Delaware | 95-3679695 |
(State or other jurisdiction of | (I.R.S. Employer |
incorporation or organization) | Identification No.) |
1444 South Alameda Street | |
Los Angeles, California | 90021 |
(Address of principal executive offices) | (Zip Code) |
Large accelerated filer x | Accelerated filer o |
Non-accelerated filer o (Do not check if a smaller reporting company) | Smaller reporting company o |
Emerging growth company o | |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o |
GUESS?, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except share data) | |||||||
Aug 4, 2018 | Feb 3, 2018 | ||||||
(unaudited) | |||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 219,062 | $ | 367,441 | |||
Accounts receivable, net | 283,375 | 259,996 | |||||
Inventories | 464,531 | 428,304 | |||||
Other current assets | 86,030 | 52,964 | |||||
Total current assets | 1,052,998 | 1,108,705 | |||||
Property and equipment, net | 288,740 | 294,254 | |||||
Goodwill | 37,299 | 38,481 | |||||
Other intangible assets, net | 7,642 | 5,977 | |||||
Deferred tax assets | 63,277 | 68,386 | |||||
Restricted cash | 372 | 241 | |||||
Other assets | 139,570 | 139,590 | |||||
$ | 1,589,898 | $ | 1,655,634 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
Current liabilities: | |||||||
Current portion of capital lease obligations and borrowings | $ | 3,504 | $ | 2,845 | |||
Accounts payable | 279,053 | 264,438 | |||||
Accrued expenses | 187,332 | 200,562 | |||||
Total current liabilities | 469,889 | 467,845 | |||||
Long-term debt and capital lease obligations | 36,945 | 39,196 | |||||
Deferred rent and lease incentives | 81,652 | 81,564 | |||||
Other long-term liabilities | 130,380 | 127,964 | |||||
718,866 | 716,569 | ||||||
Redeemable noncontrolling interests | 4,951 | 5,590 | |||||
Commitments and contingencies (Note 12) | |||||||
Stockholders’ equity: | |||||||
Preferred stock, $.01 par value. Authorized 10,000,000 shares; no shares issued and outstanding | — | — | |||||
Common stock, $.01 par value. Authorized 150,000,000 shares; issued 142,373,036 and 141,623,687 shares, outstanding 81,030,202 and 81,371,118 shares, as of August 4, 2018 and February 3, 2018, respectively | 810 | 813 | |||||
Paid-in capital | 510,550 | 498,249 | |||||
Retained earnings | 1,105,173 | 1,132,173 | |||||
Accumulated other comprehensive loss | (126,020 | ) | (93,062 | ) | |||
Treasury stock, 61,342,834 and 60,252,569 shares as of August 4, 2018 and February 3, 2018, respectively | (638,644 | ) | (621,354 | ) | |||
Guess?, Inc. stockholders’ equity | 851,869 | 916,819 | |||||
Nonredeemable noncontrolling interests | 14,212 | 16,656 | |||||
Total stockholders’ equity | 866,081 | 933,475 | |||||
$ | 1,589,898 | $ | 1,655,634 |
GUESS?, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS) (in thousands, except per share data) (unaudited) | |||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||
Aug 4, 2018 | Jul 29, 2017 | Aug 4, 2018 | Jul 29, 2017 | ||||||||||||
Product sales | $ | 626,162 | $ | 551,794 | $ | 1,127,667 | $ | 990,114 | |||||||
Net royalties | 19,709 | 16,498 | 39,493 | 32,523 | |||||||||||
Net revenue | 645,871 | 568,292 | 1,167,160 | 1,022,637 | |||||||||||
Cost of product sales | 406,440 | 370,265 | 753,791 | 679,968 | |||||||||||
Gross profit | 239,431 | 198,027 | 413,369 | 342,669 | |||||||||||
Selling, general and administrative expenses | 204,569 | 173,007 | 402,788 | 339,862 | |||||||||||
Net gains on lease terminations | — | — | (152 | ) | — | ||||||||||
Asset impairment charges | 2,981 | 1,233 | 3,740 | 3,995 | |||||||||||
Earnings (loss) from operations | 31,881 | 23,787 | 6,993 | (1,188 | ) | ||||||||||
Other income (expense): | |||||||||||||||
Interest expense | (863 | ) | (544 | ) | (1,602 | ) | (958 | ) | |||||||
Interest income | 1,132 | 1,260 | 2,109 | 2,131 | |||||||||||
Other income (expense), net | 1,360 | (2,169 | ) | (1,254 | ) | (281 | ) | ||||||||
1,629 | (1,453 | ) | (747 | ) | 892 | ||||||||||
Earnings (loss) before income tax expense | 33,510 | 22,334 | 6,246 | (296 | ) | ||||||||||
Income tax expense | 7,776 | 6,453 | 1,499 | 5,050 | |||||||||||
Net earnings (loss) | 25,734 | 15,881 | 4,747 | (5,346 | ) | ||||||||||
Net earnings attributable to noncontrolling interests | 204 | 662 | 438 | 728 | |||||||||||
Net earnings (loss) attributable to Guess?, Inc. | $ | 25,530 | $ | 15,219 | $ | 4,309 | $ | (6,074 | ) | ||||||
Net earnings (loss) per common share attributable to common stockholders (Note 3): | |||||||||||||||
Basic | $ | 0.32 | $ | 0.18 | $ | 0.05 | $ | (0.08 | ) | ||||||
Diluted | $ | 0.31 | $ | 0.18 | $ | 0.05 | $ | (0.08 | ) | ||||||
Weighted average common shares outstanding attributable to common stockholders (Note 3): | |||||||||||||||
