Guess?, Inc. (GES) Earnings Call Transcript & Summary

Hello, and welcome to the Annual Meeting of Shareholders of Guess?, Inc. [Operator Instructions] It is now my pleasure to turn today's meeting over to Maurice Marciano, Chairman of the Board of Guess?, Mr. Marciano, the floor is yours.

Thank you, operator, and thank you all for joining us today. I am Maurice Marciano, Chairman of the Board of Guess?, and I will act as Chairman of this Annual Meeting of Shareholders. As Chairman, I will take all steps necessary to conduct this meeting in an orderly manner. I would like to call the meeting to order and to introduce Carlos Alberini, our Chief Executive Officer and Board member. Carlos?

Good morning, and thank you, Mr. Chairman. This meeting is being held pursuant to the notice of the annual meeting mailed to all Guess? shareholders. Jason Miller has been appointed secretary of this meeting to record the minutes and Gregory Veliotis of Computershare has been appointed inspector of elections. The inspector of elections is requested to determine the exact number of shares present at the meeting. A final report of the number of shares represented will be supplied prior to the voting. Mr. Chairman?

Thank you, Mr. Alberini. While the inspector of election determines the number of shares of common stock present at this meeting, I would like to introduce the members of our Board of Directors and certain officers of Guess? who are present at this virtual meeting today. Chief Creative Officer and Director, Paul Marciano; Director, Gianluca Bolla; Director, Anthony Chidoni; Director, Laurie Ann Goldman; Director, Cynthia Livingston; Director, Deborah Weinswig; Director, Alex Yemenidjian; Chief Financial Officer, Katie Anderson; and General Counsel and Secretary, Jason Miller. I would also like to introduce Tony McGrath, Partner of Ernst & Young LLP, the company's independent auditor. Mr. Miller, do we have a certified list of shareholders entitled to vote at this annual meeting?

Mr. Chairman, a list of the holders of common stock of Guess? at the close of business on April 28, 2020, which was the record date of this meeting, is available at the meeting website for examination by any shareholder present and by any proxy representing a shareholder. I also have a copy of the notice of this meeting together with an affidavit as to the mailing of a copy of the notice to each shareholder who was a holder of record at the close of business on April 28, 2020. The notice of meeting and the affidavit of mailing are available for inspection by request. Only holders of common stock on the record date are entitled to vote at this meeting. I'm advised by the inspector of elections that 62,069,669 shares or approximately 91% of the total shares outstanding are represented at this meeting in person or by proxy.

Mr. Chairman, since there were 67,644,248 shares of common stock of Guess? outstanding at the close of business on April 28, 2020, the record date, more than a majority of the outstanding common stock is present or represented here today and a quorum is therefore present. Business may be transacted at this meeting. Mr. Miller?

Let's now turn to the official business of the meeting. We have 3 specific proposals, which have been described in detail in the proxy statement and are properly presented for voting at this meeting. They are as follows: one, the election of 3 directors, the nominees of which are Carlos Alberini, Deborah Weinswig and Alex Yemenidjian; two, an advisory vote to approve the compensation of the named executive officers; and three, the ratification of the appointment of Ernst & Young LLP as the company's independent auditor for the fiscal year ending January 30, 2021. We are required under Delaware law to advise you of the exact times of the opening and closing of the polls. It is 9:05 a.m., and the polls are now open. The polls will close at 9:07 a.m. Let me remind you that if you have already sent in a proxy or voted by telephone or Internet, there is no need for you to vote electronically during this virtual meeting, unless you wish to change your vote. The proxy holders will vote your shares as indicated on the proxy or by telephone or Internet. If you wish to vote electronically, you may do so at this time. [Voting]

While we tally the votes, our Chief Executive Officer, Carlos Alberini, will discuss the highlights of the 2020 fiscal year. Please note that during the course of Mr. Alberini's presentation and the Q&A period, we may be making forward-looking statements regarding future events, plans or financial performance. Actual results may differ materially from current expectation based on risk factors included in the company's quarterly and the annual reports filed with the SEC. Mr. Alberini?

Thank you, Mr. Miller. I want to start by sharing with you today a few key highlights of fiscal year 2020. Our fiscal year 2020 was a strong year for our company as we increased revenues by 3% on top of a 10% revenue growth in the prior year. We achieved significant adjusted operating earnings growth of 30%, had meaningful operating margin expansion of 120 basis points and we strengthened our cash position ending the year with $285 million. Our results highlighted the benefits of our global reach, our diversified business model and the strength of our brand. During the year, we redeployed capital and returned incremental value to our shareholders through significant share repurchases while reducing our dividend by 50%. In addition, we made significant changes to upgrade and reorganize our leadership team. We managed our capital well and we developed our long-term strategic plan, which we shared with you last December. In early 2020, we were challenged with the extremely difficult situation presented by the COVID-19 pandemic. While the impact this crisis is having on our business is extremely significant and somewhat uncertain, I still believe that the opportunities that we identified in our strategic plan remain in place for the long term. And I'm confident that our plan is a solid road map for our team to grow our business, increase profitability over time and create significant value for all Guess? stakeholders. Regarding the COVID-19 pandemic, our management team has jumped in to manage this crisis with a commitment, determination and sense of urgency that I have never experienced before in my career. We are leading our business with strong discipline, controlling inventories well, protecting our liquidity and adjusting our expense structure to adapt to these unprecedented circumstances. I firmly believe that in times like this, the true character of an organization and its people showed most clearly. I couldn't be more proud of our teams around the world. I want to thank every associate in our company today for their extraordinary attitude and their relentless commitment to our company and each other. Our company has remained relevant over the last 40 years because of its strong business sense and incredible foresight into the future of not only consumer preferences but also dynamic business models I strongly believe that Guess? will once again capitalize on the new customer preferences post this crisis and gain market share in a world more focused on quality, simplicity and sustainability and less on quantity and price. We have a great business model and a global distribution that can scale very rapidly, and we are very well positioned to do so. We look forward to sharing our future successes with you. I want to thank you, our shareholders, for your ongoing support and continued interest in our Guess? company. We will now hear the report of the secretary regarding the results of the elections. Mr. Miller?

Mr. Alberini, the report of the inspector of elections indicates that each of the nominees for election has received at least 98% of the total votes cast. The proposal for the advisory resolution approving the compensation of the company's named executive officers has received approximately 90% of the total votes cast. The proposal to ratify the appointment of Ernst & Young LLP as the company's independent auditor for the fiscal year ending January 30, 2021, has received at least 99% of the total votes cast. I can thereby report on the results of this meeting as follows: Carlos Alberini, Deborah Weinswig and Alex Yemenidjian have been elected as directors of Guess?, each to hold office for a 3-year term and until their respective successors are elected and qualified. The advisory resolution approving the compensation of the company's named executive officers has been approved. The appointment of Ernst & Young LLP as the company's independent auditor for the fiscal year ending January 30, 2021, has been ratified.

I would like to thank you for your interest and attendance at this meeting. May I hear a motion [ to adjourn ]?

Mr. Chairman, my name is [ Andy Vania ]. I'm a shareholder of this company, and I move that this meeting be adjourned.

Do I have a second motion to adjourn?

Mr. Chairman, my name is [ Sabic Ben Arush ]. I'm also a shareholder of this company, and I second the motion.

Thank you all. The meeting is adjourned. We would now like to open this meeting for questions that have been submitted through the meeting website. Are there any question?

Mr. Chairman, there are no questions to be answered at this time.

Are there -- as there are no further question, I want to thank you for attending the Guess? 2020 Annual Meeting of Shareholders. Thank you all.

This concludes the meeting. You may now disconnect.