Cover Page
Cover Page - shares | 3 Months Ended | |
May 02, 2020 | Jun. 08, 2020 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | May 2, 2020 | |
Document Transition Report | false | |
Entity File Number | 1-11893 | |
Entity Registrant Name | GUESS INC | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 95-3679695 | |
Entity Address, Address Line One | 1444 South Alameda Street | |
Entity Address, City or Town | Los Angeles, | |
Entity Address, State or Province | CA | |
Entity Address, Postal Zip Code | 90021 | |
City Area Code | 213 | |
Local Phone Number | 765-3100 | |
Title of 12(b) Security | Common Stock, par value $0.01 per share | |
Trading Symbol | GES | |
Security Exchange Name | NYSE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 67,602,723 | |
Entity Central Index Key | 0000912463 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --01-30 | |
Document Fiscal Year Focus | 2021 | |
Document Fiscal Period Focus | Q1 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | May 02, 2020 | Feb. 01, 2020 |
Current assets: | ||
Cash and cash equivalents | $ 419,415 | $ 284,613 |
Accounts receivable, net | 239,532 | 327,281 |
Inventories | 392,490 | 393,129 |
Other current assets | 58,961 | 59,212 |
Total current assets | 1,110,398 | 1,064,235 |
Property and equipment, net | 244,681 | 288,112 |
Goodwill | 34,490 | 34,777 |
Deferred tax assets | 58,777 | 63,555 |
Restricted cash | 213 | 215 |
Operating lease right-of-use assets | 778,030 | 851,990 |
Other assets | 120,163 | 126,078 |
Total assets | 2,346,752 | 2,428,962 |
Current liabilities: | ||
Current portion of borrowings and finance lease obligations | 160,501 | 9,490 |
Accounts payable | 214,937 | 232,761 |
Accrued expenses and other current liabilities | 119,819 | 204,096 |
Current portion of operating lease liabilities | 226,967 | 192,066 |
Total current liabilities | 722,224 | 638,413 |
Convertible senior notes, net | 250,176 | 247,363 |
Long-term operating lease liabilities | 659,947 | 714,079 |
Other long-term liabilities | 128,878 | 130,259 |
Total liabilities | 1,856,029 | 1,762,884 |
Redeemable noncontrolling interests | 3,934 | 4,731 |
Commitments and contingencies (Note 13) | ||
Stockholders’ equity: | ||
Preferred stock, $.01 par value. Authorized 10,000,000 shares; no shares issued and outstanding | 0 | 0 |
Common stock, $.01 par value. Authorized 150,000,000 shares; issued 142,861,035 and 142,867,947 shares, outstanding 67,644,248 and 65,848,510 shares, as of May 2, 2020 and February 1, 2020, respectively | 676 | 658 |
Paid-in capital | 544,319 | 563,004 |
Retained earnings | 973,006 | 1,130,409 |
Accumulated other comprehensive loss | (153,302) | (139,910) |
Treasury stock, 75,216,787 and 77,019,437 shares as of May 2, 2020 and February 1, 2020, respectively | (893,045) | (914,447) |
Guess, Inc. stockholders’ equity | 471,654 | 639,714 |
Nonredeemable noncontrolling interests | 15,135 | 21,633 |
Total stockholders’ equity | 486,789 | 661,347 |
Total liabilities and stockholders' equity | 2,346,752 | 2,428,962 |
Long-term debt and finance lease liabilities, excluding convertible senior notes | ||
Current liabilities: | ||
Current portion of borrowings and finance lease obligations | 160,501 | 9,490 |
Long-term debt and finance lease obligations | $ 94,804 | $ 32,770 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | May 02, 2020 | Feb. 01, 2020 |
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) | 142,861,035 | 142,867,947 |
Common stock, outstanding (in shares) | 67,644,248 | 65,848,510 |
Treasury stock (in shares) | 75,216,787 | 77,019,437 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF LOSS - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
May 02, 2020 | May 04, 2019 | |
Net revenue | $ 260,251 | $ 536,691 |
Cost of product sales | 226,022 | 354,742 |
Gross profit | 34,229 | 181,949 |
Selling, general and administrative expenses | 143,288 | 204,645 |
Asset impairment charges | 52,972 | 1,775 |
Net losses on lease terminations | 456 | 0 |
Loss from operations | (162,487) | (24,471) |
Other income (expense): | ||
Interest expense | (5,462) | (1,259) |
Interest income | 610 | 361 |
Other income (expense), net | (19,580) | 2,071 |
Total other income (expense) | (24,432) | 1,173 |
Loss before income tax benefit | (186,919) | (23,298) |
Income tax benefit | (26,381) | (2,717) |
Net loss | (160,538) | (20,581) |
Net earnings (loss) attributable to noncontrolling interests | (2,872) | 793 |
Net loss attributable to Guess, Inc. | $ (157,666) | $ (21,374) |
Net loss per common share attributable to common stockholders (Note 3): | ||
Basic (in dollars per share) | $ (2.40) | $ (0.27) |
Diluted (in dollars per share) | $ (2.40) | $ (0.27) |
Weighted average common shares outstanding attributable to common stockholders (Note 3): | ||
Basic (in shares) | 65,715 | 79,925 |
Diluted (in shares) | 65,715 | 79,925 |
Product sales | ||
Net revenue | $ 247,317 | $ 517,873 |
Net royalties | ||
Net revenue | $ 12,934 | $ 18,818 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS - USD ($) $ in Thousands | 3 Months Ended | |
May 02, 2020 | May 04, 2019 | |
Statement of Comprehensive Income [Abstract] | ||
Net loss | $ (160,538) | $ (20,581) |
Foreign currency translation adjustment | ||
Losses arising during the period | (18,499) | (12,067) |
Derivative financial instruments designated as cash flow hedges | ||
Gains arising during the period | 3,536 | 4,436 |
Less income tax effect | (356) | (572) |
Reclassification to net loss for gains realized | (1,988) | (276) |
Less income tax effect | 219 | 95 |
Defined benefit plans | ||
Foreign currency and other adjustments | 0 | 107 |
Less income tax effect | (1) | (11) |
Net actuarial loss amortization | 96 | 111 |
Prior service credit amortization | (16) | (10) |
Less income tax effect | (9) | (11) |
Total comprehensive loss | (177,556) | (28,779) |
Less comprehensive income (loss) attributable to noncontrolling interests: | ||
Net earnings (loss) | (2,872) | 793 |
Foreign currency translation adjustment | (3,626) | 310 |
Amounts attributable to noncontrolling interests | (6,498) | 1,103 |
Comprehensive loss attributable to Guess, Inc. | $ (171,058) | $ (29,882) |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 3 Months Ended | |
May 02, 2020 | May 04, 2019 | |
Cash flows from operating activities: | ||
Net loss | $ (160,538) | $ (20,581) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 17,024 | 18,598 |
Amortization of debt discount | 2,599 | 213 |
Amortization of debt issuance costs | 307 | 41 |
Share-based compensation expense | 5,786 | 4,468 |
Forward contract gains | (1,102) | (34) |
Net loss on impairment and disposition of property and equipment and long-term assets | 53,483 | 2,250 |
Other items, net | 9,951 | 82 |
Changes in operating assets and liabilities: | ||
Accounts receivable | 84,667 | 68,482 |
Inventories | (7,894) | (13,676) |
Prepaid expenses and other assets | 1,059 | (11,681) |
Operating lease assets and liabilities, net | 27,704 | 89 |
Accounts payable and accrued expenses | (93,294) | (145,077) |
Other long-term liabilities | (1,305) | 325 |
Net cash used in operating activities | (61,553) | (96,501) |
Cash flows from investing activities: | ||
Purchases of property and equipment | (5,973) | (17,865) |
Proceeds from sale of long-term assets | 257 | 0 |
Net cash settlement of forward contracts | 0 | 162 |
Other investing activities | 0 | 521 |
Net cash used in investing activities | (5,716) | (17,182) |
Cash flows from financing activities: | ||
Proceeds from borrowings | 245,961 | 78,892 |
Repayments on borrowings and finance lease obligations | (31,884) | (34,185) |
Proceeds from issuance of convertible senior notes | 0 | 300,000 |
Proceeds from issuance of warrants | 0 | 28,080 |
Purchase of convertible note hedges | 0 | (60,990) |
Convertible debt issuance costs | 0 | (4,246) |
Purchase of equity forward contracts | 0 | (68,000) |
Dividends paid | (958) | (18,642) |
Issuance of common stock, net of tax withholdings on vesting of stock awards | (3,036) | (622) |
Purchase of treasury stock | 0 | (201,564) |
Net cash provided by financing activities | 210,083 | 18,723 |
Effect of exchange rates on cash, cash equivalents and restricted cash | (8,014) | (2,579) |
Net change in cash, cash equivalents and restricted cash | 134,800 | (97,539) |
Cash, cash equivalents and restricted cash at the beginning of the year | 284,828 | 210,995 |
Cash, cash equivalents and restricted cash at the end of the period | 419,628 | 113,456 |
Supplemental cash flow data: | ||
Interest paid | 3,960 | 566 |
Income taxes paid, net of refunds | 590 | (232) |
Non-cash investing and financing activity: | ||
Assets acquired under finance lease obligations | $ 86 | $ 665 |
CONDENSED CONSOLIDATED STATEM_4
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY Statement - USD ($) $ in Thousands | Total | Common Stock | Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Loss | Treasury Stock | Nonredeemable Noncontrolling Interests |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Cumulative adjustment from adoption of new guidance | $ 853,645 | $ 814 | $ 523,331 | $ 1,077,747 | $ (126,179) | $ (638,486) | $ 16,418 |
Beginning balance (in shares) at Feb. 02, 2019 | 81,379,660 | 61,327,640 | |||||
Beginning balance at Feb. 02, 2019 | 853,645 | $ 814 | 523,331 | 1,077,747 | (126,179) | $ (638,486) | 16,418 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Cumulative adjustment from adoption of new guidance | 565,078 | $ 717 | 480,865 | 1,036,386 | (126,179) | $ (837,705) | 17,521 |
Net earnings (loss) | (20,581) | (21,374) | 793 | ||||
Other comprehensive income (loss), net of income tax | (8,198) | (8,508) | 310 | ||||
Issuance of common stock under stock compensation plans (in shares) | 545,881 | (211,221) | |||||
Issuance of common stock under stock compensation plans including tax effect | (812) | $ 5 | (3,042) | $ 2,225 | |||
Issuance of stock under Employee Stock Purchase Plan (in shares) | 11,377 | (11,377) | |||||
Issuance of stock under Employee Stock Purchase Plan | 190 | $ 1 | 69 | $ 120 | |||
Share-based compensation | 4,468 | 4,440 | 28 | ||||
Dividends | (18,331) | (18,331) | |||||
Share repurchases (in shares) | (10,264,052) | 10,264,052 | |||||
Share repurchases | (201,564) | $ (103) | 103 | $ (201,564) | |||
Equity component value of convertible note issuance, net | 42,324 | 42,324 | |||||
Sale of common stock warrant | 28,080 | 28,080 | |||||
Purchase of convertible note hedge | (46,440) | (46,440) | |||||
Equity forward contract issuance | (68,000) | (68,000) | |||||
Ending balance (in shares) at May. 04, 2019 | 71,672,866 | 71,369,094 | |||||
Ending balance at May. 04, 2019 | 565,078 | $ 717 | 480,865 | 1,036,386 | (132,706) | $ (837,705) | 17,521 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Cumulative adjustment from adoption of new guidance | 565,078 | 717 | 480,865 | 1,036,386 | (132,706) | (837,705) | 17,521 |
Cumulative adjustment from adoption of new guidance | $ 661,347 | $ 658 | 563,004 | 1,130,409 | (139,910) | $ (914,447) | 21,633 |
Beginning balance (in shares) at Feb. 01, 2020 | 65,848,510 | 65,848,510 | 77,019,437 | ||||
Beginning balance at Feb. 01, 2020 | $ 661,347 | $ 658 | 563,004 | 1,130,409 | (139,910) | $ (914,447) | 21,633 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Cumulative adjustment from adoption of new guidance | 661,347 | $ 676 | 544,319 | 973,006 | (153,302) | $ (893,045) | 15,135 |
Net earnings (loss) | (160,538) | (157,666) | (2,872) | ||||
Other comprehensive income (loss), net of income tax | (17,018) | (13,392) | (3,626) | ||||
Issuance of common stock under stock compensation plans (in shares) | 1,763,311 | (1,770,223) | |||||
Issuance of common stock under stock compensation plans including tax effect | (3,229) | $ 18 | (24,264) | $ 21,017 | |||
Issuance of stock under Employee Stock Purchase Plan (in shares) | 32,427 | (32,427) | |||||
Issuance of stock under Employee Stock Purchase Plan | 193 | (192) | $ 385 | ||||
Share-based compensation | 5,786 | 5,771 | 15 | ||||
Dividends | $ 248 | 248 | |||||
Ending balance (in shares) at May. 02, 2020 | 67,644,248 | 67,644,248 | 75,216,787 | ||||
Ending balance at May. 02, 2020 | $ 486,789 | $ 676 | 544,319 | 973,006 | (153,302) | $ (893,045) | 15,135 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Cumulative adjustment from adoption of new guidance | $ 486,789 | $ 676 | $ 544,319 | $ 973,006 | $ (153,302) | $ (893,045) | $ 15,135 |
CONDENSED CONSOLIDATED STATEM_5
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | |
May 02, 2020 | May 04, 2019 | |
Statement of Stockholders' Equity [Abstract] | ||
Other comprehensive income (loss), tax | $ (147) | $ (499) |
Basis of Presentation and New A
Basis of Presentation and New Accounting Guidance | 3 Months Ended |
May 02, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation and New Accounting Guidance | Basis of Presentation and New Accounting Guidance 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 men, women 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. Basis of Presentation 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 May 2, 2020 and February 1, 2020 , the condensed consolidated statements of loss , comprehensive loss , cash flows and stockholders’ equity for the three months ended May 2, 2020 and May 4, 2019 . The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the U.S. (“GAAP”) for interim financial information and the instructions to Rule 10-01 of Regulation S-X of the 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 for the three months ended May 2, 2020 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 February 1, 2020 . The three months ended May 2, 2020 had the same number of days as the three months ended May 4, 2019 . All references herein to “fiscal 2021 ,” “fiscal 2020 ” and “fiscal 2019 ” represent the results of the 52 -week fiscal year ending January 30, 2021 and the 52 -week fiscal years ended February 1, 2020 and February 2, 2019 , respectively. Reclassifications The Company has made certain reclassifications to prior period amounts to conform to the current period presentation within the accompanying notes to the condensed consolidated financial statements. 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, recoverability of deferred taxes, unrecognized tax benefits, the useful life of assets for depreciation and amortization, evaluation of asset impairment, pension obligations, workers’ compensation and medical self-insurance expense and accruals, litigation reserves and restructuring expense and accruals. Actual results could differ from those estimates. Revisions in estimates could materially impact the results of operations and financial position. As discussed further below, the coronavirus (or “COVID-19”) pandemic has materially impacted the Company’s results during the three months ended May 2, 2020 . The Company’s operations could continue to be impacted in ways we are not able to predict today due to the developing situation. 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. COVID-19 Business Update The COVID-19 pandemic has had and is continuing to have a material impact on the Company’s financial performance. The pandemic is ongoing and dynamic in nature and, to date, the Company has experienced temporary closures in key regions globally, along with other major retailers. Beginning in mid-April, the Company began to reopen some of its stores in Europe. In May 2020, the Company began to reopen some of its stores in the U.S. and Canada. In Asia, where store closures related to COVID-19 began, all of the Company’s directly-operated stores have reopened. The Company will continue to reopen stores in phases, as state and local guidelines and conditions permit, taking an informed, measured approach based on a number of factors. The Company’s e-commerce sites remain open in all regions. In addition, retail stores that are open have and continue to experience significant reductions in traffic and therefore, revenue. The Company’s e-commerce sites have experienced lower traffic, but this has been partially offset by a strengthening in conversion. Many of the Company’s wholesale and licensing partners have also substantially reduced their operations. The Company has and will continue to bring back store associates and support staff as stores reopen . The extent and duration of the global pandemic remains uncertain and may continue to impact consumer purchasing activity throughout the year. During the first quarter of fiscal 2021 , in addition to the negative impact from lower net revenue, the Company’s operating results also reflected asset impairment charges as well as additional inventory valuation reserves and higher allowances for markdowns and doubtful accounts due to the ongoing effects of the COVID-19 pandemic. These charges were partially offset by the favorable impact from various European and U.S. government assistance programs related primarily to the recovery of employee payroll costs as well as certain favorable tax treatments . During the first half of fiscal 2021, the Company implemented a number of measures to help mitigate the operating and financial impact of the pandemic, including: (i) furloughing its U.S. and Canada store associates and significant portions of its U.S. and Canada corporate and distribution center associates and permanently reducing U.S. corporate headcount; (ii) implementing temporary tiered salary reductions for management level corporate employees, including its executive officers; (iii) deferring annual merit increases; (iv) executing substantial reductions in expenses, store occupancy costs, capital expenditures and overall costs, including through reduced inventory purchases; (v) working globally with country management teams to maximize the Company’s participation in all eligible government or other initiatives available to businesses or employees impacted by the COVID-19 pandemic; (vi) drawing down on certain credit facilities and entering into certain term loans to ensure financial flexibility and maintain maximum liquidity; (vii) engaging with landlords to negotiate rent deferrals or other rent concessions; (viii) working with vendors to extend payment terms; and (ix) postponing its decision related to the payment of its quarterly cash dividend . In response to the COVID-19 pandemic, governments in various jurisdictions have implemented relief programs to provide assistance in the form of wage subsidies and tax related payment deferrals (related to payroll, income, sales and other taxes). The Company is leveraging these relief initiatives where able to help mitigate expenses and provide additional liquidity. An example of such an economic relief program is the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act, which was enacted by the U.S. government in March 2020. The provisions of the Act include the deferral of the employer portion of social security taxes, creation of refundable employee retention tax credits, relaxation of the net interest deduction limitations, technical amendment for qualified improvement property deduction and modification of net operating loss carryback periods. In light of store closures, the Company has taken certain actions with respect to certain of its existing leases, including engaging with landlords to discuss rent deferrals as well as other rent concessions. Consistent with updated guidance from the Financial Accounting Standards Board (“FASB”) in April 2020, the Company has elected to treat such agreed-upon payment deferrals related to the COVID-19 pandemic as if there were no modifications to the lease contract and has accrued such amounts within the current portion of operating lease liabilities in the Company’s condensed consolidated balance sheet. The Company has elected to treat other rent concessions which result in reduced lease payments as variable lease payments if the concessions that are provided are for a period of less than 12 months. For any rent concessions which reduce the lease payments for a period of more than 12 months or change the payment terms from minimum rental amounts to amounts based on a percentage of sales volume for the remainder of the lease term, the Company has elected to treat such changes as lease modifications under the current lease guidance. 