Basic | 80,110 | 82,396 | 80,006 | 82,703 | |||||||||||
Diluted | 81,550 | 82,763 | 81,248 | 82,703 | |||||||||||
Dividends declared per common share | $ | 0.225 | $ | 0.225 | $ | 0.450 | $ | 0.450 |
GUESS?, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (in thousands) (unaudited) | |||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||
Aug 4, 2018 | Jul 29, 2017 | Aug 4, 2018 | Jul 29, 2017 | ||||||||||||
Net earnings (loss) | $ | 25,734 | $ | 15,881 | $ | 4,747 | $ | (5,346 | ) | ||||||
Other comprehensive income (loss) (“OCI”): | |||||||||||||||
Foreign currency translation adjustment | |||||||||||||||
Gains (losses) arising during the period | (22,953 | ) | 44,037 | (47,525 | ) | 56,872 | |||||||||
Derivative financial instruments designated as cash flow hedges | |||||||||||||||
Gains (losses) arising during the period | 4,675 | (15,535 | ) | 12,167 | (15,089 | ) | |||||||||
Less income tax effect | (564 | ) | 2,442 | (1,588 | ) | 2,120 | |||||||||
Reclassification to net earnings (loss) for (gains) losses realized | 2,311 | (649 | ) | 4,190 | (1,310 | ) | |||||||||
Less income tax effect | (279 | ) | 43 | (542 | ) | 128 | |||||||||
Defined benefit plans | |||||||||||||||
Foreign currency and other adjustments | (40 | ) | (90 | ) | 303 | (104 | ) | ||||||||
Less income tax effect | 6 | 8 | (26 | ) | 9 | ||||||||||
Net actuarial loss amortization | 151 | 111 | 303 | 228 | |||||||||||
Prior service credit amortization | (7 | ) | (6 | ) | (14 | ) | (13 | ) | |||||||
Less income tax effect | (19 | ) | (20 | ) | (39 | ) | (41 | ) | |||||||
Total comprehensive income (loss) | 9,015 | 46,222 | (28,024 | ) | 37,454 | ||||||||||
Less comprehensive income attributable to noncontrolling interests: | |||||||||||||||
Net earnings | 204 | 662 | 438 | 728 | |||||||||||
Foreign currency translation adjustment | 511 | 958 | 187 | 2,320 | |||||||||||
Amounts attributable to noncontrolling interests | 715 | 1,620 | 625 | 3,048 | |||||||||||
Comprehensive income (loss) attributable to Guess?, Inc. | $ | 8,300 | $ | 44,602 | $ | (28,649 | ) | $ | 34,406 |
GUESS?, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (unaudited) | |||||||
Six Months Ended | |||||||
Aug 4, 2018 | Jul 29, 2017 | ||||||
Cash flows from operating activities: | |||||||
Net earnings (loss) | $ | 4,747 | $ | (5,346 | ) | ||
Adjustments to reconcile net earnings (loss) to net cash used in operating activities: | |||||||
Depreciation and amortization of property and equipment | 31,195 | 29,802 | |||||
Amortization of other long-term and intangible assets | 1,850 | 783 | |||||
Share-based compensation expense | 7,989 | 8,150 | |||||
Unrealized forward contract (gains) losses | (2,365 | ) | 5,063 | ||||
Net loss on disposition of property and equipment and long-term assets | 4,125 | 3,717 | |||||
Other items, net | 10,467 | (5,734 | ) | ||||
Changes in operating assets and liabilities: | |||||||
Accounts receivable | (967 | ) | 4,246 | ||||
Inventories | (71,044 | ) | (47,419 | ) | |||
Prepaid expenses and other assets | (20,971 | ) | (2,606 | ) | |||
Accounts payable and accrued expenses | 6,210 | 3,158 | |||||
Deferred rent and lease incentives | 2,396 | 1,657 | |||||
Other long-term liabilities | 4,716 | (5,136 | ) | ||||
Net cash used in operating activities | (21,652 | ) | (9,665 | ) | |||
Cash flows from investing activities: | |||||||
Purchases of property and equipment | (46,006 | ) | (39,591 | ) | |||
Changes in other assets | — | (553 | ) | ||||
Acquisition of businesses, net of cash acquired | (6,321 | ) | (175 | ) | |||
Net cash settlement of forward contracts | 685 | 1,279 | |||||
Purchases of investments | (1,581 | ) | (497 | ) | |||
Net cash used in investing activities | (53,223 | ) | (39,537 | ) | |||
Cash flows from financing activities: | |||||||
Proceeds from borrowings | — | 166 | |||||
Repayment of capital lease obligations and borrowings | (1,181 | ) | (453 | ) | |||
Dividends paid | (36,625 | ) | (37,790 | ) | |||
Noncontrolling interest capital contribution | — | 962 | |||||
Issuance of common stock, net of tax withholdings on vesting of stock awards | 4,634 | (149 | ) | ||||
Purchase of treasury stock | (23,620 | ) | (17,827 | ) | |||
Net cash used in financing activities | (56,792 | ) | (55,091 | ) | |||
Effect of exchange rates on cash, cash equivalents and restricted cash | (16,581 | ) | 24,444 | ||||
Net change in cash, cash equivalents and restricted cash | (148,248 | ) | (79,849 | ) | |||
Cash, cash equivalents and restricted cash at the beginning of the year | 367,682 | 397,650 | |||||
Cash, cash equivalents and restricted cash at the end of the period | $ | 219,434 | $ | 317,801 | |||
Supplemental cash flow data: | |||||||
Interest paid | $ | 683 | $ | 536 | |||
