value of the redeemable noncontrolling interest related to Guess CIS was €8.0 million as of January 28, 2023. In November 2022, the Minority Holder exercised the Put Option, triggering a contractual obligation for the Company to purchase the Minority Holder’s 30% interest in Guess CIS. Following a comprehensive review of the various economic sanctions imposed by the United States and European governments with respect to Russia, and obtaining guidance from the U.S. Department of the Treasury’s Office of Foreign Assets Control, the Company determined that its acquisition of the Minority Holder’s 30% interest in Guess CIS pursuant to the Company’s pre-sanctions contractual obligation to fulfill the Minority Holder’s exercise of the Put Option was not prohibited by current economic sanctions, including the U.S. ban on new investment in Russia. As such, following the exercise of the Put Option by the Minority Holder, the Company and the Minority Holder entered into an agreement to proceed with the Company’s acquisition of the Minority Holder’s 30% interest in Guess CIS for a purchase price of €8.0 million, subject to the formal approval of the acquisition by the relevant Russian government commission and certain other customary conditions. This formal approval was received, and the purchase was completed in May 2023. As a result of this transaction, there was no redeemable noncontrolling interest related to Guess CIS as of October 28, 2023. A reconciliation of the total carrying amount of redeemable noncontrolling interests is (in thousands):
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Defined Benefit Plans |
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Defined Benefit Plans and Other Postretirement Benefit Plans Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Defined Benefit Plans | Defined Benefit Plans Supplemental Executive Retirement Plan The Company’s Supplemental Executive Retirement Plan (“SERP”) provides select employees who satisfy certain eligibility requirements with certain benefits upon retirement, termination of employment, death, disability or a change in control of the Company, in certain prescribed circumstances. As a non-qualified pension plan, no dedicated funding of the SERP is required; however, the Company has made periodic payments into insurance policies held in a rabbi trust to fund the expected obligations arising under the non-qualified SERP. The cash surrender values of the insurance policies were $58.9 million and $64.4 million as of October 28, 2023 and January 28, 2023, respectively, and were included in other assets in the Company’s condensed consolidated balance sheets. As a result of changes in the value of the insurance policy investments, the Company recorded unrealized losses of $4.2 million and $4.1 million in other income (expense) during the three and nine months ended October 28, 2023, respectively, and unrealized losses of $4.8 million and $8.3 million in other income (expense) during the three and nine months ended October 29, 2022, respectively. The projected benefit obligation was $42.3 million and $42.4 million as of October 28, 2023 and January 28, 2023, respectively, and was included in accrued expenses and other current liabilities and other long-term liabilities in the Company’s condensed consolidated balance sheets depending on the expected timing of payments. SERP benefit payments of $0.5 million were made during each of the three months ended October 28, 2023 and October 29, 2022. SERP benefit payments of $1.4 million were made during each of the nine months ended October 28, 2023 and October 29, 2022. Foreign Pension Plans In certain foreign jurisdictions, primarily in Switzerland, the Company is required to guarantee the returns on Company-sponsored defined contribution plans in accordance with local regulations. The Company’s contributions must be made in an amount at least equal to the employee’s contribution. Minimum employee contributions are based on the respective employee’s age, salary and gender. As of October 28, 2023 and January 28, 2023, the foreign pension plans had a total projected benefit obligation of $50.9 million and $47.4 million, respectively, and plan assets held in independent investment fiduciaries of $44.4 million and $41.2 million, respectively. The net liability of $6.5 million and $6.2 million was included in other long-term liabilities in the Company’s condensed consolidated balance sheets as of October 28, 2023 and January 28, 2023, respectively. The components of net periodic defined benefit pension cost related to the Company’s defined benefit plans are (in thousands):
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Fair Value Measurements |
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Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements | Fair Value Measurements Authoritative guidance defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The guidance establishes a fair value hierarchy, which prioritizes the inputs used in measuring fair value into three broad levels as follows: Level 1—Inputs are unadjusted quoted prices in active markets for identical assets or liabilities that can be accessed at the measurement date. Level 2—Inputs include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (i.e. interest rates, yield curves, etc.) and inputs that are derived principally from or corroborated by observable market data by correlation or other means (market corroborated inputs). Level 3—Unobservable inputs that reflect assumptions about what market participants would use in pricing the asset or liability. These inputs are based on the best information available, including the Company’s own data. The following presents the fair value hierarchy for those assets and liabilities measured at fair value on a recurring basis (in thousands):
Foreign exchange currency contracts may be entered into by the Company to hedge the future payment of inventory and intercompany transactions by non-U.S. subsidiaries. Periodically, the Company may also use foreign exchange currency contracts to hedge the translation and economic exposures related to its net investments in certain of its international subsidiaries. The fair values of the Company’s foreign exchange currency contracts are based on quoted foreign exchange forward rates at the reporting date. The fair values of the Company’s interest rate swaps are based upon inputs corroborated by observable market data. Deferred compensation obligations to employees are adjusted based on changes in the fair value of the underlying employee-directed investments. Fair value of these obligations is based upon inputs corroborated by observable market data. The Company included €6.2 million ($6.5 million) and €3.7 million ($4.0 million) in other assets in the Company’s condensed consolidated balance sheets related to its investment in certain as of October 28, 2023 and January 28, 2023, respectively. The Company uses net asset value per share