Guess caps tariff hit at $10m in FY2026 outlook
Global lifestyle brand Guess has given an update on US tariffs and their potential effects on the company’s operations and financial projections while discussing the release of the first quarter (Q1) of fiscal year 2026 performance.
In the earnings call, the company clarified that a significant portion of their business – around 75% – operates outside the US and is unaffected by the tariffs levied by US President Donald Trump’s administration.
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Guess CEO Carlos Alberini stated that “the remaining 25% of directly produced and distributed products represents roughly $200m in annual purchases”.
He highlighted that both Guess’ and Rag and Bone’s sourcing teams have been proactive in mitigating tariff impacts by shifting a large segment of production away from China to alternative markets. Negotiations have also taken place to adjust costs with suppliers and prices with retail partners.
Through these strategic moves, Alberini anticipates that the tariffs will only reduce their margins by less than $10m in 2025 — a figure already factored into their current financial outlook. He emphasised that this has been achieved with negligible price hikes.
The financial update comes as the company reported a 9% increase in revenue to $647.8m, with varying performance across regions in the first quarter.
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By GlobalDataEurope’s revenue grew 8%, while the Americas retail and wholesale segments saw increases of 9% and 63% respectively. However, Asia experienced a 20% decline in revenue, and licensing revenues there decreased by 14%.
The company completed the acquisition of fashion brand Rag & Bone in partnership with brand management firm WHP Global, integrating it into Guess’s existing segments in April 2024.
Guess co-founder and chief creative officer Paul Marciano stated: “We continue to benefit from our highly diversified business model. We have a strong global infrastructure that supports 25 different product categories, multiple markets across all regions of the world and several consumer channels.
“We plan to continue to leverage this unique platform to drive revenue growth, including initiatives such as the expansion of Rag & Bone into new markets and product categories, the expanded distribution of our Guess athleisure product line and our Guess Jeans brand to capture increased market share among young consumers.”
Generally accepting accounting principles (GAAP) loss from operations increased 67.5% to $33.3m, influenced by an unfavourable business mix, higher asset impairment charges, and currency impacts.
The company posted a GAAP net loss of $32.9m, a stark contrast to the $13m net earnings reported in the same quarter of the previous year. The results include a $4.3m unrealised loss due to changes in the fair value of derivatives, impacting both GAAP and adjusted diluted net loss per share figures.
The company’s adjusted net loss increased 61% to $22.3m, with adjusted diluted net loss per share rising 63% to $0.44. Guess attributes part of these results to share buybacks and currency impacts.
Guess anticipates revenue growth between 2.9% and 4.7% for the second quarter of fiscal 2026 and between 5.5% and 7.4% for the full fiscal year.
The company forecasts GAAP operating margins of 2.5% to 3.3% for Q2 and 3.9% to 4.6% for the full year, with adjusted figures slightly higher.
Alberini stated: “As we look into the rest of the year, we continue to expect solid revenue growth driven by the expansion of Rag & Gone, the ongoing development of Guess Jeans and the new joint venture with the Chalhoub Group in the Middle East.
“We remain focused on executing our strategic initiatives to increase our direct-to-consumer sales productivity and improve our profitability through business and portfolio optimisation.”
In April, Guess disclosed plans to streamline operations and optimise its portfolios in China and North America.
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