Income taxes paid | $ | 21,436 | $ | 13,222 | |||
Non-cash investing and financing activity: | |||||||
Assets acquired under capital lease obligations | $ | 1,164 | $ | 17,522 | |||
Noncontrolling interest capital distributions | $ | 3,069 | $ | — |
(1) | Basis of Presentation and New Accounting Guidance |
(2) | Revenue Recognition |
(3) | Earnings (Loss) Per Share |
Three Months Ended | Six Months Ended | ||||||||||||||
Aug 4, 2018 | Jul 29, 2017 | Aug 4, 2018 | Jul 29, 2017 | ||||||||||||
Net earnings (loss) attributable to Guess?, Inc. | $ | 25,530 | $ | 15,219 | $ | 4,309 | $ | (6,074 | ) | ||||||
Less net earnings attributable to nonvested restricted stockholders | 268 | 196 | 390 | 395 | |||||||||||
Net earnings (loss) attributable to common stockholders | $ | 25,262 | $ | 15,023 | $ | 3,919 | $ | (6,469 | ) | ||||||
Weighted average common shares used in basic computations | 80,110 | 82,396 | 80,006 | 82,703 | |||||||||||
Effect of dilutive securities: | |||||||||||||||
Stock options and restricted stock units (1) | 1,440 | 367 | 1,242 | — | |||||||||||
Weighted average common shares used in diluted computations | 81,550 | 82,763 | 81,248 | 82,703 | |||||||||||
Net earnings (loss) per common share attributable to common stockholders: | |||||||||||||||
Basic | $ | 0.32 | $ | 0.18 | $ | 0.05 | $ | (0.08 | ) | ||||||
Diluted | $ | 0.31 | $ | 0.18 | $ | 0.05 | $ | (0.08 | ) |
(1) | For the six months ended July 29, 2017, there were 192,438 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. |
(4) | Stockholders’ Equity and Redeemable Noncontrolling Interests |
Shares | Stockholders’ Equity | ||||||||||||||||||||
Common Stock | Treasury Stock | Guess?, Inc. Stockholders’ Equity | Nonredeemable Noncontrolling Interests | Total | Redeemable Noncontrolling Interests | ||||||||||||||||
Balance at January 28, 2017 | 84,069,492 | 56,440,482 | $ | 969,222 | $ | 11,772 | $ | 980,994 | $ | 4,452 | |||||||||||
Net earnings (loss) | — | — | (7,894 | ) | 3,993 | (3,901 | ) | — | |||||||||||||
Foreign currency translation adjustment | — | — | 91,178 | 2,238 | 93,416 | 187 | |||||||||||||||
Loss on derivative financial instruments designated as cash flow hedges, net of income tax of $2,738 | — | — | (19,994 | ) | — | (19,994 | ) | — | |||||||||||||
Actuarial valuation loss and related amortization, prior service credit amortization and foreign currency and other adjustments on defined benefit plans, net of income tax of $435 | — | — | (1,647 | ) | — | (1,647 | ) | — | |||||||||||||
Issuance of common stock under stock compensation plans, net of tax effect | 1,113,713 | — | (1,257 | ) | — | (1,257 | ) | — | |||||||||||||
Issuance of stock under Employee Stock Purchase Plan | 54,300 | (54,300 | ) | 566 | — | 566 | — | ||||||||||||||
Share-based compensation | — | — | 18,852 | — | 18,852 | — | |||||||||||||||
Dividends | — | — | (76,048 | ) | — | (76,048 | ) | — | |||||||||||||
Share repurchases | (3,866,387 | ) | 3,866,387 | (56,159 | ) | — | (56,159 | ) | — | ||||||||||||
Noncontrolling interest capital contribution | — | — | — | 11 | 11 | 951 | |||||||||||||||
Noncontrolling interest capital distribution | — | — | — | (1,358 | ) | (1,358 | ) | — | |||||||||||||
Balance at February 3, 2018 | 81,371,118 | 60,252,569 | $ | 916,819 | $ | 16,656 | $ | 933,475 | $ | 5,590 | |||||||||||
Cumulative adjustment from adoption of new accounting guidance | — | — | 5,829 | — | 5,829 | — | |||||||||||||||
Net earnings | — | — | 4,309 | 438 | 4,747 | — | |||||||||||||||
Foreign currency translation adjustment | — | — | (47,712 | ) | 187 | (47,525 | ) | (639 | ) | ||||||||||||
Gain on derivative financial instruments designated as cash flow hedges, net of income tax of ($2,130) | — | — | 14,227 | — | 14,227 | — | |||||||||||||||
Actuarial valuation and prior service credit amortization and foreign currency and other adjustments on defined benefit plans, net of income tax of ($65) | — | — | 527 | — | 527 | — | |||||||||||||||
Issuance of common stock under stock compensation plans, net of tax effect | 749,349 | — | 4,169 | — | 4,169 | — | |||||||||||||||
Issuance of stock under Employee Stock Purchase Plan | 28,543 | (28,543 | ) | 465 | — | 465 | — | ||||||||||||||
Share-based compensation | — | — | 7,989 | — | 7,989 | — | |||||||||||||||
Dividends | — | — | (37,166 | ) | — | (37,166 | ) | — | |||||||||||||
Share repurchases | (1,118,808 | ) | 1,118,808 | (17,587 | ) | — | (17,587 | ) | — | ||||||||||||
Noncontrolling interest capital distribution | — | — | — | (3,069 | ) | (3,069 | ) | — | |||||||||||||
Balance at August 4, 2018 | 81,030,202 | 61,342,834 | $ | 851,869 | $ | 14,212 | $ | 866,081 | $ | 4,951 |
Three Months Ended Aug 4, 2018 | |||||||||||||||