as a practical expedient to measure the fair value of this investment and has not included this investment in the fair value hierarchy as disclosed above. As of October 28, 2023, the Company had an unfunded commitment to invest an additional €7.9 million ($8.3 million) in the private equity funds. The fair values of the Company’s debt instruments (see Note 9) are based on the amount of future cash flows associated with each instrument discounted using the Company’s incremental borrowing rate. As of October 28, 2023 and January 28, 2023, the carrying value was not materially different from fair value, as the interest rates on the Company’s debt approximated rates currently available to the Company. The fair value of the Company’s Notes (see Note 10) is determined based on inputs that are observable in the market and have been classified as Level 2 in the fair value hierarchy. The carrying amount of the Company’s remaining financial instruments, which principally include cash and cash equivalents, trade receivables, accounts payable and accrued expenses, approximates fair value due to the relatively short maturity of such instruments. Long-Lived Assets Long-lived assets, such as property and equipment and operating lease ROU assets, are reviewed for impairment quarterly or whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The majority of the Company’s long-lived assets relate to its retail operations, which consist primarily of regular retail and flagship locations. The Company considers each individual regular retail location as an asset group for impairment testing, which is the lowest level at which individual cash flows can be identified. The Company also evaluates impairment risk for retail locations that are expected to be closed in the foreseeable future. The Company has flagship locations that are used as a regional marketing tool to build brand awareness and promote the Company’s current product. Provided the flagship locations continue to meet the appropriate criteria, impairment for these locations is tested at a reporting unit level similar to goodwill since they do not have separately identifiable cash flows. An asset is considered to be impaired if the Company determines that the carrying value may not be recoverable based upon its assessment of the asset’s ability to continue to generate earnings from operations and positive cash flow in future periods or if significant changes in the Company’s strategic business objectives and utilization of the assets occurred. If the carrying amount of an asset exceeds its estimated undiscounted future cash flows adjusted for lease payments, an impairment charge is recognized in the amount by which the carrying amount of the asset exceeds the estimated fair value. The Company uses estimates of market participant rents to calculate fair value of ROU assets and discounted future cash flows of the asset group to quantify fair value for other long-lived assets. These nonrecurring fair value measurements are considered Level 3 inputs as defined above. The impairment loss calculations require management to apply judgment in estimating future cash flows and the discount rates that reflect the risk inherent in future cash flows. Future expected cash flows for assets in regular retail locations are based on management’s estimates of future cash flows over the remaining lease period or expected life, if shorter. For expected location closures, the Company will evaluate whether it is necessary to shorten the useful life for any of the assets within the respective asset group. The Company will use this revised useful life when estimating the asset group’s future cash flows. The Company considers historical trends, expected future business trends and other factors when estimating the future cash flow for each regular retail location. The Company also considers factors such as the following: the Russia-Ukraine conflict, including the sanctions and trade restrictions imposed on Russia in response to the conflict; the local environment for each regular retail location, including mall traffic and competition; the Company’s ability to successfully implement strategic initiatives; and the ability to control variable costs such as cost of sales and payroll and, in some cases, renegotiate lease costs. As discussed further in Note 1, macroeconomic conditions, including inflation, higher interest rates, foreign exchange rate fluctuations, declines in consumer spending, the impact of the war in Ukraine and the lingering effects of public health crises continued to negatively impact the Company’s financial results during the three and nine months ended October 28, 2023 and October 29, 2022, and could continue to impact the Company’s operations in ways the Company is not able to predict today. The Company has made reasonable assumptions and judgments to determine the fair value of the assets tested based on the facts and circumstances that were available as of the reporting date. If actual results are not consistent with the assumptions and judgments used in estimating future cash flows and asset fair values, there may be additional exposure to future impairment losses that could be material to the Company’s results of operations. The Company recorded asset impairment charges of $1.7 million and $6.3 million during the three and nine months ended October 28, 2023, respectively. The Company recorded asset impairment charges of $1.8 million and $5.3 million during the three and nine months ended October 29, 2022, respectively. The Company recognized $1.6 million and $6.0 million in impairment of property and equipment related to certain retail locations primarily in the Americas and Europe driven by under-performance and expected store closures during the three and nine months ended October 28, 2023, respectively. The Company recognized $1.8 million and $5.2 million in impairment of property and equipment related to certain retail locations primarily in Europe and Asia during the three and nine months ended October 29, 2022, respectively. The Company recognized immaterial impairment charges on ROU assets during the three and nine months ended October 28, 2023 and October 29, 2022. Goodwill Goodwill is tested annually for impairment or more frequently if events and circumstances indicate that the asset might be impaired. An impairment loss is recognized to the extent that the carrying amount exceeds the asset’s fair value. This determination is made at the reporting unit level which may be either an operating segment or one level below an operating segment if discrete financial information is available. Two or more reporting units within an operating segment may be aggregated for impairment testing if they have similar economic characteristics. During the three months ended October 28, 2023, the Company assessed qualitative factors and determined that it is not more likely than not that the fair values of its reporting units are less than their carrying amounts.
