Apparel retailer Guess Inc. on Monday announced several significant financial moves.
First, the company said it launched a new share repurchase program that would allow the apparel retailer to buy back up to $200 million of its common stock. The retailer also said it has agreed to exchange $14.6 million of convertible notes due this year for $12.1 million in aggregate principal.
Under the terms of the note exchange, the loans, which carry a higher interest rate will now be due in 2028. Concurrently with the pricing of the 2028 notes, Guess also has agreed to repurchase 326,429 shares of its stock for $10.3 million.
“Returning capital directly to our shareholders is a high priority for our Board,” CEO Carlos Alberini said in a statement. “This $200 million share repurchase authorization and the more than $10 million repurchase we have announced today reflects our confidence in the business and follows our recently announced special dividend of $2.25 per share which will be paid in early May.”
A year ago this month, the company issued $275 million in notes due in 2028 and exchanged about $185 million of the existing convertible senior notes due in 2024 for about $161.4 million in senior notes due in 2028. And in January, Guess issued $64.8 million of notes due in 2028 following the retirement of $67.1 million in loans that were due this year. Those note exchanges also carry higher interest rates.
“We remain committed to enhancing shareholder returns and have a strong capital structure, solid cash flow generation, a powerful and diversified business model and a unique platform to support our company’s growth initiatives,” Alberini added.
Those growth initiatives include a recent deal with WHP Global. In February, Guess and WHP reached an agreement to acquire apparel retailer Rag & Bone. Under the deal, Guess will pay $56.5 million to acquire Rag & Bone’s operating assets. Guess and WHP will both own Rag & Bone’s intellectual property through a joint venture. Rag & Bone will operate as an independent fashion brand under the Guess portfolio. Guess will gain exclusive rights to Rag & Bone’s IP to manufacture the latter’s products worldwide and sell them in specified territories in exchange for Guess’ payment of royalties.
Guess in March reported full-year net revenue rose 3% to $2.78 billion from $2.69 billion a year earlier. Net earnings for the year were $198.2 million, up 32% year over year from $149.6 million. For the company’s Americas segment, Guess said comparable sales including e-commerce decreased 5%.
For the upcoming fiscal year, Guess’s outlook is for an 11.5% to 13.5% year-over-year increase in consolidated net revenue. As of Feb. 3, Guess directly operated 1,002 retail stores in Europe, the Americas and Asia; the company’s partners and distributors operated 551 additional retail stores worldwide.