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 three 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 May 2, 2020 , the Company had $6.5 million and $17.1 million of deferred royalties related to these upfront payments included in accrued expenses and other long-term liabilities, respectively. This compares to $6.7 million and $18.7 million of deferred royalties related to these upfront payments included in accrued expenses and other long-term liabilities, respectively, at February 1, 2020 . During the three months ended May 2, 2020 and May 4, 2019 , the Company recognized $3.6 million and $3.1 million in net royalties related to the amortization of the deferred royalties, respectively. Refer to Note 8 for further information on disaggregation of revenue by segment and country. Allowance for Doubtful Accounts During the first quarter of fiscal 2021, the Company adopted authoritative guidance related to the measurement of credit losses on financial instruments. This guidance replaces the current “as incurred” loss model with an “expected loss” model which requires the recognition of an allowance for credit losses expected to be incurred over an asset’s lifetime. The adoption of this guidance did not have a material impact on the Company’s 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, an 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 and records a provision for doubtful accounts based on these evaluations. As of May 2, 2020 , approximately 54% of the Company’s total net trade accounts receivable and 66% 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. Other Assets During fiscal 2019, the Company invested $8.3 million in a privately-held apparel company and holds a 30% minority interest. The Company’s ownership in this company is accounted for under the equity method of accounting. The Company recognized its proportionate share of net losses of $2.1 million in other expense in its condensed consolidated statements of loss during the three months ended May 2, 2020 . New Accounting Guidance Changes in Accounting Policies In June 2016, the FASB issued authoritative guidance related to the measurement of credit losses on financial instruments. This guidance replaces the current “as incurred” loss model with an “expected loss” model which requires the recognition of an allowance for credit losses expected to be incurred over an asset’s lifetime. The measurement of expected credit losses is based on relevant information about past events, current conditions and reasonable and supportable forecasts impacting the collectibility of the reported amounts. This guidance was adopted as of February 2, 2020 on a modified retrospective basis and did not have a material impact on the Company’s consolidated financial statements or related disclosures . In August 2018, the FASB issued authoritative guidance to modify the disclosure requirements on fair value measurements. This guidance was adopted as of February 2, 2020 on a prospective basis and did not have a material impact on the Company’s related disclosures . In August 2018, the FASB issued authoritative guidance to align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). The Company adopted this guidance as of February 2, 2020 on a prospective basis. Prior to the adoption of this guidance, the Company capitalized implementation costs related to a hosting arrangement that is a service contract to property and equipment, net in the Company’s consolidated balance sheets and included such expenditures within the investing section of the Company’s consolidated statements of cash flows. These assets were amortized over their estimated useful life with the related amortization included in depreciation and amortization in either cost of product sales or selling, general and administrative (“SG&A”) expenses in the Company’s consolidated statements of income (loss) depending on the nature of how the assets were used. Subsequent to the adoption of this guidance, these costs are included within other current assets or other assets in the Company’s consolidated balance sheets depending on the short or long-term nature of the underlying hosting agreement with such expenditures included in the operating section of the Company’s consolidated statements of cash flows. These assets are now amortized over the shorter of the estimated useful life or the term of the underlying hosting agreement, including any probable renewal periods, with the related amortization included in cost of product sales or SG&A expenses in the Company’s consolidated statements of income (loss), consistent with the presentation of the expense related to the underlying hosting arrangement. The adoption of this guidance, including the different classification requirements for the implementation costs, did not have a material impact on the Company’s consolidated financial statements or the related disclosures . Recently Issued Accounting Guidance In August 2018, the FASB issued authoritative guidance to modify the disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans. This guidance is effective for fiscal years beginning after December 15, 2020, which will be the Company’s first quarter of fiscal 2022, with early adoption permitted. The Company is currently evaluating the impact of the adoption of this standard on its related disclosures. In December 2019, the FASB issued authoritative guidance that simplifies the accounting for income taxes by eliminating certain exceptions to general principles related to intraperiod tax allocations, ownership changes in foreign investments and calculating income taxes in an interim period when year-to-date losses exceed total anticipated losses. The new guidance also simplifies the accounting for income taxes related to franchise taxes that are partially based on income, the step up in the tax basis of goodwill, allocation of current and deferred tax expense for certain legal entities and enacted changes in tax laws or rates during interim periods, among other improvements. This guidance is effective for fiscal years beginning after December 15, 2020, which will be the Company’s first quarter of fiscal 2022, with early adoption permitted. The Company is currently evaluating the impact of the adoption of this standard on its consolidated financial statements and related disclosures. In March 2020, the FASB issued authoritative guidance to provide temporary optional expedients and exceptions related to contract modifications and hedge accounting to ease the financial reporting burdens of the expected market transition from LIBOR and other interbank offered rates to alternative reference rates, such as SOFR. This guidance may be adopted as of March 12, 2020 through December 31, 2022. This temporary relief cannot be applied to contract modifications after December 31, 2022. The Company is currently evaluating its election options and the impact on its consolidated financial statements and related disclosures. |
Lease Accounting
Lease Accounting | 3 Months Ended |
May 02, 2020 | |
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 May 2027 . 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 24% , 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 36% . In addition to the amounts as disclosed below, the Company has estimated additional operating lease commitments of approximately $10.9 million for leases where the Company has not yet taken possession of the underlying asset as of May 2, 2020 . 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 May 2, 2020 . As of May 2, 2020 and February 1, 2020 , the components of leases are as follows (in thousands): Balance Sheet Location May 2, 2020 Feb 1, 2020 Assets Operating Operating lease right-of-use assets $ 778,030 $ 851,990 Finance Property and equipment, net 15,159 15,972 Total lease assets $ 793,189 $ 867,962 Liabilities Current: Operating Current portion of operating lease liabilities $ 226,967 $ 192,066 Finance Current portion of borrowings and finance lease obligations 2,629 2,273 Noncurrent: Operating Long-term operating lease liabilities 659,947 714,079 Finance Long-term debt and finance lease obligations 13,222 14,262 Total lease liabilities $ 902,765 $ 922,680 As of May 2, 2020 and May 4, 2019 , the components of lease costs are as follows (in thousands): Three Months Ended Income Statement Location May 2, 2020 May 4, 2019 Operating lease costs Cost of product sales $ 55,369 $ 58,816 Operating lease costs Selling, general and administrative expenses 5,176 5,264 Finance lease costs Amortization of leased assets 1 Cost of product sales 681 43 Amortization of leased assets 1 Selling, general and administrative expenses 1,278 543 Interest on lease liabilities Interest expense 282 287 Variable lease costs 2 Cost of product sales 14,348 24,825 Variable lease costs 2 Selling, general and administrative expenses 579 827 Short-term lease costs Cost of product sales 239 — Short-term lease costs Selling, general and administrative expenses 1,789 212 Total lease costs $ 79,741 $ 90,817 ______________________________________________________________________ Notes: 1 Amortization of leased assets related to finance leases are included in depreciation expense within cost of product sales or selling, general and administrative expenses depending on the nature of the asset in the Company’s condensed consolidated statements of loss. 2 During the three months ended May 2, 2020 , variable lease costs included certain rent concessions granted related to the COVID-19 pandemic. Refer to Note 1 for further information. Maturities of the Company’s operating and finance lease liabilities as of May 2, 2020 are as follows (in thousands): Maturity of Lease Liabilities Operating Leases Finance Leases Total 2021 1 $ 185,976 $ 2,441 $ 188,417 2022 198,951 3,660 202,611 2023 164,949 3,251 168,200 2024 136,666 3,072 139,738 2025 95,606 2,289 97,895 After 2025 189,303 4,867 194,170 Total lease payments 971,451 19,580 991,031 Less: Interest 84,537 3,729 88,266 Present value of lease liabilities $ 886,914 $ 15,851 $ 902,765 ______________________________________________________________________ Notes: 1 Represents the maturity of lease liabilities for the remainder of fiscal 2021 and also includes rent payments that have been deferred due to the COVID-19 pandemic. This amount does not include payments made during the three months ended May 2, 2020 . Other supplemental information is as follows (dollars in thousands): Lease Term and Discount Rate May 2, 2020 Weighted-average remaining lease term (years) Operating leases 5.8 years Finance leases 6.1 years Weighted-average discount rate Operating leases 3.5% Finance leases 7.1% Three Months Ended Supplemental Cash Flow Information May 2, 2020 May 4, 2019 Cash paid for amounts included in the measurement of lease liabilities Operating cash flows from operating leases $ 32,618 $ 62,082 New operating ROU assets obtained in exchange for lease liabilities $ 16,332 $ 68,804 Impairment During the three months ended May 2, 2020 , the Company recorded asset impairment charges of $28.2 million related primarily to ROU assets at certain retail locations in North America and, to a lesser extent, Europe. The asset impairment charges were 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. There were no asset impairment charges recorded related to the Company’s ROU assets during the three months ended May 4, 2019 . Refer to Note 15 for more information on the Company’s impairment testing. |
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 May 2027 . 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 24% , 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 36% . In addition to the amounts as disclosed below, the Company has estimated additional operating lease commitments of approximately $10.9 million for leases where the Company has not yet taken possession of the underlying asset as of May 2, 2020 . 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 May 2, 2020 . As of May 2, 2020 and February 1, 2020 , the components of leases are as follows (in thousands): Balance Sheet Location May 2, 2020 Feb 1, 2020 Assets Operating Operating lease right-of-use assets $ 778,030 $ 851,990 Finance Property and equipment, net 15,159 15,972 Total lease assets $ 793,189 $ 867,962 Liabilities Current: Operating Current portion of operating lease liabilities $ 226,967 $ 192,066 Finance Current portion of borrowings and finance lease obligations 2,629 2,273 Noncurrent: Operating Long-term operating lease liabilities 659,947 714,079 Finance Long-term debt and finance lease obligations 13,222 14,262 Total lease liabilities $ 902,765 $ 922,680 As of May 2, 2020 and May 4, 2019 , the components of lease costs are as follows (in thousands): Three Months Ended Income Statement Location May 2, 2020 May 4, 2019 Operating lease costs Cost of product sales $ 55,369 $ 58,816 Operating lease costs Selling, general and administrative expenses 5,176 5,264 Finance lease costs Amortization of leased assets 1 Cost of product sales 681 43 Amortization of leased assets 1 Selling, general and administrative expenses 1,278 543 Interest on lease liabilities Interest expense 282 287 Variable lease costs 2 Cost of product sales 14,348 24,825 Variable lease costs 2 Selling, general and administrative expenses 579 827 Short-term lease costs Cost of product sales 239 — Short-term lease costs Selling, general and administrative expenses 1,789 212 Total lease costs $ 79,741 $ 90,817 ______________________________________________________________________ Notes: 1 Amortization of leased assets related to finance leases are included in depreciation expense within cost of product sales or selling, general and administrative expenses depending on the nature of the asset in the Company’s condensed consolidated statements of loss. 2 During the three months ended May 2, 2020 , variable lease costs included certain rent concessions granted related to the COVID-19 pandemic. Refer to Note 1 for further information. Maturities of the Company’s operating and finance lease liabilities as of May 2, 2020 are as follows (in thousands): Maturity of Lease Liabilities Operating Leases Finance Leases Total 2021 1 $ 185,976 $ 2,441 $ 188,417 2022 198,951 3,660 202,611 2023 164,949 3,251 168,200 2024 136,666 3,072 139,738 2025 95,606 2,289 97,895 After 2025 189,303 4,867 194,170 Total lease payments 971,451 19,580 991,031 Less: Interest 84,537 3,729 88,266 Present value of lease liabilities $ 886,914 $ 15,851 $ 902,765 ______________________________________________________________________ Notes: 1 Represents the maturity of lease liabilities for the remainder of fiscal 2021 and also includes rent payments that have been deferred due to the COVID-19 pandemic. This amount does not include payments made during the three months ended May 2, 2020 . Other supplemental information is as follows (dollars in thousands): Lease Term and Discount Rate May 2, 2020 Weighted-average remaining lease term (years) Operating leases 5.8 years Finance leases 6.1 years Weighted-average discount rate Operating leases 3.5% Finance leases 7.1% Three Months Ended Supplemental Cash Flow Information May 2, 2020 May 4, 2019 Cash paid for amounts included in the measurement of lease liabilities Operating cash flows from operating leases $ 32,618 $ 62,082 New operating ROU assets obtained in exchange for lease liabilities $ 16,332 $ 68,804 Impairment During the three months ended May 2, 2020 , the Company recorded asset impairment charges of $28.2 million related primarily to ROU assets at certain retail locations in North America and, to a lesser extent, Europe. The asset impairment charges were 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. There were no asset impairment charges recorded related to the Company’s ROU assets during the three months ended May 4, 2019 . Refer to Note 15 for more information on the Company’s impairment testing. |
Loss per Share
Loss per Share | 3 Months Ended |
May 02, 2020 | |
Earnings Per Share [Abstract] | |
Loss per Share | Loss per Share Basic earnings (loss) per share represents net earnings (loss) attributable to common stockholders divided by the weighted average number of common shares outstanding during the period. The Company considers any restricted stock units with forfeitable dividend rights that are issued and outstanding, but considered contingently returnable if certain service conditions are not met, as common equivalent shares outstanding. These restricted stock units are excluded from the weighted average number of common shares outstanding and basic earnings (loss) per share calculation until the respective service conditions have been met. Diluted earnings per share represents net earnings attributable to common stockholders divided by the weighted average number of common shares outstanding, inclusive of the dilutive impact of common equivalent shares outstanding during the period, and the dilutive impact of the Company’s convertible senior notes and related warrants, as applicable. The Company expects to settle the principal amount of its outstanding convertible senior notes in cash and any excess in shares. As a result, upon conversion of the convertible senior notes, only the amounts in excess of the principal amount are considered in diluted earnings per share under the treasury stock method, if applicable. See Note 10 for more information regarding the Company’s convertible senior notes. In periods when there is a net loss, the potentially dilutive impact of common equivalent shares outstanding is not included in the computation of diluted net loss per share as the impact of the shares would be antidilutive. Nonvested restricted stock awards (referred to as participating securities) are excluded from the dilutive impact of common equivalent shares outstanding in accordance with authoritative guidance under the two-class method since the nonvested restricted stockholders are entitled to participate in dividends declared on common stock as if the shares were fully vested and hence are deemed to be participating securities. Under the two-class method, distributed and undistributed earnings attributable to nonvested restricted stockholders are excluded from net earnings (loss) attributable to common stockholders for purposes of calculating basic and diluted earnings (loss) per common share. However, net losses are not allocated to nonvested restricted stockholders because they are not contractually obligated to share in the losses of the Company. In addition, the Company has granted certain nonvested stock units that are subject to certain performance-based or market-based vesting conditions as well as continued service requirements through the respective vesting periods. These nonvested stock units are included in the computation of diluted net earnings per common share attributable to common stockholders only to the extent that the underlying performance-based or market-based vesting conditions are satisfied as of the end of the reporting period, or would be considered satisfied if the end of the reporting period was the end of the related contingency period, and the results would be dilutive under the treasury stock method. The computation of basic and diluted net loss per common share attributable to common stockholders is as follows (in thousands, except per share data): Three Months Ended May 2, 2020 May 4, 2019 Net loss attr ibutabl e to Guess?, Inc. $ (157,666 ) $ (21,374 ) Less net earnings attributable to nonvested restricted stockholders — 161 Net loss attributable to common stockholders $ (157,666 ) $ (21,535 ) Weighted average common shares used in basic computations 65,715 79,925 Effect of dilutive securities: Stock options and restricted stock units 1 — — Weighted average common shares used in diluted computations 65,715 79,925 Net loss per common share attributable to common stockholders: Basic $ (2.40 ) $ (0.27 ) Diluted $ (2.40 ) $ (0.27 ) ______________________________________________________________________ Notes: 1 For the three months ended May 2, 2020 and May 4, 2019, there were 484,674 and 1,052,518 , respectively, of potentially dilutive shares that were not included in the computation of diluted weighted average common shares and common equivalent shares outstanding because their effect would have been antidilutive given the Company’s net loss. For the three months ended May 2, 2020 and May 4, 2019 , equity awards granted for 3,157,824 and 2,137,004 , respectively, of the Company’s common shares were outstanding but were excluded from the computation of diluted weighted average common shares and common equivalent shares outstanding because the assumed proceeds, as calculated under the treasury stock method, resulted in these awards being antidilutive. The Company excluded 227,729 and 1,075,085 nonvested stock units which are subject to the achievement of performance-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 May 2, 2020 and May 4, 2019 , respectively. The conversion spread on the Company’s convertible senior notes will have a dilutive impact on diluted earnings per share when the average market price of the Company’s common stock for a given period exceeds the conversion price of $25.78 per share of common stock. For the three months ended May 2, 2020 and May 4, 2019 , the convertible senior notes have been excluded from the computation of diluted earnings per share as the effect would be antidilutive since the conversion price of the convertible senior notes exceeded the average market price of the Company’s common stock. Warrants to initially purchase 11.6 million shares of the Company’s common shares at an initial strike price of $46.88 per share were outstanding as of May 2, 2020 . These warrants were excluded from the computation of diluted 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 months ended May 2, 2020 and May 4, 2019 . See Note 10 for more information regarding the Company’s convertible senior notes. |
Stockholders' Equity
Stockholders' Equity | 3 Months Ended |
May 02, 2020 | |
Equity [Abstract] | |