Foreign Currency Translation Adjustment | Derivative Financial Instruments Designated as Cash Flow Hedges | Defined Benefit Plans | Total | ||||||||||||
Balance at May 5, 2018 | $ | (91,297 | ) | $ | (6,285 | ) | $ | (11,208 | ) | $ | (108,790 | ) | |||
Gains (losses) arising during the period | (23,464 | ) | 4,111 | (34 | ) | (19,387 | ) | ||||||||
Reclassification to net earnings for losses realized | — | 2,032 | 125 | 2,157 | |||||||||||
Net other comprehensive income (loss) | (23,464 | ) | 6,143 | 91 | (17,230 | ) | |||||||||
Balance at August 4, 2018 | $ | (114,761 | ) | $ | (142 | ) | $ | (11,117 | ) | $ | (126,020 | ) |
Six Months Ended Aug 4, 2018 | |||||||||||||||
Foreign Currency Translation Adjustment | Derivative Financial Instruments Designated as Cash Flow Hedges | Defined Benefit Plans | Total | ||||||||||||
Balance at February 3, 2018 | $ | (67,049 | ) | $ | (14,369 | ) | $ | (11,644 | ) | $ | (93,062 | ) | |||
Gains (losses) arising during the period | (47,712 | ) | 10,579 | 277 | (36,856 | ) | |||||||||
Reclassification to net earnings for losses realized | — | 3,648 | 250 | 3,898 | |||||||||||
Net other comprehensive income (loss) | (47,712 | ) | 14,227 | 527 | (32,958 | ) | |||||||||
Balance at August 4, 2018 | $ | (114,761 | ) | $ | (142 | ) | $ | (11,117 | ) | $ | (126,020 | ) |
Three Months Ended Jul 29, 2017 | |||||||||||||||
Foreign Currency Translation Adjustment | Derivative Financial Instruments Designated as Cash Flow Hedges | Defined Benefit Plans | Total | ||||||||||||
Balance at April 29, 2017 | $ | (146,754 | ) | $ | 4,948 | $ | (8,486 | ) | $ | (150,292 | ) | ||||
Gains (losses) arising during the period | 43,079 | (13,093 | ) | (82 | ) | 29,904 | |||||||||
Reclassification to net loss for (gains) losses realized | — | (606 | ) | 85 | (521 | ) | |||||||||
Net other comprehensive income (loss) | 43,079 | (13,699 | ) | 3 | 29,383 | ||||||||||
Balance at July 29, 2017 | $ | (103,675 | ) | $ | (8,751 | ) | $ | (8,483 | ) | $ | (120,909 | ) |
Six Months Ended Jul 29, 2017 | |||||||||||||||
Foreign Currency Translation Adjustment | Derivative Financial Instruments Designated as Cash Flow Hedges | Defined Benefit Plans | Total | ||||||||||||
Balance at January 28, 2017 | $ | (158,227 | ) | $ | 5,400 | $ | (8,562 | ) | $ | (161,389 | ) | ||||
Gains (losses) arising during the period | 54,552 | (12,969 | ) | (95 | ) | 41,488 | |||||||||
Reclassification to net loss for (gains) losses realized | — | (1,182 | ) | 174 | (1,008 | ) | |||||||||
Net other comprehensive income (loss) | 54,552 | (14,151 | ) | 79 | 40,480 | ||||||||||
Balance at July 29, 2017 | $ | (103,675 | ) | $ | (8,751 | ) | $ | (8,483 | ) | $ | (120,909 | ) |
Three Months Ended | Six Months Ended | Location of (Gain) Loss Reclassified from Accumulated OCI into Earnings (Loss) | |||||||||||||||
Aug 4, 2018 | Jul 29, 2017 | Aug 4, 2018 | Jul 29, 2017 | ||||||||||||||
Derivative financial instruments designated as cash flow hedges: | |||||||||||||||||
Foreign exchange currency contracts | $ | 2,342 | $ | (661 | ) | $ | 4,028 | $ | (1,279 | ) | Cost of product sales | ||||||
Foreign exchange currency contracts | — | (14 | ) | 201 | (93 | ) | Other income (expense) | ||||||||||
Interest rate swap | (31 | ) | 26 | (39 | ) | 62 | Interest expense | ||||||||||
Less income tax effect | (279 | ) | 43 | (542 | ) | 128 | Income tax expense | ||||||||||
2,032 | (606 | ) | 3,648 | (1,182 | ) | ||||||||||||
Defined benefit plans: | |||||||||||||||||
Net actuarial loss amortization (1) | 151 | 111 | 303 | 228 | Other income (expense) | ||||||||||||
Prior service credit amortization (1) | (7 | ) | (6 | ) | (14 | ) | (13 | ) | Other income (expense) | ||||||||
Less income tax effect | (19 | ) | (20 | ) | (39 | ) | (41 | ) | Income tax expense | ||||||||
125 | 85 | 250 | 174 | ||||||||||||||
Total reclassifications during the period | $ | 2,157 | $ | (521 | ) | $ | 3,898 | $ | (1,008 | ) |
(1) | These accumulated other comprehensive income (loss) components are included in the computation of net periodic defined benefit pension cost. During the first quarter of fiscal 2019, the Company adopted new authoritative guidance which requires that the non-service components of net periodic defined benefit pension cost be presented outside of earnings (loss) from operations. The Company adopted this guidance on a retrospective basis and, as a result, reclassified these components from SG&A expenses to other income (expense) for the three and six months ended July 29, 2017. Refer to Note 13 for further information. |
(5) | Accounts Receivable |
Aug 4, 2018 | Feb 3, 2018 | ||||||
Trade | $ | 280,739 | $ | 290,478 | |||
Royalty | 6,859 | 5,504 | |||||
Other | 7,360 | 13,233 | |||||