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Derivative Financial Instruments |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Financial Instruments | Derivative Financial Instruments Hedging Strategy Foreign Exchange Currency Contracts The Company operates in foreign countries, which exposes it to market risk associated with foreign currency exchange rate fluctuations. The Company has entered into certain forward contracts to hedge the risk of foreign currency rate fluctuations. The Company has elected to apply the hedge accounting rules in accordance with authoritative guidance for certain of these hedges. The Company’s primary objective is to hedge the variability in forecasted cash flows due to the foreign currency risk. Various transactions that occur primarily in Europe, Canada, South Korea, China, Hong Kong and Mexico are denominated in U.S. dollars, British pounds and Russian roubles and thus are exposed to earnings risk as a result of exchange rate fluctuations when converted to their functional currencies. These types of transactions include U.S. dollar-denominated purchases of merchandise and U.S. dollar- and British pound-denominated intercompany liabilities. In addition, certain operating expenses, tax liabilities and pension-related liabilities are denominated in Swiss francs and are exposed to earnings risk as a result of exchange rate fluctuations when converted to the functional currency. Further, there are certain real estate leases that are denominated in a currency other than the functional currency of the respective entity that entered into the agreement (primarily Swiss francs, Russian roubles and Polish zloty). As a result, the Company may be exposed to volatility related to unrealized gains or losses on the translation of present value of future lease payment obligations when translated at the exchange rate as of a reporting period-end. The Company enters into derivative financial instruments, including forward exchange currency contracts, to offset some, but not all, of the exchange risk on certain of these anticipated foreign currency transactions. Periodically, the Company may also use foreign exchange currency contracts to hedge the translation and economic exposures related to its net investments in certain of its international subsidiaries. Interest Rate Swap Agreements The Company is exposed to interest rate risk on its floating-rate debt. The Company has entered into interest rate swap agreements for certain of these agreements to effectively convert its floating-rate debt to a fixed-rate basis. The principal objective of these contracts is to eliminate or reduce the variability of the cash flows in interest payments associated with the Company’s floating-rate debt, thus reducing the impact of interest rate changes on future interest payment cash flows. The Company has elected to apply the hedge accounting rules in accordance with authoritative guidance for certain of these contracts. Refer to Note 9 for further information. The impact of the credit risk of the counterparties to the derivative contracts is considered in determining the fair value of the foreign exchange currency contracts and interest rate swap agreements. As of October 28, 2023, credit risk has not had a significant effect on the fair value of the Company’s foreign exchange currency contracts and interest rate swap agreements. Hedge Accounting Policy Foreign Exchange Currency Contracts U.S. dollar forward contracts are used to hedge forecasted merchandise purchases over specific months. Changes in the fair value of these U.S. dollar forward contracts, designated as cash flow hedges, are recorded as a component of accumulated other comprehensive income (loss) within stockholders’ equity and are recognized in cost of product sales in the period that approximates the time the hedged merchandise inventory is sold. The Company has also used U.S. dollar forward contracts to hedge the net investments of certain of the Company’s international subsidiaries over specific months. Changes in the fair value of these U.S. dollar forward contracts, designated as net investment hedges, are recorded in foreign currency translation adjustment as a component of accumulated other comprehensive income (loss) within stockholders’ equity and are not recognized in earnings until the sale or liquidation of the hedged net investment. The Company also has foreign exchange currency contracts that are not designated as hedging instruments for accounting purposes. Changes in fair value of foreign exchange currency contracts not designated as hedging instruments are reported in net earnings as part of other income (expense). Interest Rate Swap Agreements Interest rate swap agreements are used to hedge the variability of the cash flows in interest payments associated with the Company’s floating-rate debt. Changes in the fair value of interest rate swap agreements designated as cash flow hedges are recorded as a component of accumulated other comprehensive income (loss) within stockholders’ equity and are amortized to interest expense over the term of the related debt. Periodically, the Company may also enter into interest rate swap agreements that are not designated as hedging instruments for accounting purposes. Changes in the fair value of interest rate swap agreements not designated as hedging instruments are reported in net earnings as part of other income (expense). Summary of Derivative Instruments The fair value of derivative instruments in the condensed consolidated balance sheets is (in thousands):
Derivatives Designated as Hedging Instruments Foreign Exchange Currency Contracts Designated as Cash Flow Hedges During the nine months ended October 28, 2023, the Company purchased U.S. dollar forward contracts in Europe totaling US$89.0 million that were designated as cash flow hedges. As of October 28, 2023, the Company had forward contracts outstanding for its European operations of US$135.0 million to hedge forecasted merchandise purchases, which are expected to mature over the next 12 months. As of October 28, 2023, accumulated other comprehensive income (loss) related to foreign exchange currency contracts included a $0.8 million net unrealized loss, net of tax, of which $1.1 million will be recognized in cost of product sales over the following 12 months, at the then current values on a pre-tax basis, which can be different than the current quarter-end values. At January 28, 2023, the Company had forward contracts outstanding for its European operations of US$253.0 million that were designated as cash flow hedges. Interest Rate Swap Agreement Designated as Cash Flow Hedge As of October 28, 2023, accumulated other comprehensive income (loss) related to the interest rate swap agreement included a net unrealized gain of $0.9 million, net of tax, which will be recognized in interest expense over the following 12 months, at the then current values on a pre-tax basis, which can be different than the current quarter-end values. The following summarizes the gains (losses) before income taxes recognized on derivative instruments designated as cash flow hedges in OCI and net earnings (in thousands):
The following summarizes net after income tax derivative activity recorded in accumulated other comprehensive income (loss) (in thousands):
Foreign Exchange Currency Contracts Not Designated as Hedging Instruments As of October 28, 2023, the Company had euro foreign exchange currency contracts to purchase US$65.0 million expected to mature over the next 5 months. As of January 28, 2023, the Company had euro foreign exchange currency contracts to purchase US$83.5 million. The following summarizes the gains before income taxes recognized on derivative instruments not designated as hedging instruments in other income (expense) (in thousands):
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Subsequent Events |
9 Months Ended |
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Oct. 28, 2023 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events Dividends On November 21, 2023, the Company announced a regular quarterly cash dividend of $0.30 per share on the Company’s common stock. The cash dividend will be paid on December 22, 2023 to shareholders of record as of the close of business on December 6, 2023. As a result of this dividend declaration, the Company will adjust the conversion rate (which is expected to increase) and the conversion price (which is expected to decrease) of the Notes in accordance with the terms of the 2024 Indenture and the 2028 Indenture, effective as of December 5, 2023. A corresponding adjustment is expected to be made to the strike prices with respect to the convertible note hedges and the warrants entered into by the Company in connection with the offering of the corresponding Notes, each of which will be decreased in accordance with the terms of the applicable convertible note hedge confirmations and warrant confirmations.