Stockholders' Equity | Stockholders’ Equity Share Repurchase Program On June 26, 2012, the Company’s Board of Directors authorized a program to repurchase, from time-to-time and as market and business conditions warrant, up to $ 500 million of the Company’s common stock. Repurchases under the program 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, which may be discontinued at any time, without prior notice. There were no shares repurchased under the program during the three months ended May 2, 2020 . The Company repurchased 10,264,052 shares at an aggregate cost of $201.5 million during the three months ended May 4, 2019, which is inclusive of the shares repurchased under the accelerated share repurchase agreement (the “ASR Contract”) as described below. As of May 2, 2020 , the Company had remaining authority under the program to purchase $ 86.7 million of its common stock . On April 26, 2019, pursuant to existing stock repurchase authorizations, the Company entered into an ASR Contract with JPMorgan Chase Bank, National Association (in such capacity, the “ASR Counterparty”), to repurchase an aggregate of $170 million of the Company’s common stock. Under the ASR Contract, the Company made an initial payment of $170 million to the ASR Counterparty and received an initial delivery of approximately 5.2 million shares of common stock, which represented approximately $102 million (or 60% ) of the ASR Contract. The Company received a final delivery of an additional 5.4 million shares, or $68 million , under its ASR Contract during the third quarter of fiscal 2020. The final share amount was determined based on the daily volume-weighted average price since the effective date of the ASR Contract, less the applicable contractual discount. When combined with the 5.2 million upfront shares received at the inception of the ASR in April 2019, the Company repurchased approximately 10.6 million of its shares under the ASR at an average repurchase price of $16.09 per share. All shares were repurchased in accordance with the Company’s publicly announced ASR program, which was completed during the third quarter of fiscal 2020. The shares delivered under the ASR Contract reduced the Company’s outstanding shares and its weighted average number of common shares outstanding for purposes of calculating basic and diluted earnings per share. Dividends During the first quarter of fiscal 2021, the Company announced that its Board of Directors had deferred the decision with respect to the payment of its quarterly cash dividend. While the Company remains committed to returning capital to shareholders through a dividend on a long-term basis, the Board of Directors has decided to continue to postpone its decision with respect to the payment of its quarterly cash dividend at this time in order to preserve the Company’s cash position and provide continued financial flexibility in light of the uncertainties related to the COVID-19 pandemic . As a result, there was no cash dividend declared during the three months ended May 2, 2020 . During the three months ended May 2, 2020 , dividends paid related to the vesting of restricted stock units that are considered non-participating securities and are only entitled to dividend payments once the respective awards vest. During the three months ended May 4, 2019 , the Company declared a cash dividend of $0.225 per share. During the first quarter of fiscal 2020, the Company announced that its Board of Directors reduced the future quarterly cash dividends that may be paid to holders of the Company’s common stock, when, as and if any such dividend is declared by the Company’s Board of Directors, from $0.225 per share to $0.1125 per share to redeploy capital and return incremental value to shareholders through share repurchases. 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 our 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, for the three months ended May 2, 2020 and May 4, 2019 are as follows (in thousands): Three Months Ended May 2, 2020 Foreign Currency Translation Adjustment Derivative Financial Instruments Designated as Cash Flow Hedges Defined Benefit Plans Total Balance at February 1, 2020 $ (137,289 ) $ 6,300 $ (8,921 ) $ (139,910 ) Gains (losses) arising during the period (14,873 ) 3,180 (1 ) (11,694 ) Reclassification to net loss for (gains) losses realized — (1,769 ) 71 (1,698 ) Net other comprehensive income (loss) (14,873 ) 1,411 70 (13,392 ) Balance at May 2, 2020 $ (152,162 ) $ 7,711 $ (8,851 ) $ (153,302 ) Three Months Ended May 4, 2019 Foreign Currency Translation Adjustment Derivative Financial Instruments Designated as Cash Flow Hedges Defined Benefit Plans Total Balance at February 2, 2019 $ (119,546 ) $ 2,999 $ (9,632 ) $ (126,179 ) Cumulative adjustment reclassified from retained earnings due to adoption of new accounting guidance 1 — 1,981 — 1,981 Gains (losses) arising during the period (12,377 ) 3,864 96 (8,417 ) Reclassification to net loss for (gains) losses realized — (181 ) 90 (91 ) Net other comprehensive income (loss) (12,377 ) 3,683 186 (8,508 ) Balance at May 4, 2019 $ (131,923 ) $ 8,663 $ (9,446 ) $ (132,706 ) ______________________________________________________________________ Notes: 1 During the first quarter of fiscal 2020, the Company adopted new authoritative guidance which eliminated the requirement to separately measure and report ineffectiveness for instruments that qualify for hedge accounting and generally requires that the entire change in the fair value of such instruments ultimately be presented in the same line as the respective hedge item. As a result, there is no interest component recognized for the ineffective portion of instruments that qualify for hedge accounting, but rather all changes in the fair value of such instruments are included in other comprehensive income (loss). Upon adoption of this guidance, the Company reclassified approximately $2.0 million in gains from retained earnings to accumulated other comprehensive loss related to the previously recorded interest component on outstanding instruments that qualified for hedge accounting. Details on reclassifications out of accumulated other comprehensive income (loss) to net loss during the three months ended May 2, 2020 and May 4, 2019 are as follows (in thousands): Three Months Ended Location of (Gain) Loss Reclassified from Accumulated OCI into Loss May 2, 2020 May 4, 2019 Derivative financial instruments designated as cash flow hedges: Foreign exchange currency contracts $ (1,991 ) $ (230 ) Cost of product sales Interest rate swap 3 (46 ) Interest expense Less income tax effect 219 95 Income tax benefit (1,769 ) (181 ) Defined benefit plans: Net actuarial loss amortization 96 111 Other income (expense) Prior service credit amortization (16 ) (10 ) Other income (expense) Less income tax effect (9 ) (11 ) Income tax benefit 71 90 Total reclassifications during the period $ (1,698 ) $ (91 ) |
Accounts Receivable
Accounts Receivable | 3 Months Ended |
May 02, 2020 | |
Receivables [Abstract] | |
Accounts Receivable | Accounts Receivable Accounts receivable is summarized as follows (in thousands): May 2, 2020 Feb 1, 2020 Trade $ 220,942 $ 309,508 Royalty 14,876 12,775 Other 14,359 13,429 250,177 335,712 Less allowances 1 10,645 8,431 $ 239,532 $ 327,281 ______________________________________________________________________ Notes: 1 During the first quarter of fiscal 2021, the Company adopted authoritative guidance related to the measurement of credit losses on financial instruments. This guidance replaces the current “as incurred” loss model with an “expected loss” model which requires the recognition of an allowance for credit losses expected to be incurred over an asset’s lifetime. The adoption of this guidance did not have a material impact on the Company’s allowance for doubtful accounts. Refer to Note 1 for further information. 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. |
Inventories
Inventories | 3 Months Ended |
May 02, 2020 | |
Inventory Disclosure [Abstract] | |
Inventories | Inventories Inventories consist of the following (in thousands): May 2, 2020 Feb 1, 2020 Raw materials $ 565 $ 399 Work in progress 48 52 Finished goods 391,877 392,678 $ 392,490 $ 393,129 The above balances include an allowance to write down inventories to the lower of cost or net realizable value of $39.5 million and $24.5 million as of May 2, 2020 and February 1, 2020 , respectively. |
Income Taxes
Income Taxes | 3 Months Ended |
May 02, 2020 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes Effective Tax Rate Income tax expense for the interim periods was computed using the 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 14.1% for the three months ended May 2, 2020 , compared to a benefit of 11.7% for the three months ended May 4, 2019 . During the three months ended May 2, 2020 , the Company recognized a tax benefit of approximately $11.8 million from a tax rate change related to the ability to carryback net operating losses to tax years with a higher federal corporate tax rate as allowed under the CARES Act enacted in March 2020 . This benefit was partially offset by a valuation allowance of $3.7 million resulting from jurisdictions where there have been cumulative net operating losses, limiting the Company’s ability to consider other subjective evidence to continue to recognize the existing deferred tax assets . Excluding the impact of these items, the change in the effective tax rate was due primarily to a shift in the distribution of earnings among the Company’s tax jurisdictions during the three months ended May 2, 2020 , compared to the same prior-year period . Unrecognized Tax Benefit From time-to-time, the Company is subject to routine income and other tax audits on various tax matters around the world in the ordinary course of business. As of May 2, 2020 , several tax audits were ongoing for various periods in multiple jurisdictions. These audits could conclude with an assessment of additional tax liability for the Company. These assessments could arise as the result of timing or permanent differences and could be material to the Company’s net income or future cash flows. In the event the Company disagrees with an assessment from a taxing authority, the Company may elect to appeal, litigate, pursue settlement or take other actions. The Company accrues an amount for its estimate of additional tax liability which the Company, more likely than not, will incur as a result of the ultimate resolution of tax audits (“uncertain tax positions”). The Company reviews and updates the estimates used in the accrual for uncertain tax positions, as appropriate, as more definitive information or interpretations become available from taxing authorities, upon completion of tax audits, upon receipt of assessments, upon expiration of statutes of limitation, or upon occurrence of other events. The Company had aggregate accruals for uncertain tax positions, including penalties and interest, of $34.6 million and $34.0 million as of May 2, 2020 and February 1, 2020 , respectively. This includes an accrual of $19.9 million for the estimated transition tax related to the 2017 Tax Cuts and Jobs Act for each of the periods ended May 2, 2020 and February 1, 2020 . |
Segment Information
Segment Information | 3 Months Ended |
May 02, 2020 | |
Segment Reporting [Abstract] | |
Segment Information | Segment Information The Company’s businesses are grouped into five reportable segments for management and internal financial reporting purposes: Americas Retail, Americas Wholesale, Europe, Asia and Licensing . The Company’s Americas Retail, Americas Wholesale, Europe 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 terminations, 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. The Americas Retail segment includes the Company’s retail and e-commerce operations in the Americas. The Americas Wholesale segment includes the Company’s wholesale operations in the Americas. The Europe segment includes the Company’s retail, e-commerce and wholesale operations in Europe and the Middle East. The Asia segment includes the Company’s retail, e‑commerce and wholesale operations in Asia and the Pacific. The Licensing segment includes the worldwide licensing operations of the Company. The business segment operating results exclude corporate overhead costs, which consist of shared costs of the organization, asset impairment charges, net gains (losses) on lease terminations, restructuring charges and certain non-recurring credits (charges), if any. Corporate overhead costs are presented separately and generally include, among other things, the following unallocated corporate costs: accounting and finance, executive compensation, corporate performance-based compensation, facilities, global advertising and marketing, human resources, information technology and legal. Net revenue and earnings (loss) from operations are summarized as follows for the three months ended May 2, 2020 and May 4, 2019 (in thousands): Three Months Ended May 2, 2020 May 4, 2019 Net revenue: Americas Retail $ 74,584 $ 176,423 Americas Wholesale 25,875 46,205 Europe 106,473 210,055 Asia 40,385 85,190 Licensing 12,934 18,818 Total net revenue $ 260,251 $ 536,691 Earnings (loss) from operations: Americas Retail $ (36,673 ) $ (1,812 ) Americas Wholesale 1,624 7,814 Europe (44,406 ) (16,327 ) Asia (22,777 ) (3,203 ) Licensing 10,094 16,644 Total segment earnings (loss) from operations (92,138 ) 3,116 Corporate overhead (16,921 ) (25,812 ) Asset impairment charges 1 (52,972 ) (1,775 ) Net losses on lease terminations 2 (456 ) — Total loss from operations $ (162,487 ) $ (24,471 ) ______________________________________________________________________ Notes: 1 During the three months ended May 2, 2020 , the Company recognized asset impairment charges related primarily to impairment of certain operating lease right-of-use assets and impairment of property and equipment related to certain retail locations resulting from lower revenue and future cash flow projections resulting from the ongoing effects of the COVID-19 pandemic . During the three months ended May 4, 2019 , the Company’s asset impairment charges related primarily to impairment of property and equipment 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. 2 During the three months ended May 2, 2020 , the Company recorded net losses on lease terminations related primarily to the early termination of certain lease agreements . The table 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): Three Months Ended May 2, 2020 May 4, 2019 Net revenue: U.S. $ 69,465 $ 164,371 South Korea 21,224 33,917 Italy 19,352 50,435 Canada 16,677 38,581 Spain 12,996 27,997 Other foreign countries 107,603 202,572 Total product sales 247,317 517,873 Net royalties 12,934 18,818 Net revenue $ 260,251 $ 536,691 |
Borrowings and Finance Lease Ob
Borrowings and Finance Lease Obligations | 3 Months Ended |
May 02, 2020 | |
Debt Disclosure [Abstract] | |
Borrowings and Finance Lease Obligations | Borrowings and Finance Lease Obligations Borrowings and finance lease obligations are summarized as follows (in thousands): May 2, 2020 Feb 1, 2020 Borrowings under credit facilities $ 193,725 $ 3,957 Term loans 24,705 — Mortgage debt 18,923 19,132 Finance lease obligations 15,851 16,535 Other 2,101 2,636 255,305 42,260 Less current installments 160,501 9,490 Long-term debt and finance lease obligations $ 94,804 $ 32,770 Credit Facilities On April 21, 2020, the Company entered into an amendment of its senior secured asset-based revolving credit facility with Bank of America, N.A. and the other lenders party thereto to extend the maturity date of the credit facility to April 21, 2023, among other changes (as amended, the “Credit Facility”). The Credit Facility provides for a borrowing capacity in an amount up to $ 120 million , including a Canadian sub-facility up to $ 20 million , subject to a borrowing base. Based on applicable accounts receivable and inventory balances as of May 2, 2020 , the Company could have borrowed up to $91 million under the Credit Facility. The Credit Facility has an option to expand the borrowing capacity by up to $ 180 million subject to certain terms and conditions, including the willingness of existing or new lenders to assume such increased amount. The 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 working capital and other general corporate purposes. All obligations under the Credit Facility are unconditionally guaranteed by the Company and the Company’s existing and future domestic and Canadian subsidiaries, subject to certain exceptions, and are secured by a first priority lien on substantially all of the assets of the Company and such domestic and Canadian subsidiaries , as applicable. Direct borrowings under the Credit Facility made by the Company and its domestic subsidiaries shall bear interest at the U.S. base rate plus an applicable margin (varying from 0.75% to 1.25% ) or at LIBOR plus an applicable margin (varying from 1.75% to 2.25% ), provided that LIBOR may not be less than 1.0% . 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) LIBOR for a 30-day interest period, plus 1.0% . Direct borrowings under the Credit Facility made by the Company’s Canadian subsidiaries shall bear interest at the Canadian prime rate plus an applicable margin (varying from 0.75% to 1.25% ) or at the Canadian BA rate plus an applicable margin (varying from 1.75% to 2.25% ), provided that the Canadian BA rate may not be less than 1.0% . The Canadian prime 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. As of May 2, 2020 , the Company had $ 2.3 million in outstanding standby letters of credit, no outstanding documentary letters of credit and $55.0 million in outstanding borrowings under the Credit Facility. The 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 Credit Facility or generally if borrowings exceed 80% of the borrowing base. In addition, the 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 Credit Facility, the lenders may cease making loans, terminate the Credit Facility and declare all amounts outstanding to be immediately due and payable. The 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 Credit Facility allows for both secured and unsecured borrowings outside of the Credit Facility up to specified amounts. The Company, through its European subsidiaries, maintains short-term committed and uncommitted borrowing agreements, primarily for working capital purposes, with various banks in Europe. Some of these agreements include certain equity-based financial covenants. As of May 2, 2020 , the Company had $133.4 million in outstanding borrowings, no outstanding documentary letters of credit and $0.6 million available for future borrowings under these agreements. The agreements are denominated primarily in euros and provide for annual interest rates ranging from 0.7% to 1.1% . The Company, through its China subsidiary, maintains a short-term uncommitted bank borrowing agreement, primarily for working capital purposes. The multicurrency borrowing agreement provides for borrowing up to $20.0 million . The Company had $5.3 million and $4.0 million in outstanding borrowings under this agreement as of May 2, 2020 and February 1, 2020 , respectively. Term Loans As a precautionary measure to ensure financial flexibility and maintain maximum liquidity in response to the COVID-19 pandemic, in addition to drawing down on certain of the credit facilities as noted above, the Company also entered into term loans with certain banks in Europe during the first quarter of fiscal 2021. These loans have terms ranging from one -to- four years and provide annual interest rates ranging between 0.5% to 1.5% . Certain of these loans also have an option to extend the term for a period of up to five years , subject to certain terms and conditions. As of May 2, 2020, the Company had outstanding borrowings of $24.7 million under these borrowing arrangements. Mortgage Debt On February 16, 2016, the Company entered into a ten -year $ 21.5 million real estate secured loan (the “Mortgage Debt”). The Mortgage Debt is secured by the Company’s U.S. distribution center based in Louisville, Kentucky and provides for monthly principal and interest payments based on a 25 -year amortization schedule, with the remaining principal balance and any accrued and unpaid interest due at maturity. Outstanding principal balances under the Mortgage Debt bear interest at the one-month LIBOR rate plus 1.5% . As of May 2, 2020 , outstanding borrowings under the Mortgage Debt, net of debt issuance costs of $0.1 million , were $18.9 million . At February 1, 2020 , outstanding borrowings under the Mortgage Debt, net of debt issuance costs of $0.1 million , were $19.1 million . 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. On February 16, 2016, the Company also entered into a separate interest rate swap agreement, designated as a cash flow hedge, that resulted in a swap fixed rate of approximately 3.06% . This interest rate swap agreement matures in January 2026 and converts the nature of the Mortgage Debt from LIBOR floating-rate debt to fixed-rate debt. The fair value of the interest rate swap liability was approximately $1.2 million and $0.3 million as of May 2, 2020 and February 1, 2020 , respectively. Finance Lease Obligations During fiscal 2018, the Company entered into a finance lease related to equipment used in its European distribution center located in the Netherlands. The finance lease primarily provides for monthly minimum lease payments through May 2027 with an effective interest rate of approximately 6% . As of May 2, 2020 and February 1, 2020 , the finance lease obligation was $12.1 million and $ 12.6 million , respectively. The Company also has smaller finance leases related primarily to computer hardware and software. As of May 2, 2020 and February 1, 2020 , these finance lease obligations totaled $3.8 million and $4.0 million , respectively. Other |
Convertible Senior Notes and Re
Convertible Senior Notes and Related Transactions | 3 Months Ended |
May 02, 2020 | |
Debt Disclosure [Abstract] | |