294,958 | 309,215 | ||||||
Less allowances (1) | 11,583 | 49,219 | |||||
$ | 283,375 | $ | 259,996 |
(1) | As of February 3, 2018, the accounts receivable allowance included allowances for doubtful accounts, wholesale sales returns and wholesale markdowns. During the first quarter of fiscal 2019, the Company adopted a new revenue recognition standard on a modified retrospective basis which changed the presentation of allowances for wholesale sales returns and wholesale markdowns to be classified within accrued expenses rather than as a reduction to accounts receivable. Accordingly, the Company has included allowances of $27.0 million and $10.8 million related to wholesale sales returns and wholesale markdowns, respectively, in accrued expenses as of August 4, 2018. As of August 4, 2018, the accounts receivable allowance was only related to allowances for doubtful accounts. Refer to Notes 1 and 2 for further information regarding the impact from the adoption of the new revenue recognition standard on the Company’s condensed consolidated financial statements and related disclosures during the second quarter of fiscal 2019. |
(6) | Inventories |
Aug 4, 2018 | Feb 3, 2018 | ||||||
Raw materials | $ | 697 | $ | 604 | |||
Work in progress | 21 | 16 | |||||
Finished goods (1) | 463,813 | 427,684 | |||||
$ | 464,531 | $ | 428,304 |
(1) | During the first quarter of fiscal 2019, the Company adopted a new revenue recognition standard on a modified retrospective basis which changed the presentation of the estimated cost associated with the allowance for sales returns to be included within other current assets rather than included in inventories. Accordingly, the Company has included $11.6 million related to the estimated cost associated with the allowance for sales returns in other current assets as of August 4, 2018. Refer to Notes 1 and 2 for further information regarding the impact from the adoption of the new revenue recognition standard on the Company’s condensed consolidated financial statements and related disclosures during the second quarter of fiscal 2019. |
(7) | Income Taxes |
(8) | Segment Information |
Three Months Ended | Six Months Ended | ||||||||||||||
Aug 4, 2018 | Jul 29, 2017 | Aug 4, 2018 | Jul 29, 2017 | ||||||||||||
Net revenue: | |||||||||||||||
Americas Retail | $ | 197,125 | $ | 201,188 | $ | 368,465 | $ | 374,882 | |||||||
Americas Wholesale | 34,253 | 32,658 | 74,932 | 68,515 | |||||||||||
Europe | 311,998 | 255,215 | 517,433 | 420,603 | |||||||||||
Asia | 82,786 | 62,733 | 166,837 | 126,114 | |||||||||||
Licensing (1) (2) | 19,709 | 16,498 | 39,493 | 32,523 | |||||||||||
Total net revenue (1) (2) | $ | 645,871 | $ | 568,292 | $ | 1,167,160 | $ | 1,022,637 | |||||||
Earnings (loss) from operations: | |||||||||||||||
Americas Retail (2) (3) (4) | $ | 5,582 | $ | (3,555 | ) | $ | (98 | ) | $ | (25,136 | ) | ||||
Americas Wholesale (2) (3) (4) | 5,325 | 5,238 | 11,351 | 12,221 | |||||||||||
Europe (3) (4) (5) | 30,531 | 30,058 | 10,198 | 29,052 | |||||||||||
Asia (3) (4) | 1,634 | 2,441 | 5,699 | 2,780 | |||||||||||
Licensing (2) (3) (4) | 17,437 | 14,389 | 34,923 | 27,850 | |||||||||||
Total segment earnings from operations (2) (3) (5) | 60,509 | 48,571 | 62,073 | 46,767 | |||||||||||
Corporate overhead (2) (3) (5) | (25,647 | ) | (23,551 | ) | (51,492 | ) | (43,960 | ) | |||||||
Net gains on lease terminations (3) (6) | — | — | 152 | — | |||||||||||
Asset impairment charges (3) (7) | (2,981 | ) | (1,233 | ) | (3,740 | ) | (3,995 | ) | |||||||
Total earnings (loss) from operations (2) (5) | $ | 31,881 | $ | 23,787 | $ | 6,993 | $ | (1,188 | ) |
(1) | During the fourth quarter of fiscal 2018, the Company reclassified net royalties received on the Company’s inventory purchases of licensed product from net revenue to cost of product sales to reflect its treatment as a reduction of the cost of such licensed product. Accordingly, net revenue for the three and six months ended July 29, 2017 has been adjusted to conform to the current period presentation. This reclassification had no impact on previously reported earnings (loss) from operations. |