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Pay vs Performance Disclosure - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
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Oct. 28, 2023 |
Oct. 29, 2022 |
Oct. 28, 2023 |
Oct. 29, 2022 |
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Pay vs Performance Disclosure | ||||
earnings | $ 55,701 | $ 21,835 | $ 82,929 | $ 53,767 |
Insider Trading Arrangements |
3 Months Ended |
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Oct. 28, 2023 | |
Trading Arrangements, by Individual | |
Rule 10b5-1 Arrangement Adopted | false |
Non-Rule 10b5-1 Arrangement Adopted | false |
Rule 10b5-1 Arrangement Terminated | false |
Non-Rule 10b5-1 Arrangement Terminated | false |
Basis of Presentation (Policies) |
9 Months Ended |
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Oct. 28, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Reclassifications | Reclassifications The Company has made certain reclassifications to prior period amounts to conform to the current period presentation within the accompanying condensed consolidated financial statements and notes to the condensed consolidated financial statements.
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Interim Financial Statements | 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 October 28, 2023 and January 28, 2023, and the condensed consolidated statements of income, comprehensive income, cash flows and stockholders’ equity for the three and nine months ended October 28, 2023 and October 29, 2022. 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 United States 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 and nine months ended October 28, 2023 are not necessarily indicative of the results of operations to be expected for the full fiscal year.
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Fiscal Periods | Fiscal Periods The Company operates on a 52/53-week fiscal year calendar, which ends on the Saturday nearest to January 31 of each year. The three and nine months ended October 28, 2023 had the same number of days as the three and nine months ended October 29, 2022. All references herein to “fiscal 2023” and “fiscal 2022” represent the results of the 52-week fiscal years ended January 28, 2023 and January 29, 2022, respectively. All references herein to “fiscal 2024” represent the 53-week fiscal year ending February 3, 2024, with the extra week occurring in the fourth quarter of the year.
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Use of Estimates | 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 income taxes, unrecognized income 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. These estimates and assumptions may change as a result of the impact of global economic conditions, such as the uncertainty regarding the impact of public health crises, the ongoing Russia-Ukraine conflict, global inflationary pressures, volatility in foreign exchange rates and declining consumer spending. Actual results could differ from those estimates. Revisions in estimates could materially impact the results of operations and financial position. The Company’s operations could be impacted in ways the Company is not able to predict today. 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.
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Revenue Recognition | 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 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.
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Allowance for Doubtful Accounts | 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 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 to make required payments and records a provision for doubtful accounts based on these evaluations. As of October 28, 2023, approximately 48% of the Company’s total net trade accounts receivable and 62% 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.
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Recently Issued Accounting Guidance | Recently Issued Accounting Guidance Reference Rate Reform The Financial Accounting Standards Board (“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 the London Interbank Offered Rate (“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 modified 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 (as defined in Note 9), credit facilities and interest rate swap agreements were impacted by this guidance. In May 2023, the Company amended the terms of the Mortgage Debt for the interest rate to be based on Secured Overnight Financing Rate (“SOFR”) effective May 1, 2023. The Company also amended its existing interest rate swap agreement, resulting in a swap fixed rate of approximately 3.14%. As of October 28, 2023, the Company does not have any financial instruments with attributes directly or indirectly influenced by LIBOR.
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Lease Accounting (Tables) |
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Leases [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Assets and liabilities, lessee | The components of leases are (in thousands):
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Lease cost | The components of lease costs are (in thousands):
______________________________________________________________________ Notes: 1During the three and nine months ended October 28, 2023 and October 29, 2022, net (gains) losses on lease modifications related primarily to the early termination of certain lease agreements. Operating lease costs for these locations prior to the early termination were included in cost of product sales. 2During the three and nine months ended October 28, 2023, variable lease costs included certain rent concessions of approximately $0.4 million and $1.4 million, respectively, received by the Company, primarily in Europe. During the three and nine months ended October 29, 2022, variable lease costs included certain rent concessions of approximately $1.1 million and $4.6 million, respectively, received by the Company, primarily in Europe, related to the COVID-19 pandemic.
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Operating lease liabilities maturity schedule | Maturities of the Company’s operating and finance lease liabilities as of October 28, 2023 are (in thousands):
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Finance lease liabilities maturity schedule | Maturities of the Company’s operating and finance lease liabilities as of October 28, 2023 are (in thousands):
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Other supplemental information | Other supplemental information is (in thousands):
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Earnings per Share (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Oct. 28, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Computation of basic and diluted net earnings per common share attributable to common stockholders | The computation of basic and diluted net earnings per common share attributable to common stockholders is (in thousands, except per share data):
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Stockholders' Equity (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Oct. 28, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of cash dividend declared per share | The following sets forth the cash dividend declared per share:
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Schedule of changes in accumulated other comprehensive income (loss), net of related income taxes | The changes in accumulated other comprehensive income (loss), net of related income taxes, are (in thousands):
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Reclassifications out of accumulated other comprehensive income (loss) to net earnings (loss) | Details on reclassifications out of accumulated other comprehensive income (loss) to net earnings are (in thousands):
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Accounts Receivable (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Oct. 28, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of accounts receivable | Accounts receivable is summarized as follows (in thousands):
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Inventories (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Oct. 28, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of inventories | Inventories consist of the following (in thousands):
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Segment Information (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Oct. 28, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of net revenue and earnings (loss) from operations by segment | Net revenue and earnings (loss) from operations are summarized (in thousands):
Notes: 1During the three and nine months ended October 28, 2023 and October 29, 2022, the Company recognized asset impairment charges related primarily to impairment of property and equipment and operating right-of-use assets related to certain retail locations resulting from under-performance and expected store closures. Refer to Note 2 and Note 15 for more information regarding these asset impairment charges. 2During the three and nine months ended October 28, 2023 and October 29, 2022, the Company recorded net gains (losses) on lease modifications related primarily to the early termination of certain lease agreements.