Convertible Senior Notes and Related Transactions | Convertible Senior Notes and Related Transactions 2.00% Convertible Senior Notes due 2024 In April 2019, the Company issued $300 million principal amount of 2.00% convertible senior notes due 2024 (the “Notes”) in a private offering . In connection with the issuance of the Notes, the Company entered into an indenture (the “Indenture”) with respect to the Notes with U.S. Bank N.A., as trustee (the “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, beginning on October 15, 2019. The Notes will mature on April 15, 2024 , unless earlier repurchased or converted in accordance with their terms. The 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 38.7879 shares of common stock per $1,000 principal amount of Notes, which is equivalent to an initial conversion price of approximately $25.78 per share, subject to adjustment upon the occurrence of certain events. Prior to November 15, 2023 , the 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 Notes. Following certain corporate events described in the Indenture that occur prior to the maturity date, the conversion rate will be increased for a holder who elects to convert its Notes in connection with such corporate event in certain circumstances. The Notes are not redeemable prior to maturity, and no sinking fund is provided for the Notes. If the Company undergoes a “fundamental change,” as defined in the Indenture, subject to certain conditions, holders of the Notes may require the Company to purchase for cash all or any portion of their Notes. The fundamental change purchase price will be 100% of the principal amount of the Notes to be purchased plus any accrued and unpaid interest up to but excluding the fundamental change purchase date. The Indenture contains certain other customary terms and covenants, including that upon certain events of default occurring and continuing, either the Trustee or the holders of at least 25% in principal amount of the outstanding Notes may declare 100% of the principal of, and accrued and unpaid interest on, all the Notes to be due and payable. Under GAAP, certain convertible debt instruments that may be settled in cash on conversion are required to be separately accounted for as liability and equity components of the instrument in a manner that reflects the issuer’s non-convertible debt borrowing rate. Accordingly, in accounting for the issuance of the Notes, the Company separated the Notes into liability and equity components. The liability component was recorded at fair value, which was derived from a valuation technique used to calculate the fair value of a similar liability without an associated conversion feature. The carrying amount of the equity component, which was recognized as a debt discount, represented the difference between the proceeds from the issuance of the Notes and the fair value of the liability component of the Notes. The excess of the principal amount of the liability component over its carrying amount (“debt discount”) will be amortized to interest expense using an effective interest rate of 6.8% over the term of the Notes. The equity component is not remeasured as long as it continues to meet the conditions for equity classification. During the three months ended May 2, 2020 , the Company recorded approximately $2.6 million of interest expense related to the amortization of the debt discount. During the three months ended May 4, 2019 , the Company recorded approximately $0.2 million of interest expense related to the amortization of the debt discount. Debt issuance costs related to the Notes were comprised of discounts and commissions payable to the initial purchasers of $3.8 million and third-party offering costs of approximately $1.5 million . In accounting for the debt issuance costs related to the issuance of the Notes, the Company allocated the total amount incurred to the liability and equity components based on their relative values. Debt issuance costs attributable to the liability component were recorded as a contra-liability and are presented net against the convertible senior notes balance on the Company’s condensed consolidated balance sheets. These costs are amortized to interest expense using the effective interest method over the term of the Notes. During the three months ended May 2, 2020 , the Company recorded $0.2 million related to the amortization of debt issuance costs. During the three months ended May 4, 2019 , amortization of debt issuance costs was minimal. Debt issuance costs attributable to the equity component are netted with the equity component in stockholders’ equity. The Notes consist of the following components as of May 2, 2020 and February 1, 2020 (in thousands): May 2, 2020 Feb 1, 2020 Liability component: Principal $ 300,000 $ 300,000 Unamortized debt discount (46,418 ) (49,017 ) Unamortized issuance costs (3,406 ) (3,620 ) Net carrying amount $ 250,176 $ 247,363 Equity component, net 1 $ 42,320 $ 42,320 ______________________________________________________________________ Notes: 1 Included in paid-in capital within stockholders’ equity on the condensed consolidated balance sheets and is net of debt issuance costs and deferred taxes. As of May 2, 2020 and February 1, 2020 , the fair value of the Notes was approximately $133.5 million and $272.0 million , respectively. The 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 . Convertible Bond Hedge and Warrant Transactions In connection with the offering of the Notes, the Company entered into convertible note hedge transactions whereby the Company had the option to purchase a total of approximately 11.6 million shares of its common stock at an initial strike price of approximately $25.78 per share, in each case subject to adjustment in certain circumstances. The total cost of the convertible note hedge transactions was $61.0 million . In addition, the Company sold warrants whereby the holders of the warrants had the option to purchase a total of approximately 11.6 million shares of the Company’s common stock at an initial strike price of $46.88 per share. Both the number of shares underlying the convertible note hedges and warrants and the strike price of the instruments are subject to customary adjustments. The Company received $28.1 million in cash proceeds from the sale of these warrants. Taken together, the purchase of the convertible note hedges and sale of the warrants are intended to offset dilution from the conversion of the Notes to the extent the market price per share of the Company’s common stock exceeds the adjusted 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 adjusted strike price of the warrants. As these transactions meet certain accounting criteria, the convertible note hedges and warrants are recorded in stockholders’ equity, are not accounted for as derivatives and are not remeasured each reporting period. The Company had a deferred tax liability of $11.2 million in connection with the debt discount associated with the Notes and a deferred tax asset of $12.3 million in connection with the convertible note hedge transactions for each of the periods ended May 2, 2020 and February 1, 2020 . The net deferred tax impact was included in deferred tax assets on the Company’s condensed consolidated balance sheets. |
Share-Based Compensation
Share-Based Compensation | 3 Months Ended |
May 02, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Share-Based Compensation | Share-Based Compensation The following table summarizes the share-based compensation expense recognized under all of the Company’s stock plans during the three months ended May 2, 2020 and May 4, 2019 (in thousands): Three Months Ended May 2, 2020 May 4, 2019 Stock options $ 695 $ 590 Stock awards/units 4,926 3,815 Employee Stock Purchase Plan 165 63 Total share-based compensation expense $ 5,786 $ 4,468 Unrecognized compensation cost related to nonvested stock options and nonvested stock awards/units totaled approximately $7.6 million and $20.2 million , respectively, as of May 2, 2020 . This cost is expected to be recognized over a weighted average period of 1.8 years. There were no stock options granted during the three months ended May 2, 2020 . The weighted average grant date fair value of stock options granted was $6.72 during the three months ended May 4, 2019 . Grants As a precautionary measure to maintain maximum liquidity in response to the COVID-19 pandemic, the Company elected to pay out its fiscal 2020 corporate bonus in stock awards rather than cash compensation. As such, on April 27, 2020, the Company issued 811,944 restricted stock units that vested immediately. These awards were granted to certain of the Company’s employees that were eligible to receive the corporate bonus based on the satisfaction of certain performance measures during fiscal 2020. In connection with a new employment agreement entered into between the Company and Carlos Alberini (the “Alberini Employment Agreement”), who became the Company’s Chief Executive Officer on February 20, 2019, the Company granted Mr. Alberini 600,000 stock options and 250,000 nonvested stock units which were subject to the achievement of certain performance-based vesting conditions. Mr. Alberini was also granted 150,000 restricted stock units which were considered contingently returnable as a result of certain service conditions set forth in the Alberini Employment Agreement. The service conditions were satisfied during the three months ended May 2, 2020 . On June 10, 2019 , the Company made a special grant of 1,077,700 stock options to certain of its employees. On June 20, 2019 , the Company also granted select key management 205,339 nonvested stock units which were subject to certain performance-based vesting conditions. Annual Grants On April 13, 2020 , the Company made an annual grant of 743,800 nonvested stock awards/units to its employees. On March 29, 2019 , the Company made an annual grant of 5,100 stock options and 280,700 nonvested stock awards/units to its employees. 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 two -to- three years. The Company has also granted a target number of nonvested stock units to select key management, including certain executive officers. The number of shares that may ultimately vest with respect to each award may range from 0% up to 200% of the target number of shares, subject to the achievement of certain performance-based vesting conditions. Any shares that are ultimately issued are scheduled to vest at the end of the third fiscal year following the grant date. The following table summarizes the activity for nonvested performance-based units during the three months ended May 2, 2020 : Number of Units Weighted Average Grant Date Fair Value Nonvested at February 1, 2020 1,140,023 $ 16.66 Vested (310,199 ) 13.98 Forfeited (236,404 ) 11.72 Nonvested at May 2, 2020 593,420 $ 20.03 Market-Based Awards The Company has granted certain nonvested stock units subject to market-based vesting conditions to select executive officers. 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. Vesting is also subject to continued service requirements through the vesting date. The following table summarizes the activity for nonvested market-based units during the three months ended May 2, 2020 : Number of Units Weighted Average Grant Date Fair Value Nonvested at February 1, 2020 288,202 $ 13.43 Granted 1 101,566 10.62 Vested 1 (305,901 ) 10.62 Nonvested at May 2, 2020 83,867 $ 20.28 ______________________________________________________________________ Notes: 1 As a result of the achievement of certain market-based vesting conditions, there were 101,566 |
Related Party Transactions
Related Party Transactions | 3 Months Ended |
May 02, 2020 | |
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 affiliated with trusts for the respective benefit of Paul Marciano, who is an executive and member of the Board of the Company, and Maurice Marciano, Chairman of the Board, and certain of their children (the “Marciano Trusts”). Leases The Company leases warehouse and administrative facilities, including the Company’s corporate headquarters in Los Angeles, California, from partnerships affiliated with the Marciano Trusts and certain of their affiliates. There were four of these leases in effect as of May 2, 2020 with expiration or option exercise dates ranging from calendar years 2020 to 2021 . Aggregate lease costs recorded under these four related party leases were approximately $ 1.3 million for each of the three months ended May 2, 2020 and May 4, 2019 . The Company believes that the terms of the related party leases have not been significantly affected by the fact that the Company and the lessors are related. Aircraft Arrangements The Company periodically charters aircraft owned by entities affiliated with the Marciano Trusts (the “Aircraft Entities”), through informal arrangements with the Aircraft Entities and independent third-party management companies contracted by the Aircraft Entities to manage their aircraft. The total fees paid under these arrangements for the three months ended May 2, 2020 were approximately $ 0.2 million . There were no fees paid under these arrangements for the three months ended May 4, 2019 . These related party disclosures should be read in conjunction with the disclosure concerning related party transactions in the Company’s Annual Report on Form 10-K for the year ended February 1, 2020 . |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
May 02, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Investment Commitments As of May 2, 2020 , the Company had an unfunded commitment to invest €3.6 million ( $4.0 million ) in a private equity fund. Refer to Note 15 for further information. Legal and Other Proceedings The Company is involved in legal proceedings, arising both in the ordinary course of business and otherwise, including the proceedings described below as well as various other claims and other matters incidental to the Company’s business. Unless otherwise stated, the resolution of any particular proceeding is not currently expected to have a material adverse impact on the Company’s financial position, results of operations or cash flows. Even if such an impact could be material, we may not be able to estimate the reasonably possible loss or range of loss until developments in the proceedings have provided sufficient information to support an assessment . The Company has received customs tax assessment notices from the Italian Customs Agency (“ICA”) regarding its customs tax audit of one of the Company’s European subsidiaries for the period from July 2010 through December 2012 . Such assessments totaled € 9.8 million ($ 10.8 million ), including potential penalties and interest. 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 ( $10.7 million ) of these favorable MFDTC judgments with the Appeals Court. To date, €8.5 million ( $9.3 million ) have been decided in favor of the Company and €1.2 million ( $1.4 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 plans to appeal the decision to the Supreme Court. The ICA has appealed most of the favorable Appeals Court rulings to the Supreme Court. To date, of the cases that have been appealed to the Supreme Court, €0.4 million ( $0.5 million ) have been decided in favor of the Company based on the merits of the case and €1.1 million ( $1.2 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 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. 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”), which was established through a majority-owned joint venture during fiscal 2014. 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 consolidated balance sheet. The carrying value of the redeemable noncontrolling interest related to Guess Brazil was $0.9 million and $1.2 million as of May 2, 2020 and February 1, 2020 , respectively. The Company is also party to a put arrangement with respect to the common securities that represent the remaining noncontrolling interest for its majority-owned subsidiary, Guess? CIS, LLC (“Guess CIS”), which was established through a majority-owned joint venture during fiscal 2016. The put arrangement for Guess CIS, representing 30% 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 during the period beginning after the fifth anniversary of the agreement through December 31, 2025, or sooner in certain limited circumstances. The redemption value of the Guess CIS put arrangement is based on a multiple of Guess CIS’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 consolidated balance sheet. The carrying value of the redeemable noncontrolling interest related to Guess CIS was $3.0 million and $3.5 million as of May 2, 2020 and February 1, 2020 , respectively. A reconciliation of the total carrying amount of redeemable noncontrolling interests for the three months ended May 2, 2020 and May 4, 2019 is as follows (in thousands): Three Months Ended May 2, 2020 May 4, 2019 Beginning balance $ 4,731 $ 4,853 Foreign currency translation adjustment (797 ) (79 ) Ending balance $ 3,934 $ 4,774 |
Defined Benefit Plans
Defined Benefit Plans | 3 Months Ended |
May 02, 2020 | |
Defined Benefit Plan [Abstract] | |
Defined Benefit Plans | Defined Benefit Plans Supplemental Executive Retirement Plan On August 23, 2005, the Board of Directors of the Company adopted a Supplemental Executive Retirement Plan (“SERP”) which became effective January 1, 2006. The 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 amount of any future payments into the insurance policies, if any, may vary depending on investment performance of the trust. The cash surrender values of the insurance policies were $64.0 million and $67.7 million as of May 2, 2020 and February 1, 2020 , 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 gains (losses) of $(3.1) million and $3.2 million in other income and expense during the three months ended May 2, 2020 and May 4, 2019 , respectively . The projected benefit obligation was $51.8 million and $51.9 million as of May 2, 2020 and February 1, 2020 , respectively, and was included in accrued expenses and other long-term liabilities in the Company’s condensed consolidated balance sheets depending on the expected timing of payments. SERP benefit payments of $0.6 million and $0.4 million were made during the three months ended May 2, 2020 and May 4, 2019 , respectively. 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. These plans are typically government-mandated defined contribution plans that provide employees with a minimum investment return, and as such, are treated under pension accounting in accordance with authoritative guidance. Under the Swiss plan, both the Company and certain of its employees with annual earnings in excess of government determined amounts are required to make contributions into a fund managed by an independent investment fiduciary. 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 May 2, 2020 and February 1, 2020 , the foreign pension plans had a total projected benefit obligation of $34.3 million and $34.8 million , respectively, and plan assets held in independent investment fiduciaries of $28.4 million and $28.9 million , respectively. The net liability of $6.0 million and $5.9 million was included in other long-term liabilities in the Company’s condensed consolidated balance sheets as of May 2, 2020 and February 1, 2020 , respectively. The components of net periodic defined benefit pension cost for the three months ended May 2, 2020 and May 4, 2019 related to the Company’s defined benefit plans are as follows (in thousands): Three Months Ended May 2, 2020 SERP Foreign Pension Plans Total Service cost $ — $ 764 $ 764 Interest cost 319 8 327 Expected return on plan assets — (45 ) (45 ) Net amortization of unrecognized prior service credit — (16 ) (16 ) Net amortization of actuarial losses 10 86 96 Net periodic defined benefit pension cost $ 329 $ 797 $ 1,126 Three Months Ended May 4, 2019 SERP Foreign Pension Plans Total Service cost $ — $ 807 $ 807 Interest cost 481 68 549 Expected return on plan assets — (77 ) (77 ) Net amortization of unrecognized prior service credit — (10 ) (10 ) Net amortization of actuarial losses 16 95 111 Net periodic defined benefit pension cost $ 497 $ 883 $ 1,380 |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
May 02, 2020 | |
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 would be based on the best information available, including the Company’s own data. The following table presents the fair value hierarchy for those assets and liabilities measured at fair value on a recurring basis as of May 2, 2020 and February 1, 2020 (in thousands): Fair Value Measurements Fair Value Measurements at May 2, 2020 at Feb 1, 2020 Recurring Fair Value Measures Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Assets: Foreign exchange currency contracts $ — $ 8,970 $ — $ 8,970 $ — $ 4,854 $ — $ 4,854 Total $ — $ 8,970 $ — $ 8,970 $ — $ 4,854 $ — $ 4,854 Liabilities: Interest rate swap $ — $ 1,218 $ — $ 1,218 $ — $ 348 $ — $ 348 Deferred compensation obligations — 12,594 — 12,594 — 14,091 — 14,091 Total $ — $ 13,812 $ — $ 13,812 $ — $ 14,439 $ — $ 14,439 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 €1.2 million ($ 1.3 million ) in other assets in the Company’s condensed consolidated balance sheet related to its investment in a private equity fund for each of the periods ended May 2, 2020 and February 1, 2020 . As permitted in accordance with authoritative guidance, 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. During the three months ended May 2, 2020 , the Company recorded minimal unrealized loss es in other income (expense) as a result of changes in the value of the private equity investment. This compares to unrealized loss es of €0.1 million ( $0.1 million ) included in other income (expense) during the three months ended May 4, 2019 . As of May 2, 2020 , the Company had an unfunded commitment to invest an additional €3.6 million ( $4.0 million ) in the private equity fund. 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 May 2, 2020 and February 1, 2020 , 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 convertible senior 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 asset group includes leasehold improvements, furniture, fixtures and equipment, computer hardware and software, operating lease ROU assets including lease acquisition costs, and certain long-term security deposits, and excludes operating lease liabilities. The Company reviews regular retail locations in penetrated markets for impairment risk once the locations have been opened for at least one year in their current condition, or sooner as changes in circumstances require. The Company believes that waiting at least one year allows a location to reach a maturity level where a more comprehensive analysis of financial performance can be performed. The Company evaluates impairment risk for regular retail locations in new markets, where the Company is in the early stages of establishing its presence, once brand awareness has been established. The Company also evaluates impairment risk for retail locations that are expected to be closed in the foreseeable future. The Company has flagship locations which are used as a regional marketing tool to build brand awareness and promote the Company’s current product. 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 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, the COVID-19 pandemic has materially impacted the Company’s financial results during the three months ended May 2, 2020 and could continue to impact the Company’s operations in ways we are not able to predict today due to the developing situation. 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 $53.0 million and $1.8 million during the three months ended May 2, 2020 and May 4, 2019 , respectively. During the quarter ended May 2, 2020 , the Company recognized $28.2 million in impairment of certain operating lease right-of-use assets primarily in North America and, to a lesser extent, Europe. During the quarter ended May 2, 2020 , the Company also recognized $24.8 million in impairment of property and equipment related to certain retail locations primarily in North America and, to a lesser extent, Europe and Asia driven by lower revenue and future cash flow projections resulting from the ongoing effects of the COVID-19 pandemic . This compares to $1.8 million in impairment of property and equipment related to certain retail locations primarily in Europe and, to a lesser extent North America resulting from under-performance and expected store closures during the quarter end May 4, 2019 . Refer to Note 2 for further information on impairment charges recognized on operating lease right-of-use assets. 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. The Company has identified its Americas Retail segment, its Americas Wholesale segment and its European wholesale and European retail components of its Europe segment as reporting units for goodwill impairment testing. Goodwill associated with its China retail component of its Asia segment was fully impaired during fiscal 2020. If it is more likely than not that the fair value of a reporting unit is less than its carrying amount, the amount of any impairment loss to be recognized for that reporting unit is determined through a quantitative test using two steps. First, the Company determines the fair value of the reporting unit using a discounted cash flow analysis, which requires unobservable inputs (Level 3) within the fair value hierarchy as defined above. These inputs include selection of an appropriate discount rate and the amount and timing of expected future cash flows. Second, if the carrying amount of a reporting unit exceeds its fair value, an impairment loss is recognized based on the difference between a reporting unit’s fair value and its carrying value. The COVID-19 pandemic has materially impacted the Company’s financial results during the three months ended May 2, 2020 as discussed further in Note 1. As a result of these conditions, the Company concluded that a triggering event had occurred resulting in the need to perform quantitative interim impairment testing over the Company’s goodwill and flagship assets as of May 2, 2020 . The testing concluded that the fair values of the respective reporting units exceeded their carrying amounts as of May 2, 2020 . Accordingly, the Company did not record any asset impairment charges on its goodwill or flagship assets. In performing its assessment, the Company believes it has made reasonable accounting estimates based on the facts and circumstances that were available as of the reporting date in light of the developing situation resulting from the COVID-19 pandemic. If actual results are not consistent with the assumptions and judgments used in estimating future cash flows, there may be additional exposure to future impairment losses that could be material to the Company ’ s results of operations. |