(2) | During the first quarter of fiscal 2019, the Company adopted a comprehensive new revenue recognition standard using a modified retrospective method that does not restate prior periods to be comparable to the current period presentation. The adoption of this guidance primarily impacted the presentation of advertising contributions received from the Company’s licensees and the related advertising expenditures incurred by the Company. The adoption of this guidance resulted in an increase in net royalty revenue within the Company’s Licensing segment of $2.1 million, as well as an increase in SG&A expenses in our Americas Retail, Americas Wholesale and Licensing segments as well as corporate overhead of $0.5 million, $0.2 million, $0.2 million and $0.5 million, respectively, during the three months ended August 4, 2018 compared to the same prior-year period. The net favorable impact on earnings from operations was approximately $0.6 million during the three months ended August 4, 2018 compared to the same prior-year period. During the six months ended August 4, 2018, the adoption of this guidance resulted in an increase in net royalty revenue within the Company’s Licensing segment of $4.4 million, as well as an increase in SG&A expenses in our Americas Retail, Americas Wholesale and Licensing segments as well as corporate overhead of $2.3 million, $0.9 million, $0.4 million and $1.1 million, |
(3) | During the third quarter of fiscal 2018, segment results were adjusted to exclude corporate performance-based compensation costs, net gains (losses) on lease terminations and asset impairment charges due to the fact that these items are no longer included in the segment results provided to the Company’s chief operating decision maker in order to allocate resources and assess performance. Accordingly, segment results have been adjusted for the three and six months ended July 29, 2017 to conform to the current period presentation. |
(4) | During the first quarter of fiscal 2019, the Company changed the segment accountability for funds received from licensees on the Company’s purchases of its licensed products. These amounts were treated as a reduction of cost of product sales within the Licensing segment but now are considered in the results of the segments that control the respective purchases for purposes of segment performance evaluation. Accordingly, segment results for the three and six months ended July 29, 2017 have been adjusted to conform to the current period presentation. |
(5) | During the first quarter of fiscal 2019, the Company adopted new authoritative guidance which requires that the non-service components of net periodic defined benefit pension cost be presented outside of earnings (loss) from operations. Accordingly, earnings (loss) from operations and segment results for the three and six months ended July 29, 2017 have been adjusted to conform to the current period presentation. |
(6) | During the six months ended August 4, 2018, the Company recorded net gains on lease terminations related primarily to the early termination of certain lease agreements in North America. The net gains on lease terminations were recorded during the three months ended May 5, 2018. Refer to Note 1 for more information regarding the net gains on lease terminations. |
(7) | During each of the periods presented, the Company recognized asset impairment charges for certain retail locations resulting from under-performance and expected store closures. Refer to Note 14 for more information regarding these asset impairment charges. |
Three Months Ended | Six Months Ended | ||||||||||||||
Aug 4, 2018 | Jul 29, 2017 | Aug 4, 2018 | Jul 29, 2017 | ||||||||||||
Net revenue: | |||||||||||||||
U.S. | $ | 176,064 | $ | 174,991 | $ | 338,434 | $ | 337,171 | |||||||
Italy | 89,380 | 81,196 | 148,286 | 128,394 | |||||||||||
Canada | 45,822 | 49,130 | 86,335 | 89,524 | |||||||||||
South Korea | 35,996 | 34,283 | 74,083 | 72,838 | |||||||||||
Other foreign countries | 298,609 | 228,692 | 520,022 | 394,710 | |||||||||||
Total net revenue | $ | 645,871 | $ | 568,292 | $ | 1,167,160 | $ | 1,022,637 |
(9) | Borrowings and Capital Lease Obligations |
Aug 4, 2018 | Feb 3, 2018 | ||||||
Mortgage debt, maturing monthly through January 2026 | $ | 19,982 | $ | 20,323 | |||
Capital lease obligations | 17,671 | 18,589 | |||||
Other | 2,796 | 3,129 | |||||
40,449 | 42,041 | ||||||
Less current installments | 3,504 | 2,845 | |||||
Long-term debt and capital lease obligations | $ | 36,945 | $ | 39,196 |
(10) | Share-Based Compensation |
Three Months Ended | Six Months Ended | ||||||||||||||
Aug 4, 2018 | Jul 29, 2017 | Aug 4, 2018 | Jul 29, 2017 | ||||||||||||
Stock options | $ | 672 | $ | 581 | $ | 1,367 | $ | 1,190 | |||||||
Stock awards/units | 3,292 | 3,563 | 6,462 | 6,881 | |||||||||||
Employee Stock Purchase Plan | 67 | 43 | 160 | 79 | |||||||||||
Total share-based compensation expense | $ | 4,031 | $ | 4,187 | $ | 7,989 | $ | 8,150 |
Number of Units | Weighted Average Grant Date Fair Value | |||||
Nonvested at February 3, 2018 | 1,300,921 | $ | 14.01 | |||
Granted | 489,646 | 21.83 | ||||
Vested | (141,625 | ) | 15.07 | |||
Forfeited | (27,441 | ) | 11.16 | |||
Nonvested at August 4, 2018 | 1,621,501 | $ | 16.33 |
Number of Units | Weighted Average Grant Date Fair Value | |||||