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Summary of net revenue by country | The below presents information regarding geographic areas in which the Company operated. Net revenue is classified primarily based on the country where the Company’s customer is located (in thousands):
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Borrowings and Finance Lease Obligations (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Oct. 28, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of borrowings and finance lease obligations | Borrowings and finance lease obligations are summarized (in thousands):
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Convertible Senior Notes and Related Transactions (Tables) |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Convertible Debt | The Notes consist of the following (in thousands):
Notes: 1For the three and nine months ended October 28, 2023, the weighted average effective interest rate including amortization of debt discount and issuance costs on the 2028 Notes was 4.5%. 2The unamortized debt discount related to the 2028 Notes is due to the result of the modification accounting for a portion of the exchanged notes. This discount represents both an increase in the fair value of the embedded conversion option, which is calculated as the difference between the fair value of the embedded conversion option immediately before and after the exchange, and cash paid to modified noteholders. The change in conversion option value reduces the carrying amount of the convertible debt instrument with a corresponding increase in additional paid-in capital. The additional cash paid to modified noteholders increased the debt discount. This debt discount is being amortized to interest expense over five years. 3The fair value of the Notes is determined based on inputs that are observable in the market and have been classified as Level 2 in the fair value hierarchy.
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Schedule of Interest Expense on Convertible Notes | Interest expense for the Notes for the three and nine months ended October 28, 2023 and October 29, 2022 consists of the following (in thousands):
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Share-Based Compensation (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Oct. 28, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-Based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of share-based compensation expense recognized under all of the Company's stock plans | The following summarizes the share-based compensation expense recognized under all of the Company’s stock plans (in thousands):
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Schedule of activity for nonvested performance-based units | The following summarizes the activity for nonvested performance-based units during the nine months ended October 28, 2023:
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Schedule of activity for nonvested market-based units | The following summarizes the activity for nonvested market-based units during the nine months ended October 28, 2023:
______________________________________________________________________ Notes: 1As a result of the achievement of certain market-based vesting conditions, there were 145,003 shares that vested in addition to the original target number of shares granted in fiscal 2021.
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Commitments and Contingencies (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Oct. 28, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Redeemable Noncontrolling Interest | A reconciliation of the total carrying amount of redeemable noncontrolling interests is (in thousands):
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Defined Benefit Plans (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Oct. 28, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Defined Benefit Plans and Other Postretirement Benefit Plans Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of net periodic defined benefit pension cost related to the Company's defined benefit plans | The components of net periodic defined benefit pension cost related to the Company’s defined benefit plans are (in thousands):
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Fair Value Measurements (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Oct. 28, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of fair value hierarchy for assets and liabilities measured at fair value on a recurring basis | The following presents the fair value hierarchy for those assets and liabilities measured at fair value on a recurring basis (in thousands):
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Derivative Financial Instruments (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Oct. 28, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of fair value of derivative instruments in the condensed consolidated balance sheets | The fair value of derivative instruments in the condensed consolidated balance sheets is (in thousands):