Derivative Financial Instrument
Derivative Financial Instruments | 3 Months Ended |
May 02, 2020 | |
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 May 2, 2020 , 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 may hedge forecasted intercompany royalties 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 other income (expense) in the period in which the royalty expense is incurred. 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 (loss) until the sale or liquidation of the hedged net investment. The Company has also 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 (loss) 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 (loss) as part of other income (expense). Summary of Derivative Instruments The fair value of derivative instruments in the condensed consolidated balance sheets as of May 2, 2020 and February 1, 2020 is as follows (in thousands): Derivative Balance Sheet Location Fair Value at Fair Value at ASSETS: Derivatives designated as hedging instruments: Cash flow hedges: Foreign exchange currency contracts Other current assets/ Other assets $ 6,331 $ 3,987 Derivatives not designated as hedging instruments: Foreign exchange currency contracts Other current assets/ Other assets 2,639 867 Total $ 8,970 $ 4,854 LIABILITIES: Derivatives designated as hedging instruments: Cash flow hedges: Interest rate swap Other long-term liabilities $ 1,218 $ 348 Total $ 1,218 $ 348 Derivatives Designated as Hedging Instruments Foreign Exchange Currency Contracts Designated as Cash Flow Hedges During the three months ended May 2, 2020 , the Company purchased U.S. dollar forward contracts in Europe totaling US $55.0 million that were designated as cash flow hedges. As of May 2, 2020 , the Company had forward contracts outstanding for its European operations of US $171.5 million to hedge forecasted merchandise purchases, which are expected to mature over the next 17 months . As of May 2, 2020 , accumulated other comprehensive income (loss) related to foreign exchange currency contracts included a net unrealized gain of approximately $8.6 million , net of tax, of which $7.1 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 February 1, 2020 , the Company had forward contracts outstanding for its European operations of US $148.6 million that were designated as cash flow hedges. Interest Rate Swap Agreement Designated as Cash Flow Hedge During fiscal 2017 , the Company entered into an interest rate swap agreement with a notional amount of $21.5 million , designated as a cash flow hedge, to hedge the variability of cash flows in interest payments associated with the Company’s floating-rate Mortgage Debt. This interest rate swap agreement matures in January 2026 and converts the nature of the Company’s Mortgage Debt from LIBOR floating-rate debt to fixed-rate debt, resulting in a swap fixed rate of approximately 3.06% . As of May 2, 2020 , accumulated other comprehensive income (loss) related to the interest rate swap agreement included a net unrealized loss of $0.9 million , net of tax, which will be recognized in interest expense after 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 table summarizes the gains (losses) before taxes recognized on the derivative instruments designated as cash flow hedges in OCI and net loss for the three months ended May 2, 2020 and May 4, 2019 (in thousands): Gains (Losses) Recognized in OCI Location of Gains (Losses) Reclassified from Accumulated OCI into Loss Gains (Losses) Reclassified from Accumulated OCI into Loss Three Months Ended Three Months Ended May 2, 2020 May 4, 2019 May 2, 2020 May 4, 2019 Derivatives designated as cash flow hedges: Foreign exchange currency contracts $ 4,410 $ 4,655 Cost of product sales $ 1,991 $ 230 Interest rate swap (874 ) (219 ) Interest expense (3 ) 46 The following table summarizes net after-tax derivative activity recorded in accumulated other comprehensive income (loss) (in thousands): Three Months Ended May 2, 2020 May 4, 2019 Beginning balance gain $ 6,300 $ 2,999 Cumulative adjustment from adoption of new accounting guidance 1 — 1,981 Net gains from changes in cash flow hedges 3,180 3,864 Net gains reclassified into loss (1,769 ) (181 ) Ending balance gain $ 7,711 $ 8,663 ______________________________________________________________________ Notes: 1 During the first quarter of fiscal 2020, the Company adopted new authoritative guidance which eliminated the requirement to separately measure and report ineffectiveness for instruments that qualify for hedge accounting and generally requires that the entire change in the fair value of such instruments ultimately be presented in the same line as the respective hedge item. As a result, there is no interest component recognized for the ineffective portion of instruments that qualify for hedge accounting, but rather all changes in the fair value of such instruments are included in other comprehensive income (loss). Upon adoption of this guidance, the Company reclassified $2.0 million in gains from retained earnings to accumulated other comprehensive loss related to the previously recorded interest component on outstanding instruments that qualified for hedge accounting. Foreign Exchange Currency Contracts Not Designated as Hedging Instruments As of May 2, 2020 , the Company had euro foreign exchange currency contracts to purchase US $59.7 million expected to mature over the next 13 months . The following table summarizes the gains before taxes recognized on the derivative instruments not designated as hedging instruments in other income (expense) for the three months ended May 2, 2020 and May 4, 2019 (in thousands): Location of Gain Recognized in Loss Gain Recognized in Loss Three Months Ended May 2, 2020 May 4, 2019 Derivatives not designated as hedging instruments: Foreign exchange currency contracts Other income (expense) $ 1,088 $ 575 At February 1, 2020 , the Company had euro foreign exchange currency contracts to purchase US $46.1 million |
Basis of Presentation and New_2
Basis of Presentation and New Accounting Guidance (Policies) | 3 Months Ended |
May 02, 2020 | |
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 notes to the condensed consolidated financial statements. |
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, recoverability of deferred taxes, unrecognized tax benefits, the useful life of assets for depreciation and amortization, evaluation of asset impairment, pension obligations, workers’ compensation and medical self-insurance expense and accruals, litigation reserves and restructuring expense and accruals. Actual results could differ from those estimates. Revisions in estimates could materially impact the results of operations and financial position. As discussed further below, the coronavirus (or “COVID-19”) pandemic has materially impacted the Company’s results during the three months ended May 2, 2020 . The Company’s operations could continue to be impacted in ways we are not able to predict today due to the developing situation. 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 | 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 three to ten years |
Allowance for Doubtful Accounts | Allowance for Doubtful Accounts During the first quarter of fiscal 2021, the Company adopted authoritative guidance related to the measurement of credit losses on financial instruments. This guidance replaces the current “as incurred” loss model with an “expected loss” model which requires the recognition of an allowance for credit losses expected to be incurred over an asset’s lifetime. The adoption of this guidance did not have a material impact on the Company’s 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, an 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 and records a provision for doubtful accounts based on these evaluations. |
New Accounting Guidance | New Accounting Guidance Changes in Accounting Policies In June 2016, the FASB issued authoritative guidance related to the measurement of credit losses on financial instruments. This guidance replaces the current “as incurred” loss model with an “expected loss” model which requires the recognition of an allowance for credit losses expected to be incurred over an asset’s lifetime. The measurement of expected credit losses is based on relevant information about past events, current conditions and reasonable and supportable forecasts impacting the collectibility of the reported amounts. This guidance was adopted as of February 2, 2020 on a modified retrospective basis and did not have a material impact on the Company’s consolidated financial statements or related disclosures . In August 2018, the FASB issued authoritative guidance to modify the disclosure requirements on fair value measurements. This guidance was adopted as of February 2, 2020 on a prospective basis and did not have a material impact on the Company’s related disclosures . In August 2018, the FASB issued authoritative guidance to align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). The Company adopted this guidance as of February 2, 2020 on a prospective basis. Prior to the adoption of this guidance, the Company capitalized implementation costs related to a hosting arrangement that is a service contract to property and equipment, net in the Company’s consolidated balance sheets and included such expenditures within the investing section of the Company’s consolidated statements of cash flows. These assets were amortized over their estimated useful life with the related amortization included in depreciation and amortization in either cost of product sales or selling, general and administrative (“SG&A”) expenses in the Company’s consolidated statements of income (loss) depending on the nature of how the assets were used. Subsequent to the adoption of this guidance, these costs are included within other current assets or other assets in the Company’s consolidated balance sheets depending on the short or long-term nature of the underlying hosting agreement with such expenditures included in the operating section of the Company’s consolidated statements of cash flows. These assets are now amortized over the shorter of the estimated useful life or the term of the underlying hosting agreement, including any probable renewal periods, with the related amortization included in cost of product sales or SG&A expenses in the Company’s consolidated statements of income (loss), consistent with the presentation of the expense related to the underlying hosting arrangement. The adoption of this guidance, including the different classification requirements for the implementation costs, did not have a material impact on the Company’s consolidated financial statements or the related disclosures . Recently Issued Accounting Guidance In August 2018, the FASB issued authoritative guidance to modify the disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans. This guidance is effective for fiscal years beginning after December 15, 2020, which will be the Company’s first quarter of fiscal 2022, with early adoption permitted. The Company is currently evaluating the impact of the adoption of this standard on its related disclosures. In December 2019, the FASB issued authoritative guidance that simplifies the accounting for income taxes by eliminating certain exceptions to general principles related to intraperiod tax allocations, ownership changes in foreign investments and calculating income taxes in an interim period when year-to-date losses exceed total anticipated losses. The new guidance also simplifies the accounting for income taxes related to franchise taxes that are partially based on income, the step up in the tax basis of goodwill, allocation of current and deferred tax expense for certain legal entities and enacted changes in tax laws or rates during interim periods, among other improvements. This guidance is effective for fiscal years beginning after December 15, 2020, which will be the Company’s first quarter of fiscal 2022, with early adoption permitted. The Company is currently evaluating the impact of the adoption of this standard on its consolidated financial statements and related disclosures. In March 2020, the FASB issued authoritative guidance to provide temporary optional expedients and exceptions related to contract modifications and hedge accounting to ease the financial reporting burdens of the expected market transition from LIBOR and other interbank offered rates to alternative reference rates, such as SOFR. This guidance may be adopted as of March 12, 2020 through December 31, 2022. This temporary relief cannot be applied to contract modifications after December 31, 2022. The Company is currently evaluating its election options and the impact on its consolidated financial statements and related disclosures. |
Lease Accounting (Tables)
Lease Accounting (Tables) | 3 Months Ended |
May 02, 2020 | |
Leases [Abstract] | |
Assets and liabilities, lessee | As of May 2, 2020 and February 1, 2020 , the components of leases are as follows (in thousands): Balance Sheet Location May 2, 2020 Feb 1, 2020 Assets Operating Operating lease right-of-use assets $ 778,030 $ 851,990 Finance Property and equipment, net 15,159 15,972 Total lease assets $ 793,189 $ 867,962 Liabilities Current: Operating Current portion of operating lease liabilities $ 226,967 $ 192,066 Finance Current portion of borrowings and finance lease obligations 2,629 2,273 Noncurrent: Operating Long-term operating lease liabilities 659,947 714,079 Finance Long-term debt and finance lease obligations 13,222 14,262 Total lease liabilities $ 902,765 $ 922,680 |
Lease cost | Three Months Ended Income Statement Location May 2, 2020 May 4, 2019 Operating lease costs Cost of product sales $ 55,369 $ 58,816 Operating lease costs Selling, general and administrative expenses 5,176 5,264 Finance lease costs Amortization of leased assets 1 Cost of product sales 681 43 Amortization of leased assets 1 Selling, general and administrative expenses 1,278 543 Interest on lease liabilities Interest expense 282 287 Variable lease costs 2 Cost of product sales 14,348 24,825 Variable lease costs 2 Selling, general and administrative expenses 579 827 Short-term lease costs Cost of product sales 239 — Short-term lease costs Selling, general and administrative expenses 1,789 212 Total lease costs $ 79,741 $ 90,817 ______________________________________________________________________ Notes: 1 Amortization of leased assets related to finance leases are included in depreciation expense within cost of product sales or selling, general and administrative expenses depending on the nature of the asset in the Company’s condensed consolidated statements of loss. 2 During the three months ended May 2, 2020 , variable lease costs included certain rent concessions granted related to the COVID-19 pandemic. Refer to Note 1 for further information. |
Operating lease liabilities maturity schedule | Maturities of the Company’s operating and finance lease liabilities as of May 2, 2020 are as follows (in thousands): Maturity of Lease Liabilities Operating Leases Finance Leases Total 2021 1 $ 185,976 $ 2,441 $ 188,417 2022 198,951 3,660 202,611 2023 164,949 3,251 168,200 2024 136,666 3,072 139,738 2025 95,606 2,289 97,895 After 2025 189,303 4,867 194,170 Total lease payments 971,451 19,580 991,031 Less: Interest 84,537 3,729 88,266 Present value of lease liabilities $ 886,914 $ 15,851 $ 902,765 ______________________________________________________________________ Notes: 1 Represents the maturity of lease liabilities for the remainder of fiscal 2021 and also includes rent payments that have been deferred due to the COVID-19 pandemic. This amount does not include payments made during the three months ended May 2, 2020 |
Finance lease liabilities maturity schedule | Maturities of the Company’s operating and finance lease liabilities as of May 2, 2020 are as follows (in thousands): Maturity of Lease Liabilities Operating Leases Finance Leases Total 2021 1 $ 185,976 $ 2,441 $ 188,417 2022 198,951 3,660 202,611 2023 164,949 3,251 168,200 2024 136,666 3,072 139,738 2025 95,606 2,289 97,895 After 2025 189,303 4,867 194,170 Total lease payments 971,451 19,580 991,031 Less: Interest 84,537 3,729 88,266 Present value of lease liabilities $ 886,914 $ 15,851 $ 902,765 ______________________________________________________________________ Notes: 1 Represents the maturity of lease liabilities for the remainder of fiscal 2021 and also includes rent payments that have been deferred due to the COVID-19 pandemic. This amount does not include payments made during the three months ended May 2, 2020 |
Other supplemental information | Other supplemental information is as follows (dollars in thousands): Lease Term and Discount Rate May 2, 2020 Weighted-average remaining lease term (years) Operating leases 5.8 years Finance leases 6.1 years Weighted-average discount rate Operating leases 3.5% Finance leases 7.1% Three Months Ended Supplemental Cash Flow Information May 2, 2020 May 4, 2019 Cash paid for amounts included in the measurement of lease liabilities Operating cash flows from operating leases $ 32,618 $ 62,082 New operating ROU assets obtained in exchange for lease liabilities $ 16,332 $ 68,804 |
Loss per Share (Tables)
Loss per Share (Tables) | 3 Months Ended |
May 02, 2020 | |
Earnings Per Share [Abstract] | |
Computation of basic and diluted net loss per common share attributable to common stockholders | The computation of basic and diluted net loss per common share attributable to common stockholders is as follows (in thousands, except per share data): Three Months Ended May 2, 2020 May 4, 2019 Net loss attr ibutabl e to Guess?, Inc. $ (157,666 ) $ (21,374 ) Less net earnings attributable to nonvested restricted stockholders — 161 Net loss attributable to common stockholders $ (157,666 ) $ (21,535 ) Weighted average common shares used in basic computations 65,715 79,925 Effect of dilutive securities: Stock options and restricted stock units 1 — — Weighted average common shares used in diluted computations 65,715 79,925 Net loss per common share attributable to common stockholders: Basic $ (2.40 ) $ (0.27 ) Diluted $ (2.40 ) $ (0.27 ) ______________________________________________________________________ Notes: 1 For the three months ended May 2, 2020 and May 4, 2019, there were 484,674 and 1,052,518 , respectively, of potentially dilutive shares that were not included in the computation of diluted weighted average common shares and common equivalent shares outstanding because their effect would have been antidilutive given the Company’s net loss. |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 3 Months Ended |
May 02, 2020 | |
Equity [Abstract] | |