Nonvested at February 3, 2018 | 388,477 | $ | 12.28 | |||
Granted | 129,932 | 20.28 | ||||
Vested | — | — | ||||
Forfeited | — | — | ||||
Nonvested at August 4, 2018 | 518,409 | $ | 14.28 |
(11) | Related Party Transactions |
(12) | Commitments and Contingencies |
(13) | Defined Benefit Plans |
Three Months Ended August 4, 2018 | |||||||||||
SERP | Foreign Pension Plans | Total | |||||||||
Service cost | $ | — | $ | 754 | $ | 754 | |||||
Interest cost | 472 | 55 | 527 | ||||||||
Expected return on plan assets | — | (75 | ) | (75 | ) | ||||||
Net amortization of unrecognized prior service credit | — | (7 | ) | (7 | ) | ||||||
Net amortization of actuarial losses | 46 | 105 | 151 | ||||||||
Net periodic defined benefit pension cost | $ | 518 | $ | 832 | $ | 1,350 |
Six Months Ended August 4, 2018 | |||||||||||
SERP | Foreign Pension Plans | Total | |||||||||
Service cost | $ | — | $ | 1,494 | $ | 1,494 | |||||
Interest cost | 944 | 110 | 1,054 | ||||||||
Expected return on plan assets | — | (149 | ) | (149 | ) | ||||||
Net amortization of unrecognized prior service credit | — | (14 | ) | (14 | ) | ||||||
Net amortization of actuarial losses | 93 | 210 | 303 | ||||||||
Net periodic defined benefit pension cost | $ | 1,037 | $ | 1,651 | $ | 2,688 |
Three Months Ended July 29, 2017 | |||||||||||
SERP | Foreign Pension Plans | Total | |||||||||
Service cost | $ | — | $ | 606 | $ | 606 | |||||
Interest cost | 460 | 20 | 480 | ||||||||
Expected return on plan assets | — | (46 | ) | (46 | ) | ||||||
Net amortization of unrecognized prior service credit | — | (6 | ) | (6 | ) | ||||||
Net amortization of actuarial losses | 38 | 73 | 111 | ||||||||
Net periodic defined benefit pension cost | $ | 498 | $ | 647 | $ | 1,145 |
Six Months Ended July 29, 2017 | |||||||||||
SERP | Foreign Pension Plans | Total | |||||||||
Service cost | $ | — | $ | 1,232 | $ | 1,232 | |||||
Interest cost | 921 | 42 | 963 | ||||||||
Expected return on plan assets | — | (95 | ) | (95 | ) | ||||||
Net amortization of unrecognized prior service credit | — | (13 | ) | (13 | ) | ||||||
Net amortization of actuarial losses | 76 | 152 | 228 | ||||||||
Net periodic defined benefit pension cost | $ | 997 | $ | 1,318 | $ | 2,315 |
(14) | Fair Value Measurements |
Fair Value Measurements at Aug 4, 2018 | Fair Value Measurements at Feb 3, 2018 | |||||||||||||||||||||||||||||||
Recurring Fair Value Measures | Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||||||
Assets: | ||||||||||||||||||||||||||||||||
Foreign exchange currency contracts | $ | — | $ | 5,950 | $ | — | $ | 5,950 | $ | — | $ | 51 | $ | — | $ | 51 | ||||||||||||||||
Interest rate swap | — | 1,525 | — | 1,525 | — | 1,460 | — | 1,460 | ||||||||||||||||||||||||
Total | $ | — | $ | 7,475 | $ | — | $ | 7,475 | $ | — | $ | 1,511 | $ | — | $ | 1,511 | ||||||||||||||||
Liabilities: | ||||||||||||||||||||||||||||||||
Foreign exchange currency contracts | $ | — | $ | 1,011 | $ | — | $ | 1,011 | $ | — | $ | 18,089 | $ | — | $ | 18,089 | ||||||||||||||||
Deferred compensation obligations | — | 14,484 | — | 14,484 | — | 13,476 | — | 13,476 | ||||||||||||||||||||||||
Total | $ | — | $ | 15,495 | $ | — | $ | 15,495 | $ | — | $ | 31,565 | $ | — | $ | 31,565 |
(15) | Derivative Financial Instruments |
Derivative Balance Sheet Location | Fair Value at Aug 4, 2018 | Fair Value at Feb 3, 2018 | ||||||||
ASSETS: | ||||||||||
Derivatives designated as hedging instruments: | ||||||||||
Cash flow hedges: | ||||||||||
Foreign exchange currency contracts | Other current assets/ Other assets | $ | 4,224 | $ | 41 | |||||
Interest rate swap | Other assets | 1,525 | 1,460 | |||||||
Total derivatives designated as hedging instruments | 5,749 | 1,501 | ||||||||
Derivatives not designated as hedging instruments: | ||||||||||
Foreign exchange currency contracts | Other current assets | 1,726 | 10 | |||||||
Total | $ | 7,475 | $ | 1,511 | ||||||
LIABILITIES: | ||||||||||
Derivatives designated as hedging instruments: | ||||||||||
Cash flow hedges: | ||||||||||
Foreign exchange currency contracts | Accrued expenses/ Other long-term liabilities | $ | 528 | $ | 13,789 | |||||
Derivatives not designated as hedging instruments: | ||||||||||
Foreign exchange currency contracts | Accrued expenses | 483 | 4,300 | |||||||
Total | $ | 1,011 | $ | 18,089 |
Gain (Loss) Recognized in OCI | Location of Gain (Loss) Reclassified from Accumulated OCI into Earnings (Loss) (1) | Gain (Loss) Reclassified from Accumulated OCI into Earnings (Loss) | |||||||||||||||
Three Months Ended | Three Months Ended | ||||||||||||||||
Aug 4, 2018 | Jul 29, 2017 | Aug 4, 2018 | Jul 29, 2017 | ||||||||||||||
Derivatives designated as cash flow hedges: | |||||||||||||||||
