Guess?, Inc.

Good day, everyone, and welcome to the guest's fourth quarter fiscal 2023 earnings conference call. I would like to turn the call over to Fabrice Benarouch, Vice President of Finance and Investor Relations.

Thank you, Operator. Good afternoon, everyone, and thank you for joining us today. On the call today with me are Carlos Alberini, Chief Executive Officer, and Denis Sikor, Interim Chief Financial Officer. During today's call, the company will be making forward-looking statements, including comments regarding future plans, strategic initiatives, capital allocation, and short- and long-term outlooks. The company's actual results may differ materially from current expectations based on risk factors included in today's press release and the company's quarterly and annual reports tied with the SEC. Comments will also reference certain non-GAAP or adjusted measures. Gap reconciliations and descriptions of these measures can be found in today's earnings release. Now, I will turn it over to Carlos.

Thank you, Fabrice. Good afternoon, everyone, and thank you for joining us today. I am very pleased to report our fourth quarter results, which exceeded our expectations for revenues, operating profit, and earnings per share. These results cut a strong ear for guests. where we grew revenues by 4% in U.S. dollars and 12% in constant currency and delivered almost 10% in adjusted operating margin and $2.74 in adjusted earnings per share. We are very proud of our performance this year, and Paul and I want to thank our teams around the world for their commitment and strong execution. During the fourth quarter, our revenues increased by 2% in U.S. dollars and 8% in constant currency, well ahead of our expectations. The revenue increase was driven primarily by our business in Europe, which delivered strong top-line growth and solid profit performance in spite of currency headwinds. Our Europe results were driven by better-than-expected performance in our retail stores, including new stores, and solid results in our wholesale business due to increased shipments during the quarter. Our brand continues to enjoy strong momentum, and our wholesale customers chose to take early deliveries when the product was available. Our Americas retail business posted a marginal decrease in revenues and a more significant reduction in operating earnings. This decrease was attributed to lower gross margins as a result of increased markdowns partially offset by a higher initial markup. Our America's wholesale segment revenues decreased meaningfully in the quarter as we experienced lower orders and cancellations from our customers as they tightly managed their overall inventory levels. Despite achieving a higher gross margin in this business, operating earnings decreased due to higher expenses and deleveraging. Our Asia business recorded a reduction in both revenues and operating profit during the period, and this was primarily due to timing and revenue mix compared to the prior year. Although our Asia business is relatively small, we remain committed to its growth and continued success. Additionally, our licensing business also recorded a mild decrease in both revenues and operating earnings. However, the underlying sales for this business continued to be strong and delivered stellar performance for the entire year. Our strongest product categories in the fourth quarter were accessories led by handbags, small leather goods, travel products, fragrances, jewelry, and eyewear. We also saw strong results in our Marciano brand, activewear, dresses, and our kids' business. While sales of apparel for both men's and women's had similar performances, the more dressy products outperformed due to customers dressing up for holiday events. Conversely, the more casual parts of the assortments experienced a deceleration in line with our third quarter trends. As we reflect on the full year, we are very pleased with our performance and the quality of our earnings. Although the pandemic became less of an issue for our business this year, there were significant changes in the environment and challenges that impacted our results, which were beyond our control. Severe supply chain disruptions created product shortages and skyrocketing costs further aggravated the situation. Additionally, the ongoing war in Ukraine disrupted energy flows, resulting in a significant increase in costs. These and other factors contributed to global inflation, which undermined consumer confidence and put pressure on all aspects of our cost structure, including labor costs and rent. Our team did what we do best by focusing on the fundamentals and controlling the things that are within our control. We proactively tackled the supply chain issues by moving up deliveries which helped to protect product flows to our stores and deliveries to our wholesale partners. We managed inventories carefully and avoided creating excessive amounts of unsolved stock. We used our capital wisely and prudently, and we controlled our costs very effectively. And we stayed the course set by our brand elevation strategy and minimized promotional activities. With our steady and disciplined approach We captured growth opportunities and gained market share throughout the year, delivering growth in each one of our operating segments. However, we faced a frustrating challenge as a large portion of this growth was overshadowed by the most significant factor outside our control, currency fluctuations. Despite this challenge, we remain highly committed to delivering value to our stakeholders and will continue to do so in the future. For the year, in constant currencies, impressively, we grew our business by 12% to $2.9 billion, but currency headwinds consumed $217 million of that growth, resulting in the 4% U.S. dollar increase and $2.7 billion of revenues that we are reporting today. Beyond that, currencies consumed $62 million of operating profits, and 140 basis points of operating margin. When combined with mark-to-market changes, which we've booked below the operating line, these factors represented $1.20 reduction to