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, for the three months ended May 2, 2020 and May 4, 2019 are as follows (in thousands): Three Months Ended May 2, 2020 Foreign Currency Translation Adjustment Derivative Financial Instruments Designated as Cash Flow Hedges Defined Benefit Plans Total Balance at February 1, 2020 $ (137,289 ) $ 6,300 $ (8,921 ) $ (139,910 ) Gains (losses) arising during the period (14,873 ) 3,180 (1 ) (11,694 ) Reclassification to net loss for (gains) losses realized — (1,769 ) 71 (1,698 ) Net other comprehensive income (loss) (14,873 ) 1,411 70 (13,392 ) Balance at May 2, 2020 $ (152,162 ) $ 7,711 $ (8,851 ) $ (153,302 ) Three Months Ended May 4, 2019 Foreign Currency Translation Adjustment Derivative Financial Instruments Designated as Cash Flow Hedges Defined Benefit Plans Total Balance at February 2, 2019 $ (119,546 ) $ 2,999 $ (9,632 ) $ (126,179 ) Cumulative adjustment reclassified from retained earnings due to adoption of new accounting guidance 1 — 1,981 — 1,981 Gains (losses) arising during the period (12,377 ) 3,864 96 (8,417 ) Reclassification to net loss for (gains) losses realized — (181 ) 90 (91 ) Net other comprehensive income (loss) (12,377 ) 3,683 186 (8,508 ) Balance at May 4, 2019 $ (131,923 ) $ 8,663 $ (9,446 ) $ (132,706 ) ______________________________________________________________________ Notes: 1 During the first quarter of fiscal 2020, the Company adopted new authoritative guidance which eliminated the requirement to separately measure and report ineffectiveness for instruments that qualify for hedge accounting and generally requires that the entire change in the fair value of such instruments ultimately be presented in the same line as the respective hedge item. As a result, there is no interest component recognized for the ineffective portion of instruments that qualify for hedge accounting, but rather all changes in the fair value of such instruments are included in other comprehensive income (loss). Upon adoption of this guidance, the Company reclassified approximately $2.0 million in gains from retained earnings to accumulated other comprehensive loss related to the previously recorded interest component on outstanding instruments that qualified for hedge accounting. |
Reclassifications out of accumulated other comprehensive income (loss) to net loss | Details on reclassifications out of accumulated other comprehensive income (loss) to net loss during the three months ended May 2, 2020 and May 4, 2019 are as follows (in thousands): Three Months Ended Location of (Gain) Loss Reclassified from Accumulated OCI into Loss May 2, 2020 May 4, 2019 Derivative financial instruments designated as cash flow hedges: Foreign exchange currency contracts $ (1,991 ) $ (230 ) Cost of product sales Interest rate swap 3 (46 ) Interest expense Less income tax effect 219 95 Income tax benefit (1,769 ) (181 ) Defined benefit plans: Net actuarial loss amortization 96 111 Other income (expense) Prior service credit amortization (16 ) (10 ) Other income (expense) Less income tax effect (9 ) (11 ) Income tax benefit 71 90 Total reclassifications during the period $ (1,698 ) $ (91 ) |
Accounts Receivable (Tables)
Accounts Receivable (Tables) | 3 Months Ended |
May 02, 2020 | |
Receivables [Abstract] | |
Schedule of accounts receivable | Accounts receivable is summarized as follows (in thousands): May 2, 2020 Feb 1, 2020 Trade $ 220,942 $ 309,508 Royalty 14,876 12,775 Other 14,359 13,429 250,177 335,712 Less allowances 1 10,645 8,431 $ 239,532 $ 327,281 ______________________________________________________________________ Notes: 1 During the first quarter of fiscal 2021, the Company adopted authoritative guidance related to the measurement of credit losses on financial instruments. This guidance replaces the current “as incurred” loss model with an “expected loss” model which requires the recognition of an allowance for credit losses expected to be incurred over an asset’s lifetime. The adoption of this guidance did not have a material impact on the Company’s allowance for doubtful accounts. Refer to Note 1 for further information. |
Inventories (Tables)
Inventories (Tables) | 3 Months Ended |
May 02, 2020 | |
Inventory Disclosure [Abstract] | |
Schedule of inventories | Inventories consist of the following (in thousands): May 2, 2020 Feb 1, 2020 Raw materials $ 565 $ 399 Work in progress 48 52 Finished goods 391,877 392,678 $ 392,490 $ 393,129 |
Segment Information (Tables)
Segment Information (Tables) | 3 Months Ended |
May 02, 2020 | |
Segment Reporting [Abstract] | |
Summary of net revenue and earnings (loss) from operations by segment | Net revenue and earnings (loss) from operations are summarized as follows for the three months ended May 2, 2020 and May 4, 2019 (in thousands): Three Months Ended May 2, 2020 May 4, 2019 Net revenue: Americas Retail $ 74,584 $ 176,423 Americas Wholesale 25,875 46,205 Europe 106,473 210,055 Asia 40,385 85,190 Licensing 12,934 18,818 Total net revenue $ 260,251 $ 536,691 Earnings (loss) from operations: Americas Retail $ (36,673 ) $ (1,812 ) Americas Wholesale 1,624 7,814 Europe (44,406 ) (16,327 ) Asia (22,777 ) (3,203 ) Licensing 10,094 16,644 Total segment earnings (loss) from operations (92,138 ) 3,116 Corporate overhead (16,921 ) (25,812 ) Asset impairment charges 1 (52,972 ) (1,775 ) Net losses on lease terminations 2 (456 ) — Total loss from operations $ (162,487 ) $ (24,471 ) ______________________________________________________________________ Notes: 1 During the three months ended May 2, 2020 , the Company recognized asset impairment charges related primarily to impairment of certain operating lease right-of-use assets and impairment of property and equipment related to certain retail locations resulting from lower revenue and future cash flow projections resulting from the ongoing effects of the COVID-19 pandemic . During the three months ended May 4, 2019 , the Company’s asset impairment charges related primarily to impairment of property and equipment 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. 2 During the three months ended May 2, 2020 , the Company recorded net losses on lease terminations related primarily to the early termination of certain lease agreements . |
Summary of net revenue by country | Net revenue is classified primarily based on the country where the Company’s customer is located (in thousands): Three Months Ended May 2, 2020 May 4, 2019 Net revenue: U.S. $ 69,465 $ 164,371 South Korea 21,224 33,917 Italy 19,352 50,435 Canada 16,677 38,581 Spain 12,996 27,997 Other foreign countries 107,603 202,572 Total product sales 247,317 517,873 Net royalties 12,934 18,818 Net revenue $ 260,251 $ 536,691 |
Borrowings and Finance Lease _2
Borrowings and Finance Lease Obligations (Tables) | 3 Months Ended |
May 02, 2020 | |
Debt Disclosure [Abstract] | |
Summary of borrowings and finance lease obligations | Borrowings and finance lease obligations are summarized as follows (in thousands): May 2, 2020 Feb 1, 2020 Borrowings under credit facilities $ 193,725 $ 3,957 Term loans 24,705 — Mortgage debt 18,923 19,132 Finance lease obligations 15,851 16,535 Other 2,101 2,636 255,305 42,260 Less current installments 160,501 9,490 Long-term debt and finance lease obligations $ 94,804 $ 32,770 |
Convertible Senior Notes and _2
Convertible Senior Notes and Related Transactions (Tables) | 3 Months Ended |
May 02, 2020 | |
Debt Disclosure [Abstract] | |
Convertible Debt | The Notes consist of the following components as of May 2, 2020 and February 1, 2020 (in thousands): May 2, 2020 Feb 1, 2020 Liability component: Principal $ 300,000 $ 300,000 Unamortized debt discount (46,418 ) (49,017 ) Unamortized issuance costs (3,406 ) (3,620 ) Net carrying amount $ 250,176 $ 247,363 Equity component, net 1 $ 42,320 $ 42,320 ______________________________________________________________________ Notes: 1 Included in paid-in capital within stockholders’ equity on the condensed consolidated balance sheets and is net of debt issuance costs and deferred taxes. |
Share-Based Compensation (Table
Share-Based Compensation (Tables) | 3 Months Ended |
May 02, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Schedule of share-based compensation expense recognized under all of the Company's stock plans | The following table summarizes the share-based compensation expense recognized under all of the Company’s stock plans during the three months ended May 2, 2020 and May 4, 2019 (in thousands): Three Months Ended May 2, 2020 May 4, 2019 Stock options $ 695 $ 590 Stock awards/units 4,926 3,815 Employee Stock Purchase Plan 165 63 Total share-based compensation expense $ 5,786 $ 4,468 |
Schedule of activity for nonvested performance-based units | The following table summarizes the activity for nonvested performance-based units during the three months ended May 2, 2020 : Number of Units Weighted Average Grant Date Fair Value Nonvested at February 1, 2020 1,140,023 $ 16.66 Vested (310,199 ) 13.98 Forfeited (236,404 ) 11.72 Nonvested at May 2, 2020 593,420 $ 20.03 |
Schedule of activity for nonvested market-based units | The following table summarizes the activity for nonvested market-based units during the three months ended May 2, 2020 : Number of Units Weighted Average Grant Date Fair Value Nonvested at February 1, 2020 288,202 $ 13.43 Granted 1 101,566 10.62 Vested 1 (305,901 ) 10.62 Nonvested at May 2, 2020 83,867 $ 20.28 ______________________________________________________________________ Notes: 1 As a result of the achievement of certain market-based vesting conditions, there were 101,566 shares that vested in addition to the original target number of shares granted in fiscal 2018. |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 3 Months Ended |
May 02, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Redeemable Noncontrolling Interest | A reconciliation of the total carrying amount of redeemable noncontrolling interests for the three months ended May 2, 2020 and May 4, 2019 is as follows (in thousands): Three Months Ended May 2, 2020 May 4, 2019 Beginning balance $ 4,731 $ 4,853 Foreign currency translation adjustment (797 ) (79 ) Ending balance $ 3,934 $ 4,774 |
Defined Benefit Plans (Tables)
Defined Benefit Plans (Tables) | 3 Months Ended |
May 02, 2020 | |
Defined Benefit Plan [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 for the three months ended May 2, 2020 and May 4, 2019 related to the Company’s defined benefit plans are as follows (in thousands): Three Months Ended May 2, 2020 SERP Foreign Pension Plans Total Service cost $ — $ 764 $ 764 Interest cost 319 8 327 Expected return on plan assets — (45 ) (45 ) Net amortization of unrecognized prior service credit — (16 ) (16 ) Net amortization of actuarial losses 10 86 96 Net periodic defined benefit pension cost $ 329 $ 797 $ 1,126 Three Months Ended May 4, 2019 SERP Foreign Pension Plans Total Service cost $ — $ 807 $ 807 Interest cost 481 68 549 Expected return on plan assets — (77 ) (77 ) Net amortization of unrecognized prior service credit — (10 ) (10 ) Net amortization of actuarial losses 16 95 111 Net periodic defined benefit pension cost $ 497 $ 883 $ 1,380 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended |
May 02, 2020 | |
Fair Value Disclosures [Abstract] | |
Schedule of fair value hierarchy for assets and liabilities measured at fair value on a recurring basis | The following table presents the fair value hierarchy for those assets and liabilities measured at fair value on a recurring basis as of May 2, 2020 and February 1, 2020 (in thousands): Fair Value Measurements Fair Value Measurements at May 2, 2020 at Feb 1, 2020 Recurring Fair Value Measures Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Assets: Foreign exchange currency contracts $ — $ 8,970 $ — $ 8,970 $ — $ 4,854 $ — $ 4,854 Total $ — $ 8,970 $ — $ 8,970 $ — $ 4,854 $ — $ 4,854 Liabilities: Interest rate swap $ — $ 1,218 $ — $ 1,218 $ — $ 348 $ — $ 348 Deferred compensation obligations — 12,594 — 12,594 — 14,091 — 14,091 Total $ — $ 13,812 $ — $ 13,812 $ — $ 14,439 $ — $ 14,439 |
Derivative Financial Instrume_2
Derivative Financial Instruments (Tables) | 3 Months Ended |
May 02, 2020 | |
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 as of May 2, 2020 and February 1, 2020 is as follows (in thousands): Derivative Balance Sheet Location Fair Value at Fair Value at ASSETS: Derivatives designated as hedging instruments: Cash flow hedges: Foreign exchange currency contracts Other current assets/ Other assets $ 6,331 $ 3,987 Derivatives not designated as hedging instruments: Foreign exchange currency contracts Other current assets/ Other assets 2,639 867 Total $ 8,970 $ 4,854 LIABILITIES: Derivatives designated as hedging instruments: Cash flow hedges: Interest rate swap Other long-term liabilities $ 1,218 $ 348 Total $ 1,218 $ 348 |
Summary of gains (losses) before taxes recognized on the derivative instruments designated as cash flow hedges in OCI and net loss | The following table summarizes the gains (losses) before taxes recognized on the derivative instruments designated as cash flow hedges in OCI and net loss for the three months ended May 2, 2020 and May 4, 2019 (in thousands): Gains (Losses) Recognized in OCI Location of Gains (Losses) Reclassified from Accumulated OCI into Loss Gains (Losses) Reclassified from Accumulated OCI into Loss Three Months Ended Three Months Ended May 2, 2020 May 4, 2019 May 2, 2020 May 4, 2019 Derivatives designated as cash flow hedges: Foreign exchange currency contracts $ 4,410 $ 4,655 Cost of product sales $ 1,991 $ 230 Interest rate swap (874 ) (219 ) Interest expense (3 ) 46 |
Summary of net after-tax derivative activity recorded in accumulated other comprehensive income (loss) | The following table summarizes net after-tax derivative activity recorded in accumulated other comprehensive income (loss) (in thousands): Three Months Ended May 2, 2020 May 4, 2019 Beginning balance gain $ 6,300 $ 2,999 Cumulative adjustment from adoption of new accounting guidance 1 — 1,981 Net gains from changes in cash flow hedges 3,180 3,864 Net gains reclassified into loss (1,769 ) (181 ) Ending balance gain $ 7,711 $ 8,663 ______________________________________________________________________ Notes: 1 During the first quarter of fiscal 2020, the Company adopted new authoritative guidance which eliminated the requirement to separately measure and report ineffectiveness for instruments that qualify for hedge accounting and generally requires that the entire change in the fair value of such instruments ultimately be presented in the same line as the respective hedge item. As a result, there is no interest component recognized for the ineffective portion of instruments that qualify for hedge accounting, but rather all changes in the fair value of such instruments are included in other comprehensive income (loss). Upon adoption of this guidance, the Company reclassified $2.0 million in gains from retained earnings to accumulated other comprehensive loss related to the previously recorded interest component on outstanding instruments that qualified for hedge accounting. |
Summary of gains before taxes recognized on the derivative instruments not designated as hedging instruments in other income (expense) | The following table summarizes the gains before taxes recognized on the derivative instruments not designated as hedging instruments in other income (expense) for the three months ended May 2, 2020 and May 4, 2019 (in thousands): Location of Gain Recognized in Loss Gain Recognized in Loss Three Months Ended May 2, 2020 May 4, 2019 Derivatives not designated as hedging instruments: Foreign exchange currency contracts Other income (expense) $ 1,088 $ 575 |
Basis of Presentation and New_3
Basis of Presentation and New Accounting Guidance (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||
May 02, 2020 | May 04, 2019 | Jan. 30, 2021 | Feb. 01, 2020 | Feb. 02, 2019 | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Fiscal period duration | 364 days | 364 days | |||
Percentage of total accounts receivable that are insured or supported by bank guarantees or letters of credit | 54.00% | ||||
Europe | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Percentage of total accounts receivable that are insured or supported by bank guarantees or letters of credit | 66.00% | ||||
Scenario, Forecast | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Fiscal period duration | 364 days | ||||
Royalties | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Net royalties revenue recognized | $ 3.6 | $ 3.1 | |||
Minimum | Royalties | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
License agreement term | 3 years | ||||
Maximum | Royalties | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
License agreement term | 10 years | ||||
Accrued expenses | Royalties | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Current deferred royalties | $ 6.5 | $ 6.7 | |||
Other long-term liabilities | Royalties | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Noncurrent deferred royalties | $ 17.1 | $ 18.7 | |||
Privately Held Apparel Company | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Equity method investment | $ 8.3 | ||||
Minority interest | 30.00% | ||||
Privately Held Apparel Company | Other expense | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Net loss from equity method investment | $ 2.1 |
Lease Accounting - Narrative (D
Lease Accounting - Narrative (Details) - USD ($) | 3 Months Ended | |
May 02, 2020 | May 04, 2019 | |
Lessee, Lease, Description [Line Items] | ||
Lease not yet commenced | $ 10,900,000 | |
Impairment on operating lease right-of-use assets | $ 0 | |
North America and Europe | ||
Lessee, Lease, Description [Line Items] | ||
Impairment on operating lease right-of-use assets | $ 28,200,000 | |
Retail Store | Minimum | ||
Lessee, Lease, Description [Line Items] | ||
Percentage of annual sales volume used for incremental rent on certain retail location leases | 3.00% | |
Retail Store | Maximum | ||
Lessee, Lease, Description [Line Items] | ||
Percentage of annual sales volume used for incremental rent on certain retail location leases | 24.00% | |
Retail Concession | Weighted Average | ||
Lessee, Lease, Description [Line Items] | ||
Percentage of annual sales volume used for incremental rent on certain retail location leases | 36.00% |
Lease Accounting - Lease Assets
Lease Accounting - Lease Assets and Liabilities (Details) - USD ($) $ in Thousands | May 02, 2020 | Feb. 01, 2020 |
Assets | ||
Operating | $ 778,030 | $ 851,990 |
Finance | 15,159 | 15,972 |
Total lease assets | 793,189 | 867,962 |
Current: | ||
Operating | 226,967 | 192,066 |
Finance | 2,629 | 2,273 |
Noncurrent: | ||
Operating | 659,947 | 714,079 |
Finance | 13,222 | 14,262 |
Total lease liabilities | $ 902,765 | $ 922,680 |
Lease Accounting - Lease Cost (
Lease Accounting - Lease Cost (Details) - USD ($) $ in Thousands | 3 Months Ended | |
May 02, 2020 | May 04, 2019 | |
Lease costs | ||
Total lease costs | $ 79,741 | $ 90,817 |
Cost of product sales | ||
Lease costs | ||
Operating lease cost | 55,369 | 58,816 |
Amortization of leased assets | 681 | 43 |
Variable lease costs | 14,348 | 24,825 |
Short-term lease costs | 239 | 0 |
Selling, general and administrative expenses | ||
Lease costs | ||
Operating lease cost | 5,176 | 5,264 |
Amortization of leased assets | 1,278 | 543 |
Variable lease costs | 579 | 827 |
Short-term lease costs | 1,789 | 212 |
Interest expense | ||
Lease costs | ||
Interest on lease liabilities | $ 282 | $ 287 |
Lease Accounting - Maturity of
Lease Accounting - Maturity of Lease Liabilities (Details) - USD ($) $ in Thousands | May 02, 2020 | Feb. 01, 2020 |
Operating Leases | ||
2021 | $ 185,976 | |
2022 | 198,951 | |
2023 | 164,949 | |
2024 | 136,666 | |
2025 | 95,606 | |
After 2025 | 189,303 | |
Total lease payments | 971,451 | |
Less: Interest | 84,537 | |
Present value of lease liabilities | 886,914 | |
Finance Leases | ||
2021 | 2,441 | |
2022 | 3,660 | |
2023 | 3,251 | |
2024 | 3,072 | |
2025 | 2,289 | |
After 2025 | 4,867 | |
Total lease payments | 19,580 | |
Less: Interest | 3,729 | |
Present value of lease liabilities | 15,851 | $ 16,535 |
Total | ||
2021 | 188,417 | |
2022 | 202,611 | |
2023 | 168,200 | |
2024 | 139,738 | |
2025 | 97,895 | |
After 2025 | 194,170 | |
Total lease payments | 991,031 | |
Less: Interest | 88,266 | |
Present value of lease liabilities | $ 902,765 | $ 922,680 |
Lease Accounting - Lease Term a
Lease Accounting - Lease Term and Discount Rate (Details) | May 02, 2020 |
Weighted-average remaining lease term (years) | |
Operating leases | 5 years 9 months 18 days |
Finance leases | 6 years 1 month 6 days |
Weighted-average discount rate | |
Operating leases | 3.50% |
Finance leases | 7.10% |
Lease Accounting - Other Inform
Lease Accounting - Other Information (Details) - USD ($) $ in Thousands | 3 Months Ended | |
May 02, 2020 | May 04, 2019 | |
Cash paid for amounts included in the measurement of lease liabilities | ||
Operating cash flows from operating leases | $ 32,618 | $ 62,082 |
New operating ROU assets obtained in exchange for lease liabilities | $ 16,332 | $ 68,804 |
Loss per Share - Basic and Dilu
Loss per Share - Basic and Diluted EPS (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
May 02, 2020 | May 04, 2019 | |
Earnings Per Share [Abstract] | ||
Net loss attributable to Guess, Inc. | $ (157,666) | $ (21,374) |
Less net earnings attributable to nonvested restricted stockholders | 0 | 161 |
Net loss attributable to common stockholders | $ (157,666) | $ (21,535) |
Weighted average common shares used in basic computations (in shares) | 65,715,000 | 79,925,000 |
Effect of dilutive securities: | ||
Stock options and restricted stock units (in shares) | 0 | 0 |
Weighted average common shares used in diluted computations (in shares) | 65,715,000 | 79,925,000 |
Net loss per common share attributable to common stockholders: | ||
Basic (in dollars per share) | $ (2.40) | $ (0.27) |
Diluted (in dollars per share) | $ (2.40) | $ (0.27) |
Antidilutive securities excluded from computation of earnings (loss) per share | ||
Antidilutive equity awards excluded from computation of diluted weighted average common shares (in shares) | 3,157,824 | 2,137,004 |
Potentially Dilutive Shares | ||
Antidilutive securities excluded from computation of earnings (loss) per share | ||
Antidilutive equity awards excluded from computation of diluted weighted average common shares (in shares) | 484,674 | 1,052,518 |
Performance Shares | ||
Antidilutive securities excluded from computation of earnings (loss) per share | ||
Performance or market awards excluded from computation of EPS (in shares) | 227,729 | 1,075,085 |
Loss per Share - Other Narrativ
