GUESS? INC (NYSE:GES) Beats Q2 FY26 Estimates Amid Take-Private Deal Overhang

Guess?, Inc. (NYSE:GES) reported second-quarter fiscal 2026 results that surpassed analyst expectations, though the broader narrative remains heavily influenced by a pending take-private transaction announced last month. The apparel retailer posted revenue of $772.9 million, a 6% increase year-over-year, exceeding the consensus estimate of $766.3 million. On a constant currency basis, revenue grew 3%.

Adjusted earnings per share came in at $0.26, significantly higher than the $0.15 analysts had projected, though this represented a 38% decline from the $0.42 reported in the same quarter last year. GAAP earnings per share were $0.12, compared to a loss of $0.28 in the prior-year period.

Key Financial Performance vs. Estimates

The company’s ability to beat both top and bottom-line estimates was primarily driven by stronger-than-expected performance in its European segment. European revenues increased 14% in U.S. dollars (9% in constant currency), with retail comparable sales, including e-commerce, rising 11%. This strength helped offset continued challenges in the Americas Retail segment, where revenues decreased 1% and comparable sales fell 5%.

Despite the revenue beat, operating margins faced pressure. GAAP operating margin decreased to 2.3% from 6.5% in the prior-year quarter. This contraction was attributed to several factors, including higher expenses related to store costs and advertising, costs associated with the proposed transaction, an unfavorable business mix, and increased markdowns. Adjusted operating margin also declined, falling to 3.7% from 5.2%.

Market Reaction and the Take-Private Overhang

The market’s reaction to the earnings beat has been muted, largely overshadowed by the company’s recent announcement of a definitive agreement to be taken private. On August 20, 2025, Guess? entered into an agreement with Authentic Brands Group and a group of existing shareholders. Under the terms of the deal, public shareholders will receive $16.75 per share in cash, after which the company’s stock will be delisted.

This proposed transaction, expected to close in the fourth quarter of fiscal 2026, has effectively capped the stock's upside near the acquisition price. Consequently, the company has suspended its practice of providing financial guidance and will not host a conference call to discuss quarterly results, redirecting investors to its SEC filings for further detail.

Operational Summary and Segment Performance

The earnings release highlighted a mixed operational performance across the company’s global segments:

• Europe: Demonstrated robust growth with a 14% revenue increase and an expansion in operating margin to 10.6%.
• Americas Retail: Continued to struggle, with revenues down 1% and the segment reporting an operating loss, with margin declining to -3.7%.
• Americas Wholesale: Revenues decreased 11%, though operating margin improved slightly to 19.6%.
• Asia: Posted a modest 3% revenue increase but saw its operating margin decline significantly to -6.8%.
• Licensing: Revenues decreased 10%, though the segment maintains an exceptionally high operating margin of 95.4%.

For a more detailed breakdown of future earnings projections and analyst estimates, you can review the full outlook here.

Disclaimer: This article is for informational purposes only and does not constitute investment advice, a recommendation, or an offer to buy or sell any securities. The information presented should not be used as the sole basis for making any investment decision.