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Summary of gains (losses) before taxes recognized on the derivative instruments designated as cash flow hedges | The following summarizes the gains (losses) before income taxes recognized on derivative instruments designated as cash flow hedges in OCI and net earnings (in thousands):
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Summary of net after-tax derivative activity recorded in accumulated other comprehensive income (loss) | The following summarizes net after income tax derivative activity recorded in accumulated other comprehensive income (loss) (in thousands):
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Summary of derivative instruments not designated as hedging instruments | The following summarizes the gains before income taxes recognized on derivative instruments not designated as hedging instruments in other income (expense) (in thousands):
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Lease Accounting - Lease Assets and Liabilities (Details) - USD ($) $ in Thousands |
Oct. 28, 2023 |
Jan. 28, 2023 |
---|---|---|
Assets | ||
Operating | $ 657,363 | $ 636,148 |
Finance | 16,536 | 19,055 |
Total lease assets | $ 673,899 | $ 655,203 |
Finance Lease, Right-of-Use Asset, Statement of Financial Position [Extensible Enumeration] | Property and equipment, net | Property and equipment, net |
Current: | ||
Operating | $ 165,420 | $ 170,192 |
Finance | 6,999 | 6,684 |
Noncurrent: | ||
Operating | 538,731 | 528,236 |
Finance | 10,793 | 13,181 |
Total lease liabilities | $ 721,943 | $ 718,293 |
Finance Lease, Liability, Current, Statement of Financial Position [Extensible Enumeration] | Current portion of borrowings and finance lease obligations | Current portion of borrowings and finance lease obligations |
Finance Lease, Liability, Noncurrent, Statement of Financial Position [Extensible Enumeration] | Long-term debt and finance lease obligations | Long-term debt and finance lease obligations |
Lease Accounting - Lease Term and Discount Rate (Details) |
Oct. 28, 2023 |
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Weighted-average remaining lease term | |
Operating leases | 6 years 2 months 12 days |
Finance leases | 3 years 3 months 18 days |
Weighted-average discount rate | |
Operating leases | 4.80% |
Finance leases | 5.10% |
Lease Accounting - Other Information (Details) - USD ($) $ in Thousands |
9 Months Ended | |
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Oct. 28, 2023 |
Oct. 29, 2022 |
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Cash paid for amounts included in the measurement of lease liabilities | ||
Operating cash flows from operating leases | $ 155,379 | $ 166,910 |
New operating ROU assets obtained in exchange for lease liabilities | $ 128,756 | $ 106,427 |
Stockholders' Equity - Cash Dividend Declared Per Share (Details) - $ / shares |
3 Months Ended | 9 Months Ended | ||||
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May 24, 2023 |
Oct. 28, 2023 |
Apr. 29, 2023 |
Oct. 29, 2022 |
Oct. 28, 2023 |
Oct. 29, 2022 |
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Equity [Abstract] | ||||||
Cash dividend declared per share (in dollars per share) | $ 0.30 | $ 0.300 | $ 0.225 | $ 0.225 | $ 0.825 | $ 0.675 |
Stockholders' Equity - Accumulated Other Comprehensive Income (Loss) (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||||||
---|---|---|---|---|---|---|---|---|
Oct. 28, 2023 |
Jul. 29, 2023 |
Apr. 29, 2023 |
Oct. 29, 2022 |
Jul. 30, 2022 |
Apr. 30, 2022 |
Oct. 28, 2023 |
Oct. 29, 2022 |
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Accumulated other comprehensive income (loss), net of tax | ||||||||
Beginning balance | $ 533,821 | $ 493,058 | $ 572,751 | $ 442,173 | $ 431,239 | $ 653,643 | $ 572,751 | $ 653,643 |
Net other comprehensive income (loss) | (23,648) | 9,302 | (4,095) | (6,712) | (10,135) | (11,640) | ||
Ending balance | 557,130 | 533,821 | 493,058 | 452,688 | 442,173 | 431,239 | 557,130 | 452,688 |
Foreign Currency Translation Adjustment | ||||||||
Accumulated other comprehensive income (loss), net of tax | ||||||||
Beginning balance | (123,169) | (129,168) | (163,862) | (135,861) | (129,168) | (135,861) | ||
Gains (losses) arising during the period | (26,663) | (9,685) | (20,664) | (37,686) | ||||
Reclassification to net earnings for (gains) losses realized | 0 | 0 | 0 | 0 | ||||
Net other comprehensive income (loss) | (26,663) | (9,685) | (20,664) | (37,686) | ||||
Ending balance | (149,832) | (123,169) | (173,547) | (163,862) | (149,832) | (173,547) | ||
Derivative Financial Instruments Designated as Cash Flow Hedges | ||||||||
Accumulated other comprehensive income (loss), net of tax | ||||||||
Beginning balance | (5,805) | (1,584) | 14,240 | 7,280 | (1,584) | 7,280 | ||
Gains (losses) arising during the period | 5,870 | 6,136 | 7,383 | 15,578 | ||||
Reclassification to net earnings for (gains) losses realized | (6) | (3,709) | (5,740) | (6,191) | ||||
Net other comprehensive income (loss) | 5,864 | 2,427 | 1,643 | 9,387 | ||||
Ending balance | 59 | (5,805) | 16,667 | 14,240 | 59 | 16,667 | ||
Defined Benefit Plans | ||||||||
Accumulated other comprehensive income (loss), net of tax | ||||||||
Beginning balance | (3,583) | (3,321) | (6,902) | (6,968) | (3,321) | (6,968) | ||
Gains (losses) arising during the period | 184 | 150 | (122) | 221 | ||||
