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 Alex Yemenidjian, Chairman of the Board of Guess?. Mr. Yemenidjian, the floor is yours.

Thank you, operator, and thank you all for joining us today. I'm Alex Yemenidjian, Chairman of the Board of Guess?, and I will act as Chairman of this Annual Meeting of Shareholders. As Chairman, I'll take 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.

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, Anthony Chidoni; Director, Laurie Ann Goldman; Director, Cynthia Livingston; Director, Deborah Weinswig; Director nominee, Tom Barrack; 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 May 10, 2021, 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 May 10, 2021. 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 60,502,223 shares or 93% of the total shares outstanding are represented at this meeting in person or by proxy.

Mr. Chairman, since there were 64,932,143 shares of common stock of Guess? outstanding at the close of business on May 10, 2021, 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 4 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, an amendment to the company's restated Certificate of Incorporation to declassify the company's Board of Directors; two, the election of 3 directors, the nominees of which are Maurice Marciano, Laurie Ann Goldman; and Thomas J. Barrack, Jr.; three, an advisory vote to approve the compensation of the named executive officers; and four, the ratification of the appointment of Ernst & Young LLP, as the company's independent auditor for the fiscal year ending January 29, 2022. We are required under Delaware law to advise you of the exact times of the opening and closing of the polls. It is 9:04 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 2021 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 expectations based on risk factors included in the company's quarterly and 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 2021. Our fiscal 2021 was a challenging but rewarding year for our company. While we experienced a significant revenue contraction due to the pandemic, we were very proactive and led the business carefully, managing inventories and capital well and controlling expenses tightly. During the year, we prioritized our investments in our digital and omnichannel initiatives and rationalized our global store footprint and expense structure. We also returned value to our shareholders via dividends and purchased $39 million of our shares. We closed the year with a strong balance sheet with $469 million in cash. During our Investor Day in December of 2019, we outlined 6 strategic objectives that represent the foundation of our 5-year plan. We still believe that this plan constitutes the right road map to drive revenue, grow operating profit and create value for all Guess? stakeholders. During fiscal year 2021, we've made great progress executing our strategic plan, and we were able to accelerate the implementation of several key initiatives. We completed the implementation of our new sales force platform in North America and Europe and are very pleased with the new customer experience that we are providing through our digital business, including our website. We have also launched the rollout of omnichannel capabilities in Europe in addition to North America. We also continue optimizing our store portfolio with a closure of over 125 underperforming stores and the renegotiation of 290 leases at favorable terms during the year. Last but not least, we identified new ways to transform our business model. This includes a global reorganization of our team; an omnichannel focus for our direct-to-consumer business; the development of our first global product line; and the introduction of new product categories like athleisure and essentials to our rich product category assortment. Based on the progress we made last year, we recently announced in May that we now believe that we can achieve our 10% operating margin goal 1 year earlier in fiscal year 2024. I strongly believe that this was a year of test of character, proof of courage and adaptability for all of us. At Guess?, we flourish in times like this. There is a strength of character that is present in the Guess? DNA. Our founders had this since day 1. And Paul Marciano has that same strength and commitment for our company, our team and our Guess? brand today. I want to thank Paul for his relentless dedication to this company and for his vision, energy and courage to always pursue excellence. I want to express how proud we are of what our entire team has accomplished under very challenging circumstances. We want to thank them and our Board for their extraordinary efforts and great leadership. Finally, I also want to thank you, our shareholders, for your ongoing support and the continued interest that you demonstrate in our company. I strongly believe that the Guess? brand has tremendous potential to continue to expand globally and amplify its customer reach. We have a true global brand, a unique product offering, a diversified business model and a strong global team that is highly energized, committed and ready to tackle our great long-term opportunities. I couldn't be more excited about our future, and I believe our company is at a tipping point in our pursuit of growth and value creation. 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 the proposal to approve an amendment to the company's restated Certificate of Incorporation to declassify the company's Board of Directors has received the affirmative vote of at least 88% of the outstanding shares of the company's common stock. Each of the nominees for election has received at least 96% of the total votes cast. The proposal for the advisory resolution approving the compensation of the company's named executive officers has received approximately 99% of the total votes cast. The proposal to ratify the appointment of Ernst & Young, as the company's independent auditor for the fiscal year ending January 29, 2022, has received at least 99% of the total votes cast. I can therefore -- thereby report on the results of this meeting as follows: The proposed amendment to the company's restated Certificate of Incorporation to declassify the company's Board of Directors has been approved. Maurice Marciano, Laurie Ann Goldman; and Thomas J. Barrack, Jr., have been elected as directors of Guess?, each to hold office for a 1-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 as the company's independent auditor for the fiscal year ending January 29, 2022, has been ratified.

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

Mr. Chairman, my name is [ Andy Bania. ] 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 [ Sai Beru. ] 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 the meeting for questions that have been submitted through the meeting website. Are there any questions?

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

As there are no questions, I want to thank you for attending the Guess? 2021 Annual Shareholders' Meeting.

This concludes the meeting, and you may now disconnect.