Loss per Share - Other Narrative (Details) - $ / shares shares in Millions | 1 Months Ended | 3 Months Ended |
Apr. 30, 2019 | May 02, 2020 | |
Earnings Per Share [Abstract] | ||
Conversion price of convertible senior notes (in dollars per share) | $ 25.78 | $ 25.78 |
Warrants outstanding (in shares) | 11.6 | 11.6 |
Strike price of warrants (in dollars per share) | $ 46.88 | $ 46.88 |
Stockholders' Equity - Narrativ
Stockholders' Equity - Narrative (Details) - USD ($) | Apr. 26, 2019 | May 02, 2020 | Nov. 02, 2019 | May 04, 2019 | Nov. 02, 2019 | Jun. 26, 2012 |
Class of Stock [Line Items] | ||||||
Share repurchases | $ 201,564,000 | |||||
Purchase of treasury stock | $ 0 | $ 201,564,000 | ||||
Share Repurchase Program | ||||||
Class of Stock [Line Items] | ||||||
Authorized amount for repurchase | $ 500,000,000 | |||||
Share repurchases (in shares) | 0 | 10,264,052 | ||||
Share repurchases | $ 201,500,000 | |||||
Remaining purchase amount authorized | $ 86,700,000 | |||||
Accelerated Share Repurchase Contract | ||||||
Class of Stock [Line Items] | ||||||
Authorized amount for repurchase | $ 170,000,000 | |||||
Share repurchases (in shares) | 5,200,000 | 5,400,000 | 10,600,000 | |||
Share repurchases | $ 102,000,000 | $ 68,000,000 | ||||
Purchase of treasury stock | $ 170,000,000 | |||||
Percentage of contract | 60.00% | |||||
Average price per share (in dollars per share) | $ 16.09 |
Stockholders' Equity - Cash Div
Stockholders' Equity - Cash Dividend Declared Per Share (Details) - $ / shares | 3 Months Ended | 9 Months Ended | ||
May 02, 2020 | May 04, 2019 | Feb. 02, 2019 | Feb. 01, 2020 | |
Equity [Abstract] | ||||
Dividends per share (in dollars per share) | $ 0 | $ 0.225 | $ 0.225 | $ 0.1125 |
Stockholders' Equity - Accumula
Stockholders' Equity - Accumulated Other Comprehensive Income (Loss) (Details) - USD ($) $ in Thousands | 3 Months Ended | |||
May 02, 2020 | May 04, 2019 | Feb. 02, 2020 | Feb. 03, 2019 | |
Accumulated other comprehensive income (loss), net of tax | ||||
Beginning balance | $ 661,347 | $ 853,645 | ||
Cumulative adjustment from adoption of new guidance | 661,347 | 565,078 | ||
Ending balance | 486,789 | 565,078 | ||
Cumulative effect period of adoption adjustment | ||||
Accumulated other comprehensive income (loss), net of tax | ||||
Cumulative adjustment from adoption of new guidance | $ 297 | |||
Foreign Currency Translation Adjustment | ||||
Accumulated other comprehensive income (loss), net of tax | ||||
Beginning balance | (137,289) | (119,546) | ||
Cumulative adjustment from adoption of new guidance | (152,162) | (131,923) | ||
Gains (losses) arising during the period | (14,873) | (12,377) | ||
Reclassification to net earnings (loss) for (gains) losses realized | 0 | 0 | ||
Net other comprehensive income (loss) | (14,873) | (12,377) | ||
Ending balance | (152,162) | (131,923) | ||
Foreign Currency Translation Adjustment | Cumulative effect period of adoption adjustment | ||||
Accumulated other comprehensive income (loss), net of tax | ||||
Cumulative adjustment from adoption of new guidance | 0 | |||
Derivative Financial Instruments Designated as Cash Flow Hedges | ||||
Accumulated other comprehensive income (loss), net of tax | ||||
Beginning balance | 6,300 | 2,999 | ||
Cumulative adjustment from adoption of new guidance | 7,711 | 8,663 | ||
Gains (losses) arising during the period | 3,180 | 3,864 | ||
Reclassification to net earnings (loss) for (gains) losses realized | (1,769) | (181) | ||
Net other comprehensive income (loss) | 1,411 | 3,683 | ||
Ending balance | 7,711 | 8,663 | ||
Derivative Financial Instruments Designated as Cash Flow Hedges | Cumulative effect period of adoption adjustment | ||||
Accumulated other comprehensive income (loss), net of tax | ||||
Cumulative adjustment from adoption of new guidance | $ 0 | 1,981 | ||
Defined Benefit Plans | ||||
Accumulated other comprehensive income (loss), net of tax | ||||
Beginning balance | (8,921) | (9,632) | ||
Cumulative adjustment from adoption of new guidance | (8,851) | (9,446) | ||
Gains (losses) arising during the period | (1) | 96 | ||
Reclassification to net earnings (loss) for (gains) losses realized | 71 | 90 | ||
Net other comprehensive income (loss) | 70 | 186 | ||
Ending balance | (8,851) | (9,446) | ||
Defined Benefit Plans | Cumulative effect period of adoption adjustment | ||||
Accumulated other comprehensive income (loss), net of tax | ||||
Cumulative adjustment from adoption of new guidance | 0 | |||
Accumulated Other Comprehensive Loss | ||||
Accumulated other comprehensive income (loss), net of tax | ||||
Beginning balance | (139,910) | (126,179) | ||
Cumulative adjustment from adoption of new guidance | (153,302) | (126,179) | ||
Gains (losses) arising during the period | (11,694) | (8,417) | ||
Reclassification to net earnings (loss) for (gains) losses realized | (1,698) | (91) | ||
Net other comprehensive income (loss) | (13,392) | (8,508) | ||
Ending balance | (153,302) | (132,706) | ||
Accumulated Other Comprehensive Loss | Cumulative effect period of adoption adjustment | ||||
Accumulated other comprehensive income (loss), net of tax | ||||
Cumulative adjustment from adoption of new guidance | 1,981 | |||
Retained Earnings | ||||
Accumulated other comprehensive income (loss), net of tax | ||||
Beginning balance | 1,130,409 | 1,077,747 | ||
Cumulative adjustment from adoption of new guidance | 973,006 | 1,036,386 | ||
Ending balance | $ 973,006 | $ 1,036,386 | ||
Retained Earnings | Cumulative effect period of adoption adjustment | ||||
Accumulated other comprehensive income (loss), net of tax | ||||
Cumulative adjustment from adoption of new guidance | (1,684) | |||
Accounting Standards Update 2017-12 | Accumulated Other Comprehensive Loss | Cumulative effect period of adoption adjustment | ||||
Accumulated other comprehensive income (loss), net of tax | ||||
Cumulative adjustment from adoption of new guidance | 2,000 | |||
Accounting Standards Update 2017-12 | Retained Earnings | Cumulative effect period of adoption adjustment | ||||
Accumulated other comprehensive income (loss), net of tax | ||||
Cumulative adjustment from adoption of new guidance | $ (2,000) |
Stockholders' Equity - Reclassi
Stockholders' Equity - Reclassifications Out of Accumulated Other Comprehensive Income (Loss) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
May 02, 2020 | May 04, 2019 | |
Reclassifications out of accumulated other comprehensive income (loss) to net earnings (loss) | ||
Cost of product sales | $ 226,022 | $ 354,742 |
Other income (expense), net | 19,580 | (2,071) |
Interest expense | 5,462 | 1,259 |
Income tax benefit | (26,381) | (2,717) |
Net loss attributable to Guess, Inc. | 157,666 | 21,374 |
Reclassifications out of accumulated other comprehensive income (loss) | ||
Reclassifications out of accumulated other comprehensive income (loss) to net earnings (loss) | ||
Net loss attributable to Guess, Inc. | (1,698) | (91) |
Derivative Financial Instruments Designated as Cash Flow Hedges | Reclassifications out of accumulated other comprehensive income (loss) | ||
Reclassifications out of accumulated other comprehensive income (loss) to net earnings (loss) | ||
Cost of product sales | (1,991) | (230) |
Interest expense | 3 | (46) |
Income tax benefit | 219 | 95 |
Net loss attributable to Guess, Inc. | (1,769) | (181) |
Net Actuarial Loss Amortization | Reclassifications out of accumulated other comprehensive income (loss) | ||
Reclassifications out of accumulated other comprehensive income (loss) to net earnings (loss) | ||
Other income (expense), net | 96 | 111 |
Prior Service Credit Amortization | Reclassifications out of accumulated other comprehensive income (loss) | ||
Reclassifications out of accumulated other comprehensive income (loss) to net earnings (loss) | ||
Other income (expense), net | (16) | (10) |
Defined Benefit Plans | Reclassifications out of accumulated other comprehensive income (loss) | ||
Reclassifications out of accumulated other comprehensive income (loss) to net earnings (loss) | ||
Income tax benefit | (9) | (11) |
Net loss attributable to Guess, Inc. | $ 71 | $ 90 |
Accounts Receivable (Details)
Accounts Receivable (Details) - USD ($) $ in Thousands | May 02, 2020 | Feb. 01, 2020 |
Accounts receivable | ||
Accounts receivable, gross | $ 250,177 | $ 335,712 |
Less allowances | 10,645 | 8,431 |
Accounts receivable, net | 239,532 | 327,281 |
Trade receivables | ||
Accounts receivable | ||
Accounts receivable, gross | 220,942 | 309,508 |
Royalty receivables | ||
Accounts receivable | ||
Accounts receivable, gross | 14,876 | 12,775 |
Other receivables | ||
Accounts receivable | ||
Accounts receivable, gross | $ 14,359 | $ 13,429 |
Inventories (Details)
Inventories (Details) - USD ($) $ in Thousands | May 02, 2020 | Feb. 01, 2020 |
Inventory Disclosure [Abstract] | ||
Raw materials | $ 565 | $ 399 |
Work in progress | 48 | 52 |
Finished goods | 391,877 | 392,678 |
Inventories | 392,490 | 393,129 |
Allowance to write down inventories to the lower of cost or net realizable value | $ 39,500 | $ 24,500 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Millions | 3 Months Ended | ||
May 02, 2020 | May 04, 2019 | Feb. 01, 2020 | |
Operating Loss Carryforwards [Line Items] | |||
Effective income tax rate (as a percent) | 14.10% | 11.70% | |
Tax benefit due to deferred tax rate change related to net operating loss carrybacks | $ 11.8 | ||
Valuation allowance due to cumulative net operating losses | 3.7 | ||
Aggregate accruals for uncertain tax positions, including penalties and interest | 34.6 | $ 34 | |
Other long-term liabilities | |||
Operating Loss Carryforwards [Line Items] | |||
Transition tax liability | $ 19.9 | $ 19.9 |
Segment Information - Net Reven
Segment Information - Net Revenue and Earnings (Loss) from Operations (Details) $ in Thousands | 3 Months Ended | |
May 02, 2020USD ($)segment | May 04, 2019USD ($) | |
Segment Reporting Information | ||
Number of reportable segments | segment | 5 | |
Net revenue | $ 260,251 | $ 536,691 |
Earnings (loss) from operations | (162,487) | (24,471) |
Asset impairment charges | (52,972) | (1,775) |
Net losses on lease terminations | (456) | 0 |
Operating Segments | ||
Segment Reporting Information | ||
Earnings (loss) from operations | (92,138) | 3,116 |
Corporate overhead | ||
Segment Reporting Information | ||
Earnings (loss) from operations | (16,921) | (25,812) |
Reconciling items | ||
Segment Reporting Information | ||
Asset impairment charges | (52,972) | (1,775) |
Net losses on lease terminations | (456) | 0 |
Americas Retail | ||
Segment Reporting Information | ||
Net revenue | 74,584 | 176,423 |
Americas Retail | Operating Segments | ||
Segment Reporting Information | ||
Earnings (loss) from operations | (36,673) | (1,812) |
Americas Wholesale | ||
Segment Reporting Information | ||
Net revenue | 25,875 | 46,205 |
Americas Wholesale | Operating Segments | ||
Segment Reporting Information | ||
Earnings (loss) from operations | 1,624 | 7,814 |
Europe | ||
Segment Reporting Information | ||
Net revenue | 106,473 | 210,055 |
Europe | Operating Segments | ||
Segment Reporting Information | ||
Earnings (loss) from operations | (44,406) | (16,327) |
Asia | ||
Segment Reporting Information | ||
Net revenue | 40,385 | 85,190 |
Asia | Operating Segments | ||
Segment Reporting Information | ||
Earnings (loss) from operations | (22,777) | (3,203) |
Licensing | ||
Segment Reporting Information | ||
Net revenue | 12,934 | 18,818 |
Licensing | Operating Segments | ||
Segment Reporting Information | ||
Earnings (loss) from operations | $ 10,094 | $ 16,644 |
Segment Information - Net Rev_2
Segment Information - Net Revenue by Location (Details) - USD ($) $ in Thousands | 3 Months Ended | |
May 02, 2020 | May 04, 2019 | |
Segment Reporting Information | ||
Net revenue | $ 260,251 | $ 536,691 |
Product sales | ||
Segment Reporting Information | ||
Net revenue | 247,317 | 517,873 |
Product sales | U.S. | ||
Segment Reporting Information | ||
Net revenue | 69,465 | 164,371 |
Product sales | South Korea | ||
Segment Reporting Information | ||
Net revenue | 21,224 | 33,917 |
Product sales | Italy | ||
Segment Reporting Information | ||
Net revenue | 19,352 | 50,435 |
Product sales | Canada | ||
Segment Reporting Information | ||
Net revenue | 16,677 | 38,581 |
Product sales | Spain | ||
Segment Reporting Information | ||
Net revenue | 12,996 | 27,997 |
Product sales | Other foreign countries | ||
Segment Reporting Information | ||
Net revenue | 107,603 | 202,572 |
Net royalties | ||
Segment Reporting Information | ||
Net revenue | $ 12,934 | $ 18,818 |
Borrowings and Finance Lease _3
Borrowings and Finance Lease Obligations (Details) - USD ($) | Feb. 16, 2016 | May 02, 2020 | May 04, 2019 | Feb. 01, 2020 |
Debt Instrument [Line Items] | ||||
Borrowings under credit facilities | $ 193,725,000 | $ 3,957,000 | ||
Term loans | 24,705,000 | 0 | ||
Mortgage debt | 18,923,000 | 19,132,000 | ||
Finance lease obligations | 15,851,000 | 16,535,000 | ||
Other | 2,101,000 | 2,636,000 | ||
Less current installments | 160,501,000 | 9,490,000 | ||
Credit Facilities | ||||
Credit Facility, outstanding amount | 193,725,000 | 3,957,000 | ||
Term Loans and Mortgage Debt | ||||
Mortgage debt | 18,923,000 | 19,132,000 | ||
Finance Lease | ||||
Finance lease obligations incurred | 86,000 | $ 665,000 | ||
Finance lease obligations | $ 15,851,000 | 16,535,000 | ||
Interest rate swap | Derivatives designated as hedging instruments | Cash flow hedges | ||||
Term Loans and Mortgage Debt | ||||
Fixed rate of interest rate swap derivative (as a percent) | 3.06% | |||
Europe | Foreign line of credit | ||||
Debt Instrument [Line Items] | ||||
Borrowings under credit facilities | $ 133,400,000 | |||
Credit Facilities | ||||
Letters of credit outstanding | 0 | |||
Credit Facility, outstanding amount | 133,400,000 | |||
Remaining borrowing capacity | $ 600,000 | |||
Europe | Foreign line of credit | Minimum | ||||
Credit Facilities | ||||
Interest rate (as a percent) | 0.70% | |||
Europe | Foreign line of credit | Maximum | ||||
Credit Facilities | ||||
Interest rate (as a percent) | 1.10% | |||
China | Foreign line of credit | ||||
Debt Instrument [Line Items] | ||||
Borrowings under credit facilities | $ 5,300,000 | 4,000,000 | ||
Credit Facilities | ||||
Maximum borrowing capacity | 20,000,000 | |||
Credit Facility, outstanding amount | 5,300,000 | 4,000,000 | ||
Credit Facility | ||||
Debt Instrument [Line Items] | ||||
Borrowings under credit facilities | 55,000,000 | |||
Credit Facilities | ||||
Credit Facility, outstanding amount | $ 55,000,000 | |||
Percentage of borrowings exceeding borrowing base that require the Company to comply with a fixed charge coverage ratio on a trailing four-quarter basis | 80.00% | |||
Credit Facility | Revolving Credit Facility | ||||
Credit Facilities | ||||
Maximum borrowing capacity | $ 120,000,000 | |||
Current borrowing capacity | 91,000,000 | |||
Credit Facility | Accordion feature | ||||
Credit Facilities | ||||
Maximum borrowing capacity | $ 180,000,000 | |||
Credit Facility | U.S. line of credit | Base rate | Minimum | ||||
Term Loans and Mortgage Debt | ||||
Interest rate margin (as a percent) | 0.75% | |||
Credit Facility | U.S. line of credit | Base rate | Maximum | ||||
Term Loans and Mortgage Debt | ||||
Interest rate margin (as a percent) | 1.25% | |||
Credit Facility | U.S. line of credit | LIBOR | ||||
Credit Facilities | ||||
Interest rate margin added to respective base rate | 1.00% | |||
Minimum rate | 1.00% | |||
Credit Facility | U.S. line of credit | LIBOR | Minimum | ||||
Term Loans and Mortgage Debt | ||||
Interest rate margin (as a percent) | 1.75% | |||
Credit Facility | U.S. line of credit | LIBOR | Maximum | ||||
Term Loans and Mortgage Debt | ||||
Interest rate margin (as a percent) | 2.25% | |||
Credit Facility | U.S. line of credit | Federal funds rate | ||||
Credit Facilities | ||||
Interest rate margin added to respective base rate | 0.50% | |||
Credit Facility | Standby letters of credit | ||||
Credit Facilities | ||||
Letters of credit outstanding | $ 2,300,000 | |||
Credit Facility | Documentary letters of credit | ||||
Credit Facilities | ||||
Letters of credit outstanding | 0 | |||
Credit Facility | Canada | Foreign line of credit | ||||
Credit Facilities | ||||
Maximum borrowing capacity | $ 20,000,000 | |||
Credit Facility | Canada | Foreign line of credit | Prime rate | ||||
Credit Facilities | ||||
Minimum rate | 0.00% | |||
Credit Facility | Canada | Foreign line of credit | Prime rate | Minimum | ||||
Term Loans and Mortgage Debt | ||||
Interest rate margin (as a percent) | 0.75% | |||
Credit Facility | Canada | Foreign line of credit | Prime rate | Maximum | ||||
Term Loans and Mortgage Debt | ||||
Interest rate margin (as a percent) | 1.25% | |||
Credit Facility | Canada | Foreign line of credit | Canadian BA rate | ||||
Credit Facilities | ||||
Interest rate margin added to respective base rate | 1.00% | |||
Minimum rate | 1.00% | |||
Credit Facility | Canada | Foreign line of credit | Canadian BA rate | Minimum | ||||
Term Loans and Mortgage Debt | ||||
Interest rate margin (as a percent) | 1.75% | |||
Credit Facility | Canada | Foreign line of credit | Canadian BA rate | Maximum | ||||
Term Loans and Mortgage Debt | ||||
Interest rate margin (as a percent) | 2.25% | |||
Term Loans | Europe | ||||
Debt Instrument [Line Items] | ||||
Term loans | $ 24,700,000 | |||
Term Loans | Europe | Minimum | ||||
Credit Facilities | ||||
Interest rate (as a percent) | 0.50% | |||
Term Loans and Mortgage Debt | ||||
Debt maturity period (in years) | 1 year | |||
Term Loans | Europe | Maximum | ||||
Credit Facilities | ||||
Interest rate (as a percent) | 1.50% | |||
Term Loans and Mortgage Debt | ||||
Debt maturity period (in years) | 4 years | |||
Option to extend term (in years) | 5 years | |||
Mortgage debt | Building | U.S. | ||||
Debt Instrument [Line Items] | ||||
Mortgage debt | $ 21,500,000 | $ 18,900,000 | 19,100,000 | |
Term Loans and Mortgage Debt | ||||
Debt maturity period (in years) | 10 years | |||
Mortgage debt | $ 21,500,000 | 18,900,000 | 19,100,000 | |
Debt amortization period (in years) | 25 years | |||
Debt issuance costs | $ 100,000 | 100,000 | ||
Mortgage debt | Building | U.S. | LIBOR | ||||
Term Loans and Mortgage Debt | ||||
Interest rate margin (as a percent) | 1.50% | |||
Mortgage debt | Building | U.S. | Interest rate swap | ||||
Term Loans and Mortgage Debt | ||||
Fair value of cash flow hedge liability | $ 1,200,000 | 300,000 | ||
Mortgage debt | Building | U.S. | Interest rate swap | Derivatives designated as hedging instruments | Cash flow hedges | ||||
Term Loans and Mortgage Debt | ||||
Fixed rate of interest rate swap derivative (as a percent) | 3.06% | |||
Finance lease | Equipment | Netherlands | ||||
Debt Instrument [Line Items] | ||||
Finance lease obligations | $ 12,100,000 | 12,600,000 | ||
Finance Lease | ||||
Effective interest rate on finance lease obligations | 6.00% | |||
Finance lease obligations | $ 12,100,000 | 12,600,000 | ||
Finance lease | Computer hardware and software | ||||
Debt Instrument [Line Items] | ||||
Finance lease obligations | 3,800,000 | 4,000,000 | ||
Finance Lease | ||||
Finance lease obligations | 3,800,000 | 4,000,000 | ||
Long-term debt and finance lease liabilities, excluding convertible senior notes | ||||
Debt Instrument [Line Items] | ||||
Total debt and finance lease obligations | 255,305,000 | 42,260,000 | ||
Less current installments | 160,501,000 | 9,490,000 | ||
Long-term debt and finance lease obligations | $ 94,804,000 | $ 32,770,000 |
Convertible Senior Notes and _3
Convertible Senior Notes and Related Transactions - Narrative (Details) $ / shares in Units, shares in Millions | 1 Months Ended | 3 Months Ended | ||
Apr. 30, 2019USD ($)$ / sharesshares | May 02, 2020USD ($)$ / sharesshares | May 04, 2019USD ($) | Feb. 01, 2020USD ($) | |
Debt Instrument [Line Items] | ||||
Amortization of debt discount | $ 2,599,000 | $ 213,000 | ||
Amortization of debt issuance costs | $ 307,000 | 41,000 | ||
Option to purchase, number of shares (in shares) | shares | 11.6 | |||
Conversion price of convertible senior notes (in dollars per share) | $ / shares | $ 25.78 | $ 25.78 | ||
Convertible note hedge cost | $ 61,000,000 | |||
Warrants outstanding (in shares) | shares | 11.6 | 11.6 | ||
Strike price of warrants (in dollars per share) | $ / shares | $ 46.88 | $ 46.88 | ||
Proceeds from issuance of warrants | $ 0 | 28,080,000 | ||
Deferred tax liability | 11,200,000 | $ 11,200,000 | ||
Deferred tax asset | 12,300,000 | 12,300,000 | ||
Senior Notes | 2.00% Convertible Senior Notes Due 2024 | ||||
Debt Instrument [Line Items] | ||||
Interest rate | 2.00% | |||
Convertible debt issued | $ 300,000,000 | |||
Conversion ratio | 0.0387879 | |||
Conversion price (in dollars per share) | $ / shares | $ 25.78 | |||
Percentage of principal and interest of the Notes that the Company may be required to purchase in the event of a fundamental change | 100.00% | |||
Minimum percentage of holders of the Notes which may be able to declare the Notes to be due and payable upon the occurrence of certain events of default | 25.00% | |||
Percentage of principal and interest that may be declared due and payable upon the occurrence of certain events of default | 100.00% | |||
Effective interest rate | 6.80% | |||
Amortization of debt discount | 2,600,000 | $ 200,000 | ||
Amortization of debt issuance costs | 200,000 | |||
Initial Purchasers | Senior Notes | 2.00% Convertible Senior Notes Due 2024 | ||||
Debt Instrument [Line Items] | ||||
Debt issuance costs | $ 3,800,000 | |||
Third Party Offerers | Senior Notes | 2.00% Convertible Senior Notes Due 2024 | ||||
Debt Instrument [Line Items] | ||||
Debt issuance costs | $ 1,500,000 | |||
Level 2 | Senior Notes | 2.00% Convertible Senior Notes Due 2024 | ||||
Debt Instrument [Line Items] | ||||
Fair value of convertible senior notes | $ 133,500,000 | $ 272,000,000 |
Convertible Senior Notes and _4
Convertible Senior Notes and Related Transactions - Components of Debt (Details) - Senior Notes - 2.00% Convertible Senior Notes Due 2024 - USD ($) $ in Thousands | May 02, 2020 | Feb. 01, 2020 |