Reclassification to net earnings for (gains) losses realized | 22 | (8) | 66 | (13) | ||||
Net other comprehensive income (loss) | 206 | 142 | (56) | 208 | ||||
Ending balance | (3,377) | (3,583) | (6,760) | (6,902) | (3,377) | (6,760) | ||
Accumulated Other Comprehensive Loss | ||||||||
Accumulated other comprehensive income (loss), net of tax | ||||||||
Beginning balance | (132,557) | (139,477) | (134,073) | (156,524) | (146,713) | (135,549) | (134,073) | (135,549) |
Gains (losses) arising during the period | (20,609) | (3,399) | (13,403) | (21,887) | ||||
Reclassification to net earnings for (gains) losses realized | 16 | (3,717) | (5,674) | (6,204) | ||||
Net other comprehensive income (loss) | (20,593) | 6,920 | (5,404) | (7,116) | (9,811) | (11,164) | (19,077) | (28,091) |
Ending balance | $ (153,150) | $ (132,557) | $ (139,477) | $ (163,640) | $ (156,524) | $ (146,713) | $ (153,150) | $ (163,640) |
Accounts Receivable (Details) - USD ($) $ in Thousands |
Oct. 28, 2023 |
Jan. 28, 2023 |
---|---|---|
Accounts receivable | ||
Accounts receivable, gross | $ 347,918 | $ 350,493 |
Less allowances | 7,134 | 8,554 |
Accounts receivable, net | 340,784 | 341,939 |
Trade | ||
Accounts receivable | ||
Accounts receivable, gross | 294,352 | 306,737 |
Royalty | ||
Accounts receivable | ||
Accounts receivable, gross | 49,533 | 37,521 |
Other | ||
Accounts receivable | ||
Accounts receivable, gross | $ 4,033 | $ 6,235 |
Inventories (Details) - USD ($) $ in Thousands |
Oct. 28, 2023 |
Jan. 28, 2023 |
---|---|---|
Inventory Disclosure [Abstract] | ||
Raw materials | $ 1,760 | $ 1,807 |
Work in progress | 3 | 3 |
Finished goods | 560,623 | 509,089 |
Inventories | 562,386 | 510,899 |
Allowance to write down inventories to the lower of cost or net realizable value | $ 25,000 | $ 30,300 |
Borrowings and Finance Lease Obligations - Summary of Borrowings and Finance Lease Obligations (Details) - USD ($) $ in Thousands |
Oct. 28, 2023 |
Jan. 28, 2023 |
---|---|---|
Debt Instrument [Line Items] | ||
Borrowings under credit facilities | $ 121,804 | $ 70,304 |
Term loans | 13,931 | 25,516 |
Finance lease obligations | 17,792 | 19,865 |
Mortgage debt | 16,668 | 17,189 |
Other | 3,321 | 3,427 |
Less current installments | 41,695 | 40,380 |
Long-term debt and finance lease obligations | 131,821 | 95,921 |
Long-term debt and finance lease liabilities, excluding convertible senior notes | ||
Debt Instrument [Line Items] | ||
Total debt and finance lease obligations | 173,516 | 136,301 |
Less current installments | 41,695 | 40,380 |
Long-term debt and finance lease obligations | $ 131,821 | $ 95,921 |
Convertible Senior Notes and Related Transactions - Components of Debt (Details) - Senior Notes - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Oct. 28, 2023 |
Oct. 28, 2023 |
Apr. 29, 2023 |
Jan. 28, 2023 |
|
2028 Notes | ||||
Debt Instrument [Line Items] | ||||
Principal | $ 275,000 | $ 275,000 | $ 0 | |
Unamortized debt discount and issuance costs | (8,449) | (8,449) | 0 | |
Net carrying amount | $ 266,551 | $ 266,551 | 0 | |
Effective interest rate | 4.50% | 4.50% | ||
Discount amortization period | 5 years | |||
2028 Notes | Level 2 | ||||
Debt Instrument [Line Items] | ||||
Fair value, net | $ 274,342 | $ 274,342 | 0 | |
2024 Notes | ||||
Debt Instrument [Line Items] | ||||
Principal | 115,144 | 115,144 | $ 115,100 | 300,000 |
Unamortized debt issuance costs | (159) | (159) | (1,069) | |
Net carrying amount | 114,985 | 114,985 | 298,931 | |
2024 Notes | Level 2 | ||||
Debt Instrument [Line Items] | ||||
Fair value, net | $ 117,327 | $ 117,327 | $ 331,862 |
Convertible Senior Notes and Related Transactions - Components of Interest Expense (Details) - Senior Notes - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Oct. 28, 2023 |
Oct. 29, 2022 |
Oct. 28, 2023 |
Oct. 29, 2022 |
|
2028 Notes | ||||
Debt Instrument [Line Items] | ||||
Coupon interest | $ 2,578 | $ 0 | $ 5,557 | $ 0 |
Amortization of debt discount and issuance costs | 415 | 0 | 894 | 0 |
Total | 2,993 | 0 | 6,451 | 0 |
2024 Notes | ||||
Debt Instrument [Line Items] | ||||
Coupon interest | 325 | 1,500 | 2,247 | 4,500 |
Amortization of debt discount and issuance costs | 50 | 215 | 334 | 644 |
Total | $ 375 | $ 1,715 | $ 2,581 | $ 5,144 |
Share-Based Compensation - Share-based Compensation Expense (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Oct. 28, 2023 |
Oct. 29, 2022 |
Oct. 28, 2023 |
Oct. 29, 2022 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share-based compensation expense | $ 4,877 | $ 5,868 | $ 14,952 | $ 16,547 |
Employee Stock Purchase Plan | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share-based compensation expense | 37 | 33 | 131 | 176 |
Stock options | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share-based compensation expense | 0 | 706 | 713 | 2,018 |
Stock awards/units | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share-based compensation expense | $ 4,840 | $ 5,129 | $ 14,108 | $ 14,353 |
Commitments and Contingencies - Investment Commitments (Details) - Oct. 28, 2023 € in Millions, $ in Millions |
EUR (€) |
USD ($) |
---|---|---|
Commitments and Contingencies Disclosure [Abstract] | ||
