Can Guess? Overcome Footfall Challenge Despite Restructuring?

Telsey Advisory Group analyst Dana Telsey reiterated the Market Perform rating on Guess?, Inc. GES, with an unchanged price forecast of $13.

Yesterday, the company reported fourth-quarter results, with adjusted earnings per share of $1.48, beating the street view of $1.38.

Telsey noted that after three uneven quarters and downward adjustments to its annual outlook, Guess? met its revenue expectations in the fourth quarter.

Despite that, lower gross margins and modest expense management led to an operating margin miss, though earnings per share landed within the guidance range thanks to a lower tax rate, the analyst adds.

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The company’s CEO, Carlos Alberini, said Guess? is sharpening its focus on boosting global direct-to-consumer sales productivity and enhancing profitability by streamlining its business operations and portfolio.

As part of this strategy, the company plans to transition its long-standing direct operations in Greater China to a local partner with strong market experience, noting that discussions with several potential candidates are already underway and the transition is expected to be finalized before the fiscal year ends.

While these steps are promising, Telsey warned that near-term challenges persist, including weaker customer traffic in North America and Asia.

For the first quarter of fiscal 2026, the company projects adjusted diluted loss in the range of 65 cents to 74 cents per share (estimate: 23 cents loss per share).

Looking ahead, Telsey viewed the company’s sales guidance as solid, with first-quarter estimates aligning with forecasts and the full-year revenue outlook surpassing expectations.

Meanwhile, guidance for operating margins and EPS fell short for both the quarter and the year, reflecting a tough global macroeconomic backdrop, the analyst writes.

The analyst notes that the guidance does not include the incremental tariffs announced this week.

Per Telsey, the tariffs could add further margin pressure—though about 75% of Guess?’s revenue comes from outside the U.S.

Price Action: GES shares are trading higher by 11.5% to $11.20 at last check Friday.

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