Debt Instrument [Line Items] | ||
Principal | $ 300,000 | $ 300,000 |
Unamortized debt discount | (46,418) | (49,017) |
Unamortized issuance costs | (3,406) | (3,620) |
Net carrying amount | 250,176 | 247,363 |
Equity component, net | $ 42,320 | $ 42,320 |
Share-Based Compensation - Shar
Share-Based Compensation - Share-based Compensation Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | |
May 02, 2020 | May 04, 2019 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Share-based compensation expense | $ 5,786 | $ 4,468 |
Stock options | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Share-based compensation expense | 695 | 590 |
Stock awards/units | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Share-based compensation expense | 4,926 | 3,815 |
Employee Stock Purchase Plan | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Share-based compensation expense | $ 165 | $ 63 |
Share-Based Compensation Share-
Share-Based Compensation Share-Based Compensation - Narrative (Details) - USD ($) $ / shares in Units, $ in Millions | Apr. 27, 2020 | Apr. 13, 2020 | Jun. 20, 2019 | Jun. 10, 2019 | Mar. 29, 2019 | Feb. 20, 2019 | May 02, 2020 | May 04, 2019 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Unrecognized compensation cost related to nonvested stock options | $ 7.6 | |||||||
Weighted average period for recognition of unrecognized compensation cost (in years/months/days) | 1 year 9 months 18 days | |||||||
Weighted average fair values of stock options granted during the period (in dollars per share) | $ 6.72 | |||||||
Stock options granted (in shares) | 1,077,700 | 5,100 | 0 | |||||
Stock awards/units | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Unrecognized compensation cost related to nonvested stock awards/units | $ 20.2 | |||||||
Equity instruments granted (in shares) | 743,800 | 280,700 | ||||||
Performance-based units | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Equity instruments granted (in shares) | 205,339 | |||||||
Restricted stock units | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Equity instruments granted (in shares) | 811,944 | |||||||
Nonvested performance shares | Minimum | Vesting, Tranches After Initial Vesting Period | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Award vesting period | 2 years | |||||||
Nonvested performance shares | Maximum | Vesting, Tranches After Initial Vesting Period | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Award vesting period | 3 years | |||||||
Target performance units | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Award vesting period | 3 years | |||||||
Target performance units | Minimum | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Target vesting percentage | 0.00% | |||||||
Target performance units | Maximum | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Target vesting percentage | 200.00% | |||||||
Market-based units | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Award vesting period | 3 years | |||||||
Market-based units | Minimum | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Target vesting percentage | 0.00% | |||||||
Market-based units | Maximum | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Target vesting percentage | 150.00% | |||||||
Chief Executive Officer | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Stock options granted (in shares) | 600,000 | |||||||
Chief Executive Officer | Performance-based units | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Equity instruments granted (in shares) | 250,000 | |||||||
Chief Executive Officer | Restricted stock units | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Equity instruments granted (in shares) | 150,000 |
Share-Based Compensation - Equi
Share-Based Compensation - Equity Instrument Activity (Details) - $ / shares | Jun. 20, 2019 | May 02, 2020 |
Performance-based units | ||
Number of Units | ||
Balance at beginning of period (in shares) | 1,140,023 | |
Granted (in shares) | 205,339 | |
Vested (in shares) | (310,199) | |
Forfeited (in shares) | (236,404) | |
Balance at end of period (in shares) | 593,420 | |
Weighted Average Grant Date Fair Value | ||
Balance at beginning of period (in dollars per share) | $ 16.66 | |
Vested (in dollars per share) | 13.98 | |
Forfeited (in dollars per share) | 11.72 | |
Balance at end of period (in dollars per share) | $ 20.03 | |
Market-based units | ||
Number of Units | ||
Balance at beginning of period (in shares) | 288,202 | |
Granted (in shares) | 101,566 | |
Vested (in shares) | (305,901) | |
Balance at end of period (in shares) | 83,867 | |
Weighted Average Grant Date Fair Value | ||
Balance at beginning of period (in dollars per share) | $ 13.43 | |
Granted (in dollars per share) | 10.62 | |
Vested (in dollars per share) | 10.62 | |
Balance at end of period (in dollars per share) | $ 20.28 |
Related Party Transactions (Det
Related Party Transactions (Details) | 3 Months Ended | |
May 02, 2020USD ($)lease | May 04, 2019USD ($) | |
Marciano Trusts | ||
Related Party Transactions | ||
Number of leases under related party lease agreements | lease | 4 | |
Marciano Trusts | Related party leases | ||
Related Party Transactions | ||
Expenses under related party arrangement | $ 1,300,000 | $ 1,300,000 |
Aircraft Entities | Payments for aircraft charter | ||
Related Party Transactions | ||
Expenses under related party arrangement | $ 200,000 | $ 0 |
Commitments and Contingencies -
Commitments and Contingencies - Investment Commitments (Details) - May 02, 2020 € in Millions, $ in Millions | USD ($) | EUR (€) |
Private equity fund | ||
Investment commitments | ||
Unfunded commitment to invest in private equity fund | $ 4 | € 3.6 |
Commitments and Contingencies_2
Commitments and Contingencies - Legal and Other Proceedings (Details) - 3 months ended May 02, 2020 - Italy - Europe - Customs tax audit and appeals € in Millions, $ in Millions | USD ($)subsidiary | EUR (€)subsidiary | EUR (€) |
Pending litigation | |||
Loss Contingencies [Line Items] | |||
Number of subsidiaries under audit by the Italian Customs Agency | 1 | 1 | |
Customs tax assessments including potential penalties and interest | $ 10.8 | € 9.8 | |
Appealed customs tax assessments | 10.7 | € 9.7 | |
Amount with appealed ruling in favor of the Company | 9.3 | 8.5 | |
Monetary damages awarded by court to the plaintiff | 1.4 | 1.2 | |
Italian Supreme Court | Pending litigation | |||
Loss Contingencies [Line Items] | |||
Amount being reconsidered in lower court | 1.2 | 1.1 | |
Italian Supreme Court | Settled litigation | |||
Loss Contingencies [Line Items] | |||
Amount with appealed ruling in favor of the Company | $ 0.5 | € 0.4 |
Commitments and Contingencies_3
Commitments and Contingencies - Redeemable Noncontrolling Interests (Details) - USD ($) $ in Thousands | May 02, 2020 | Feb. 01, 2020 | May 04, 2019 | Feb. 02, 2019 |
Loss Contingencies [Line Items] | ||||
Redeemable noncontrolling interests | $ 3,934 | $ 4,731 | $ 4,774 | $ 4,853 |
Guess Brazil | ||||
Loss Contingencies [Line Items] | ||||
Ownership percentage | 40.00% | |||
Guess CIS | ||||
Loss Contingencies [Line Items] | ||||
Ownership percentage by parent | 30.00% | |||
Guess Brazil | ||||
Loss Contingencies [Line Items] | ||||
Redeemable noncontrolling interests | $ 900 | 1,200 | ||
Guess CIS | ||||
Loss Contingencies [Line Items] | ||||
Redeemable noncontrolling interests | $ 3,000 | $ 3,500 |
Commitments and Contingencies_4
Commitments and Contingencies - Reconciliation of Redeemable Noncontrolling Interest (Details) - USD ($) $ in Thousands | 3 Months Ended | |
May 02, 2020 | May 04, 2019 | |
Redeemable Noncontrolling Interest [Roll Forward] | ||
Beginning balance | $ 4,731 | $ 4,853 |
Foreign currency translation adjustment | (797) | (79) |
Ending balance | $ 3,934 | $ 4,774 |
Defined Benefit Plans (Details)
Defined Benefit Plans (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
May 02, 2020 | May 04, 2019 | Feb. 01, 2020 | |
SERP | |||
Defined Benefit Plans | |||
SERP benefit payments | $ 600 | $ 400 | |
Components of net periodic defined benefit pension cost | |||
Service cost | 0 | 0 | |
Interest cost | 319 | 481 | |
Expected return on plan assets | 0 | 0 | |
Net amortization of unrecognized prior service credit | 0 | 0 | |
Net amortization of actuarial losses | 10 | 16 | |
Net periodic defined benefit pension cost | 329 | 497 | |
SERP | Other income/expense | |||
Defined Benefit Plans | |||
Gain (loss) as a result of changes in value of the insurance policy investments, included in other income (expense) | (3,100) | 3,200 | |
Pension | |||
Components of net periodic defined benefit pension cost | |||
Service cost | 764 | 807 | |
Interest cost | 327 | 549 | |
Expected return on plan assets | (45) | (77) | |
Net amortization of unrecognized prior service credit | (16) | (10) | |
Net amortization of actuarial losses | 96 | 111 | |
Net periodic defined benefit pension cost | 1,126 | 1,380 | |
Pension | Foreign Plan | |||
Defined Benefit Plans | |||
Projected benefit obligation | 34,300 | $ 34,800 | |
Plan assets at fair value | 28,400 | 28,900 | |
Components of net periodic defined benefit pension cost | |||
Service cost | 764 | 807 | |
Interest cost | 8 | 68 | |
Expected return on plan assets | (45) | (77) | |
Net amortization of unrecognized prior service credit | (16) | (10) | |
Net amortization of actuarial losses | 86 | 95 | |
Net periodic defined benefit pension cost | 797 | $ 883 | |
Other assets | SERP | |||
Defined Benefit Plans | |||
Cash surrender values of the insurance policies held in a rabbi trust | 64,000 | 67,700 | |
Accrued expenses and other long-term liabilities | SERP | |||
Defined Benefit Plans | |||
Projected benefit obligation | 51,800 | 51,900 | |
Other long-term liabilities | Pension | Foreign Plan | |||
Defined Benefit Plans | |||
Net liability | $ 6,000 | $ 5,900 |
Fair Value Measurements - Fair
Fair Value Measurements - Fair Value Hierarchy for Assets and Liabilities (Details) - Assets and liabilities measured at fair value on a recurring basis - USD ($) $ in Thousands | May 02, 2020 | Feb. 01, 2020 |
Assets: | ||
Total Assets | $ 8,970 | $ 4,854 |
Liabilities: | ||
Deferred compensation obligations | 12,594 | 14,091 |
Total Liabilities | 13,812 | 14,439 |
Level 1 | ||
Assets: | ||
Total Assets | 0 | 0 |
Liabilities: | ||
Deferred compensation obligations | 0 | 0 |
Total Liabilities | 0 | 0 |
Level 2 | ||
Assets: | ||
Total Assets | 8,970 | 4,854 |
Liabilities: | ||
Deferred compensation obligations | 12,594 | 14,091 |
Total Liabilities | 13,812 | 14,439 |
Level 3 | ||
Assets: | ||
Total Assets | 0 | 0 |
Liabilities: | ||
Deferred compensation obligations | 0 | 0 |
Total Liabilities | 0 | 0 |
Foreign exchange currency contracts | ||
Assets: | ||
Derivative assets | 8,970 | 4,854 |
Foreign exchange currency contracts | Level 1 | ||
Assets: | ||
Derivative assets | 0 | 0 |
Foreign exchange currency contracts | Level 2 | ||
Assets: | ||
Derivative assets | 8,970 | 4,854 |
Foreign exchange currency contracts | Level 3 | ||
Assets: | ||
Derivative assets | 0 | 0 |
Interest rate swap | ||
Liabilities: | ||
Derivative liabilities | 1,218 | 348 |
Interest rate swap | Level 1 | ||
Liabilities: | ||
Derivative liabilities | 0 | 0 |
Interest rate swap | Level 2 | ||
Liabilities: | ||
Derivative liabilities | 1,218 | 348 |
Interest rate swap | Level 3 | ||
Liabilities: | ||
Derivative liabilities | $ 0 | $ 0 |
Fair Value Measurements - Narra
Fair Value Measurements - Narrative (Details) € in Millions | 3 Months Ended | |||||
May 02, 2020USD ($) | May 04, 2019USD ($) | May 04, 2019EUR (€) | May 02, 2020EUR (€) | Feb. 01, 2020USD ($) | Feb. 01, 2020EUR (€) | |
Asset impairment charges | ||||||
Period of time new regular retail locations in penetrated markets would need to be opened to be considered for impairment | 1 year | |||||
Asset impairment charges | $ 52,972,000 | $ 1,775,000 | ||||
Impairment on operating lease right-of-use assets | 0 | |||||
North America, Europe and Asia | Retail locations | ||||||
Asset impairment charges | ||||||
Impairment of property and equipment | 24,800,000 | |||||
North America and Europe | ||||||
Asset impairment charges | ||||||
Impairment on operating lease right-of-use assets | 28,200,000 | |||||
North America and Europe | Retail locations | ||||||
Asset impairment charges | ||||||
Impairment of property and equipment | 1,800,000 | |||||
Private equity fund | ||||||
Investment in private equity fund | ||||||
Unfunded commitment to invest in private equity fund | 4,000,000 | € 3.6 | ||||
Fair Value Measured at Net Asset Value Per Share | Private equity fund | ||||||
Investment in private equity fund | ||||||
Unfunded commitment to invest in private equity fund | 4,000,000 | 3.6 | ||||
Fair Value Measured at Net Asset Value Per Share | Private equity fund | Other expense | ||||||
Investment in private equity fund | ||||||
Unrealized loss on investments | $ (100,000) | € (0.1) | ||||
Fair Value Measured at Net Asset Value Per Share | Private equity fund | Other assets | ||||||
Investment in private equity fund | ||||||
Alternative investment | $ 1,300,000 | € 1.2 | $ 1,300,000 | € 1.2 |
Derivative Financial Instrume_3
Derivative Financial Instruments - Fair Value of Derivatives (Details) - USD ($) $ in Thousands | May 02, 2020 | Feb. 01, 2020 |
ASSETS: | ||
Derivatives, assets | $ 8,970 | $ 4,854 |
LIABILITIES: | ||
Derivatives, liabilities | 1,218 | 348 |
Derivatives designated as hedging instruments | Foreign exchange currency contracts | Other current assets/Other assets | Cash flow hedges | ||
ASSETS: | ||
Derivatives, assets | 6,331 | 3,987 |
Derivatives designated as hedging instruments | Interest rate swap | Other long-term liabilities | Cash flow hedges | ||
LIABILITIES: | ||
Derivatives, liabilities | 1,218 | 348 |
Derivatives not designated as hedging instruments | Foreign exchange currency contracts | Other current assets/Other assets | ||
ASSETS: | ||
Derivatives, assets | $ 2,639 | $ 867 |
Derivative Financial Instrume_4
Derivative Financial Instruments - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||
May 02, 2020 | Jan. 28, 2017 | Feb. 01, 2020 | May 04, 2019 | Feb. 02, 2019 | |
Derivative [Line Items] | |||||
Gain (loss) on derivative financial instruments designated as cash flow hedges included in accumulated other income (loss) | $ 486,789 | $ 661,347 | $ 565,078 | $ 853,645 | |
Foreign exchange currency cash flow hedge unrealized gain to be recognized in cost of product sales over the following 12 months | 7,100 | ||||
Interest rate swap cash flow hedge unrealized loss to be recognized in interest expense after the following 12 months | (900) | ||||
Derivative Financial Instruments Designated as Cash Flow Hedges | |||||
Derivative [Line Items] | |||||
Gain (loss) on derivative financial instruments designated as cash flow hedges included in accumulated other income (loss) | $ 7,711 | 6,300 | $ 8,663 | $ 2,999 | |
Cash flow hedges | Europe | Derivatives designated as hedging instruments | |||||
Derivative [Line Items] | |||||
U.S. dollar forward contracts outstanding, maximum remaining maturity period (in months) | 17 months | ||||
Foreign exchange currency contracts | Derivative Financial Instruments Designated as Cash Flow Hedges | |||||
Derivative [Line Items] | |||||
Gain (loss) on derivative financial instruments designated as cash flow hedges included in accumulated other income (loss) | $ 8,600 | ||||
Foreign exchange currency contracts | Cash flow hedges | Europe | Derivatives designated as hedging instruments | |||||
Derivative [Line Items] | |||||
Total notional amount of derivatives purchased | 55,000 | ||||
Notional amount of derivative outstanding | 171,500 | 148,600 | |||
Interest rate swap | Derivative Financial Instruments Designated as Cash Flow Hedges | |||||
Derivative [Line Items] | |||||
Gain (loss) on derivative financial instruments designated as cash flow hedges included in accumulated other income (loss) | $ (900) | ||||
Interest rate swap | Cash flow hedges | Derivatives designated as hedging instruments | |||||
Derivative [Line Items] | |||||
Total notional amount of derivatives purchased | $ 21,500 | ||||
Fixed rate of interest rate swap designated as a cash flow hedge (as a percent) | 3.06% | ||||
Euro Member Countries, Euro | Derivatives not designated as hedging instruments | |||||
Derivative [Line Items] | |||||
U.S. dollar forward contracts outstanding, maximum remaining maturity period (in months) | 13 months | ||||
Euro Member Countries, Euro | Foreign exchange currency contracts | Derivatives not designated as hedging instruments | |||||
Derivative [Line Items] | |||||
Notional amount of derivative outstanding | $ 59,700 | $ 46,100 |
Derivative Financial Instrume_5
Derivative Financial Instruments - Gains (Losses) Before Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | ||||
May 02, 2020 | May 04, 2019 | Feb. 01, 2020 | Feb. 03, 2019 | Feb. 02, 2019 | |
Gains (losses) before taxes recognized on the derivative instruments designated as cash flow hedges in OCI and net earnings (loss) | |||||
Cumulative adjustment from adoption of new guidance | $ 486,789 | $ 565,078 | $ 661,347 | $ 853,645 | |
Gains (losses) arising during the period | 3,536 | 4,436 | |||
Gains (losses) reclassified from accumulated OCI into loss | 1,988 | 276 | |||
Foreign exchange currency contracts | Cost of product sales | |||||
Gains (losses) before taxes recognized on the derivative instruments designated as cash flow hedges in OCI and net earnings (loss) | |||||
Gains (losses) arising during the period | 4,410 | 4,655 | |||
Gains (losses) reclassified from accumulated OCI into loss | 1,991 | 230 | |||
Interest rate swap | Interest expense | |||||
Gains (losses) before taxes recognized on the derivative instruments designated as cash flow hedges in OCI and net earnings (loss) | |||||
Gains (losses) arising during the period | (874) | (219) | |||
Gains (losses) reclassified from accumulated OCI into loss | (3) | 46 | |||
Retained Earnings | |||||
Gains (losses) before taxes recognized on the derivative instruments designated as cash flow hedges in OCI and net earnings (loss) | |||||
Cumulative adjustment from adoption of new guidance | 973,006 | 1,036,386 | 1,130,409 | 1,077,747 | |
Accumulated Other Comprehensive Loss | |||||
Gains (losses) before taxes recognized on the derivative instruments designated as cash flow hedges in OCI and net earnings (loss) | |||||
Cumulative adjustment from adoption of new guidance | $ (153,302) | $ (132,706) | $ (139,910) | $ (126,179) | |
Cumulative effect period of adoption adjustment | |||||
Gains (losses) before taxes recognized on the derivative instruments designated as cash flow hedges in OCI and net earnings (loss) | |||||
Cumulative adjustment from adoption of new guidance | $ 297 | ||||
Cumulative effect period of adoption adjustment | Retained Earnings | |||||
Gains (losses) before taxes recognized on the derivative instruments designated as cash flow hedges in OCI and net earnings (loss) | |||||
Cumulative adjustment from adoption of new guidance | (1,684) | ||||
Cumulative effect period of adoption adjustment | Accumulated Other Comprehensive Loss | |||||
Gains (losses) before taxes recognized on the derivative instruments designated as cash flow hedges in OCI and net earnings (loss) | |||||
Cumulative adjustment from adoption of new guidance | 1,981 | ||||
Cumulative effect period of adoption adjustment | Accounting Standards Update 2017-12 | Retained Earnings | |||||
Gains (losses) before taxes recognized on the derivative instruments designated as cash flow hedges in OCI and net earnings (loss) | |||||
Cumulative adjustment from adoption of new guidance | (2,000) | ||||
Cumulative effect period of adoption adjustment | Accounting Standards Update 2017-12 | Accumulated Other Comprehensive Loss | |||||
Gains (losses) before taxes recognized on the derivative instruments designated as cash flow hedges in OCI and net earnings (loss) | |||||
Cumulative adjustment from adoption of new guidance | $ 2,000 |
Derivative Financial Instrume_6
Derivative Financial Instruments - Derivative Activity in AOCI (Details) - USD ($) $ in Thousands | 3 Months Ended | |||
May 02, 2020 | May 04, 2019 | Feb. 02, 2020 | Feb. 03, 2019 | |
Accumulated Other Comprehensive Income, Derivatives Qualifying as Hedges, Net of Tax [Roll Forward] | ||||
Beginning balance | $ 661,347 | $ 853,645 | ||
Cumulative adjustment from adoption of new guidance | 661,347 | 565,078 | ||
Ending balance | 486,789 | 565,078 | ||
Cumulative effect period of adoption adjustment | ||||
Accumulated Other Comprehensive Income, Derivatives Qualifying as Hedges, Net of Tax [Roll Forward] | ||||
Cumulative adjustment from adoption of new guidance | $ 297 | |||
Derivative Financial Instruments Designated as Cash Flow Hedges | ||||
Accumulated Other Comprehensive Income, Derivatives Qualifying as Hedges, Net of Tax [Roll Forward] | ||||
Beginning balance | 6,300 | 2,999 | ||
Cumulative adjustment from adoption of new guidance | 7,711 | 8,663 | ||
Net gains from changes in cash flow hedges | 3,180 | 3,864 | ||
Net gains reclassified into loss | (1,769) | (181) | ||
Ending balance | $ 7,711 | $ 8,663 | ||
Derivative Financial Instruments Designated as Cash Flow Hedges | Cumulative effect period of adoption adjustment | ||||
Accumulated Other Comprehensive Income, Derivatives Qualifying as Hedges, Net of Tax [Roll Forward] | ||||
Cumulative adjustment from adoption of new guidance | $ 0 | $ 1,981 |
Derivative Financial Instrume_7
Derivative Financial Instruments - Derivative Instruments Not Designated as Hedging Instruments (Details) - USD ($) $ in Thousands | 3 Months Ended | |
May 02, 2020 | May 04, 2019 | |
Foreign exchange currency contracts | Other income/expense | ||
Derivatives not designated as hedging instruments: | ||
Foreign exchange currency contracts | $ 1,088 | $ 575 |
Uncategorized Items - a10q-q1fy
Label | Element | Value |
Cumulative Effect Period of Adoption Adjustment [Member] | Additional Paid-in Capital [Member] | ||
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest | us-gaap_StockholdersEquityIncludingPortionAttributableToNoncontrollingInterest | $ 1,981,000 |