the $2.74 adjusted earnings per share for the year. If we similarly neutralized last year for currencies, our adjusted earnings per share this year would have grown roughly 20% compared to last year. And last year was exceptionally profitable due to the abnormally high margins that we achieved as a result of inventory shortages and reduced promotions in the market. We consider this a significant accomplishment and are immensely proud of our teams managing the business well, controlling what we could control. As we developed our strategic plan in 2019 pre-code We identified several valuable opportunities for margin expansion. We adopted a strategic approach with a focus on purchasing inventory based on anticipated demand, maximizing full price selling and reducing promotional activity. We identified opportunities to enhance productivity across functions, optimize our store portfolio, consolidate multiple functions, manage capital effectively, and expand our digital business with a new, upgraded infrastructure. We built greater agility into our supply chains through the development of one global line. We remain steadfast in our commitment to further improving our operations and driving sustainable growth in the future. As we take a step back to evaluate where our business stands today and identify value creation opportunities for the future, We have significantly transformed the company and are moving forward from a position of strength. Unequivocally, Paul led the way in our transformation that touched every aspect of our business. Paul's vision to elevate our brand and his leadership and drive to inspire our teams resulted in amazing execution. Today, our brand elevation is visible in every aspect of our business. You can see it in the quality of our products, in the styling, in the consistency of our assortments and our commitment to sustainability. Today, we are proud to offer a global line of products for each of the 25 categories that we serve. And every product is priced based on its customer's perceived value for the market it is being offered. We have a product assortment that caters to the needs of our customers from casual to to crazy occasions. And the power and versatility of our brand appeals to a broad range of customer segments, from Gen Z to millennials to heritage. And in marketing, where we have never stopped investing, our efforts are synchronized with the appropriate product deliveries for our omnichannel network. We have also elevated the customer experience, including new tools for our websites and stores. Currently, We are developing a clienteling app to personalize the in-store experience, and we are relying more in data analytics to optimize data collection, customer engagement, segmentation, and personalization. Additionally, as part of our brand elevation initiative, we have invested in new stores, remodels, new imagery, and enhanced visual presentations. As a result, 80% of the fleet today reflect the more elevated representation of our brand. Despite the significant progress that we have made in optimizing our business model, we remain vigilant in identifying further opportunities for margin expansion. Our strategies include optimizing our assortments to improve sales productivity, enhancing inventory management to accelerate inventory turnover and increase margins, and streamlining our supply chain to reduce costs and increase sourcing proximity for better market distribution. Looking forward, we are excited about the significant growth opportunities that lie ahead for our company, leveraging the robust capabilities that we have built during the 42 years that GES has been in operation. We aim to achieve this growth gradually by prioritizing four key initiatives. Firstly, We will focus on increasing the sales productivity of our existing network, including our stores, websites, licensing, and wholesale channels. Secondly, we will explore opportunities to grow organically in existing and new markets by expanding our store network and attracting new customers. Thirdly, we will pursue further brand extensions and category expansions that leverage the strength of the Guess and Marciano brands. And finally, we'll pursue strategic acquisitions of brands and businesses that leverage our global infrastructure and network of licensees and wholesale partners. We are confident that this growth strategy will result in tremendous value creation opportunities, and we are well positioned to support these initiatives with our robust capital structure. Regarding our outlook for fiscal year 2024, we are taking a prudent approach based on our current business trends and the state of the consumer across markets. As Dennis will discuss in more detail shortly, we are planning the business with a low single-digit revenue growth for the year. We have actively sought opportunities for gross margin growth, primarily by reducing promotions and inbound trade costs. These efforts should result in strong profit performance as we anticipate delivering an operating margin between 8% and 9%. Before I hand over the call to Dennis, I would like to reflect on the past four years since my return to GES and how the world has undergone significant changes in that time. I am proud of how our entire organization has embraced these changes and how we have adapted to a new era of shopping, working and living. Our customers have responded positively to our transformation. Thanks to Paul's efforts and vision, our products have never been better. Our brands are thriving globally and we have a robust business model that is capable of delivering strong margins and high returns on invested capital. Furthermore, We have numerous opportunities to expand and leverage our global platform. And above all, we have an exceptional team that is highly capable and committed to achieving our goals and delivering value to our shareholders. I'm excited about our future and eager to share with you what lies ahead. With that, I would now like to hand the call over to Dennis, who will provide a more in-depth review of our financial results and outlook. Dennis?