What’s Happening With Guess Stock?

[Note: Guess’ FY’25 ended Feb 2025]

Guess Stock (NYSE: GES) skyrocketed 30% on March 17 after the company announced a $13.00 per share takeover bid from WHP Global. The proposed acquisition, subject to review by a special committee, would see WHP Global acquire all outstanding shares except those held by Guess’ co-founders Paul and Maurice Marciano, and CEO Carlos Alberini, who collectively own around 43% of the company. The sudden spike is a much-needed respite for investors, who have seen Guess’ stock struggle in recent months. Notably, Guess has an existing partnership with WHP Global, having acquired the Rag & Bone fashion brand in April 2024. This strategic move has enabled Guess to expand its presence in the luxury market, operating Rag & Bone stores and distributing the brand through high-end retail channels globally.

Guess stock has declined by 37% since the start of 2024, underperforming the broader S&P 500 index, which has risen by 14%. This underperformance is mainly due to declines in the Americas segment, and elevated inventory levels and markdowns which have negatively impacted the company’s profitability. The broader market volatility triggered by the Trump administration’s new tariff implementations, and escalating trade tensions also contributed to the decline. The key factors influencing the downward movement include:

1. a 42% fall in the company’s P/S ratio to 0.22 now, versus 0.38 in FY 2023; partly offset by
2. a 10% rise in the company’s revenue from $2.7 billion in FY 2023 to $3 billion (last twelve months); and
3. a 6% fall in total shares outstanding to 54 million.

We’ll delve into the specifics of these factors. Our dashboard on Why Guess Stock Moved has more details. If you want an upside with a smoother ride than an individual stock, consider the High-Quality portfolio, which has outperformed the S&P, and clocked >91% returns since inception.

Image by Clau M from Pixabay

Guess Revenues were driven by robust sales in European markets, which account for over 50% of total revenues, but offset by declines in North American retail segments. The recent acquisition of Rag & Bone provided an additional revenue boost, contributing to the company’s top-line growth.

The retailer has been grappling with declining foot traffic in its brick-and-mortar stores in the Americas, particularly in North America, for several years. Despite the region accounting for over 33% of the company’s total revenues, management aims to reduce this contribution to around 25% in the future. To achieve this goal, Guess is rebalancing its American retail and wholesale businesses, closing underperforming stores, enhancing product offerings, and bolstering its online presence through strategic marketing initiatives, celebrity endorsements, and targeted promotions.

Guess’ operating margin expanded to 9.5% in FY 2024, up from 9.2% in FY 2023, driving adjusted earnings growth to $3.14 from $2.74, aided by a reduction in outstanding shares. However, the company anticipates a year-over-year decline in EPS for FY 2025, primarily due to increased marketing investments in international expansion and Rag & Bone integration. In addition, the repeated downward revisions to guidance so far this year have negatively impacted the stock, resulting in a decline in the price-to-sales ratio from 0.4x in FY 2023 to 0.2x currently, reflecting investor caution ahead of the full-year results.

The decrease in GES stock over the last 4-year period has been far from consistent and has largely been as volatile as the S&P 500. Returns for the stock were 7% in 2021, -9% in 2022, 18% in 2023, and -30% in 2024. The Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, is less volatile. And it has comfortably outperformed the S&P 500 over the last 4-year period.

With the current economic uncertainty surrounding interest rate cuts and ongoing trade disputes, will GES stock continue to underperform the S&P 500 in the next 12 months, or will it stage a strong rebound? From a valuation perspective, we believe GES has considerable upside potential.

We estimate Guess Valuation to be $17 per share, representing a potential 33% upside from current levels. Guess stock is currently trading at $13, with a price-to-sales ratio of 0.22x, below its four-year average of 0.4x. Notably, the average analyst price estimate of $18 for Guess also reflects a nearly 40% upside, implying that the stock has more room for growth.

[1] Returns as of 3/18/2025
[2] Cumulative total returns since the end of 2016

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