Unfunded commitment to invest in private equity fund | € 7.9 | $ 8.3 |
Commitments and Contingencies - Redeemable Noncontrolling Interests (Details) $ in Thousands |
1 Months Ended | |||||||
---|---|---|---|---|---|---|---|---|
May 31, 2023
EUR (€)
|
Oct. 28, 2023
USD ($)
|
Oct. 28, 2023
EUR (€)
|
Apr. 30, 2023 |
Jan. 28, 2023
USD ($)
|
Jan. 28, 2023
EUR (€)
|
Oct. 29, 2022
USD ($)
|
Jan. 29, 2022
USD ($)
|
|
Loss Contingencies [Line Items] | ||||||||
Redeemable noncontrolling interests | $ | $ 513 | $ 9,154 | $ 8,434 | $ 9,500 | ||||
Guess Brazil | ||||||||
Loss Contingencies [Line Items] | ||||||||
Ownership percentage | 40.00% | 40.00% | ||||||
Redeemable noncontrolling interests | $ | $ 500 | $ 500 | ||||||
Guess CIS | ||||||||
Loss Contingencies [Line Items] | ||||||||
Ownership percentage | 30.00% | |||||||
Redeemable noncontrolling interests | € | € 0 | € 8,000,000 | ||||||
Payment to acquire noncontrolling interest | € | € 8,000,000 |
Commitments and Contingencies - Reconciliation of Redeemable Noncontrolling Interest (Details) - USD ($) $ in Thousands |
9 Months Ended | |
---|---|---|
Oct. 28, 2023 |
Oct. 29, 2022 |
|
Redeemable Noncontrolling Interest [Roll Forward] | ||
Beginning balance | $ 9,154 | $ 9,500 |
Foreign currency translation adjustment | (60) | (1,066) |
Purchase of redeemable noncontrolling interest | (8,581) | 0 |
Ending balance | $ 513 | $ 8,434 |
Defined Benefit Plans - Narrative (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Oct. 28, 2023 |
Oct. 29, 2022 |
Oct. 28, 2023 |
Oct. 29, 2022 |
Jan. 28, 2023 |
|
SERP | |||||
Defined Benefit Plans | |||||
Projected benefit obligation | $ 42.3 | $ 42.3 | $ 42.4 | ||
SERP benefit payments | 0.5 | $ 0.5 | 1.4 | $ 1.4 | |
SERP | Other income (expense) | |||||
Defined Benefit Plans | |||||
Unrealized losses as a result of changes in value of the insurance policy investments, included in other expense | 4.2 | $ 4.8 | 4.1 | $ 8.3 | |
Pension Plans | Foreign Plan | |||||
Defined Benefit Plans | |||||
Projected benefit obligation | 50.9 | 50.9 | 47.4 | ||
Plan assets at fair value | 44.4 | 44.4 | 41.2 | ||
Net liability | 6.5 | 6.5 | 6.2 | ||
Other assets | SERP | |||||
Defined Benefit Plans | |||||
Cash surrender values of the insurance policies held in a rabbi trust | $ 58.9 | $ 58.9 | $ 64.4 |
Fair Value Measurements - Narrative (Details) $ in Thousands, € in Millions |
3 Months Ended | 9 Months Ended | |||||
---|---|---|---|---|---|---|---|
Oct. 28, 2023
USD ($)
|
Oct. 29, 2022
USD ($)
|
Oct. 28, 2023
USD ($)
|
Oct. 29, 2022
USD ($)
|
Oct. 28, 2023
EUR (€)
|
Jan. 28, 2023
USD ($)
|
Jan. 28, 2023
EUR (€)
|
|
Fair value measurements | |||||||
Alternative Investment, Type [Extensible Enumeration] | Private Equity Funds [Member] | Private Equity Funds [Member] | Private Equity Funds [Member] | Private Equity Funds [Member] | Private Equity Funds [Member] | ||
Unfunded commitment to invest in private equity fund | $ 8,300 | $ 8,300 | € 7.9 | ||||
Asset impairment charges | 1,737 | $ 1,789 | 6,293 | $ 5,252 | |||
Impairment of property and equipment | 1,600 | $ 1,800 | 6,000 | $ 5,200 | |||
Fair Value Measured at Net Asset Value Per Share | |||||||
Fair value measurements | |||||||
Unfunded commitment to invest in private equity fund | 8,300 | 8,300 | 7.9 | ||||
Fair Value Measured at Net Asset Value Per Share | Other assets | |||||||
Fair value measurements | |||||||
Alternative investment | $ 6,500 | $ 6,500 | € 6.2 | $ 4,000 | € 3.7 |
Derivative Financial Instruments - Derivative Activity in AOCI (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Oct. 28, 2023 |
Oct. 29, 2022 |
Oct. 28, 2023 |
Oct. 29, 2022 |
|
Accumulated Other Comprehensive Income, Derivatives Qualifying as Hedges, Net of Tax [Roll Forward] | ||||
Beginning balance | $ 533,821 | $ 442,173 | $ 572,751 | $ 653,643 |
Ending balance | 557,130 | 452,688 | 557,130 | 452,688 |
Derivative Financial Instruments Designated as Cash Flow Hedges | ||||
Accumulated Other Comprehensive Income, Derivatives Qualifying as Hedges, Net of Tax [Roll Forward] | ||||
Beginning balance | (5,805) | 14,240 | (1,584) | 7,280 |
Net gains from changes in cash flow hedges | 5,870 | 6,136 | 7,383 | 15,578 |
Net gains reclassified into earnings | (6) | (3,709) | (5,740) | (6,191) |
Ending balance | $ 59 | $ 16,667 | $ 59 | $ 16,667 |
Derivative Financial Instruments - Derivative Instruments Not Designated as Hedging Instruments (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Oct. 28, 2023 |
Oct. 29, 2022 |
Oct. 28, 2023 |
Oct. 29, 2022 |
|
Foreign exchange currency contracts | Other expense | ||||
Derivative [Line Items] | ||||
Gains Recognized in Earnings | $ 3,870 | $ 1,153 | $ 3,410 | $ 4,294 |
Subsequent Events (Details) - $ / shares |
3 Months Ended | 9 Months Ended | |||||
---|---|---|---|---|---|---|---|
Nov. 21, 2023 |
May 24, 2023 |
Oct. 28, 2023 |
Apr. 29, 2023 |
Oct. 29, 2022 |
Oct. 28, 2023 |
Oct. 29, 2022 |
|
Subsequent Event [Line Items] | |||||||
Cash dividend declared per share (in dollars per share) | $ 0.30 | $ 0.300 | $ 0.225 | $ 0.225 | $ 0.825 | $ 0.675 | |
Subsequent Event | |||||||
Subsequent Event [Line Items] | |||||||
Cash dividend declared per share (in dollars per share) | $ 0.30 |