Foreign exchange currency contracts | $ | 4,638 | $ | (14,673 | ) | Cost of product sales | $ | (2,342 | ) | $ | 661 | ||||||
Foreign exchange currency contracts | $ | — | $ | (785 | ) | Other income (expense) | $ | — | $ | 14 | |||||||
Interest rate swap | $ | 37 | $ | (77 | ) | Interest expense | $ | 31 | $ | (26 | ) |
Gain (Loss) Recognized in OCI | Location of Gain (Loss) Reclassified from Accumulated OCI into Earnings (Loss) (1) | Gain (Loss) Reclassified from Accumulated OCI into Earnings (Loss) | |||||||||||||||
Six Months Ended | Six Months Ended | ||||||||||||||||
Aug 4, 2018 | Jul 29, 2017 | Aug 4, 2018 | Jul 29, 2017 | ||||||||||||||
Derivatives designated as cash flow hedges: | |||||||||||||||||
Foreign exchange currency contracts | $ | 12,060 | $ | (13,816 | ) | Cost of product sales | $ | (4,028 | ) | $ | 1,279 | ||||||
Foreign exchange currency contracts | $ | 2 | $ | (996 | ) | Other income (expense) | $ | (201 | ) | $ | 93 | ||||||
Interest rate swap | $ | 105 | $ | (277 | ) | Interest expense | $ | 39 | $ | (62 | ) |
(1) | The Company recognized gains of $0.8 million and $1.4 million resulting from the ineffective portion related to foreign exchange currency contracts in interest income during the three and six months ended August 4, 2018, respectively. The Company recognized gains of $0.9 million and $1.5 million resulting from the ineffective portion related to foreign exchange currency contracts in interest income during the three and six months ended July 29, 2017, respectively. There was no ineffectiveness recognized related to the interest rate swap during the three and six months ended August 4, 2018 and July 29, 2017. |
Three Months Ended | Six Months Ended | ||||||||||||||
Aug 4, 2018 | Jul 29, 2017 | Aug 4, 2018 | Jul 29, 2017 | ||||||||||||
Beginning balance gain (loss) | $ | (6,285 | ) | $ | 4,948 | $ | (14,369 | ) | $ | 5,400 | |||||
Net gains (losses) from changes in cash flow hedges | 4,111 | (13,093 | ) | 10,579 | (12,969 | ) | |||||||||
Net (gains) losses reclassified into earnings (loss) | 2,032 | (606 | ) | 3,648 | (1,182 | ) | |||||||||
Ending balance loss | $ | (142 | ) | $ | (8,751 | ) | $ | (142 | ) | $ | (8,751 | ) |
Location of Gain (Loss) Recognized in Earnings (Loss) | Gain (Loss) Recognized in Earnings (Loss) | |||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||||
Aug 4, 2018 | Jul 29, 2017 | Aug 4, 2018 | Jul 29, 2017 | |||||||||||||||
Derivatives not designated as hedging instruments: | ||||||||||||||||||
Foreign exchange currency contracts | Other income (expense) | $ | 2,216 | $ | (6,540 | ) | $ | 5,906 | $ | (7,333 | ) |
(16) | Subsequent Events |
ITEM 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations. |
• | Total net revenue increased 13.7% to $645.9 million for the quarter ended August 4, 2018, compared to $568.3 million in the same prior-year period. In constant currency, net revenue increased by 12.2%. |
• | Gross margin (gross profit as a percentage of total net revenue) increased 230 basis points to 37.1% for the quarter ended August 4, 2018, compared to 34.8% in the same prior-year period. |
• | Selling, general and administrative (“SG&A”) expenses as a percentage of total net revenue (“SG&A rate”) increased 130 basis points to 31.7% for the quarter ended August 4, 2018, compared to 30.4% in the same prior-year period. SG&A expenses increased 18.2% to $204.6 million for the quarter ended August 4, 2018, compared to $173.0 million in the same prior-year period. |
• | During the quarter ended August 4, 2018, the Company recognized asset impairment charges of $3.0 million, compared to $1.2 million in the same prior-year period. |
• | Operating margin improved 70 basis points to 4.9% for the quarter ended August 4, 2018, compared to 4.2% in the same prior-year period. Higher asset impairment charges negatively impacted operating margin by 30 basis points during the quarter ended August 4, 2018 compared to the same prior-year period. Certain professional service and legal fees and related costs also negatively impacted operating margin by 30 basis points. Earnings from operations increased 34.0% to $31.9 million for the quarter ended August 4, 2018, compared to $23.8 million in the same prior-year period. |
• | Other income, net (including interest income and expense) totaled $1.6 million for the quarter ended August 4, 2018, compared to other expense, net of $1.5 million in the same prior-year period. |
• | The effective income tax rate improved by 570 basis points to 23.2% for the quarter ended August 4, 2018, compared to 28.9% in the same prior-year period. |
• | The Company had $219.1 million in cash and cash equivalents and $0.4 million in restricted cash as of August 4, 2018, compared to $316.5 million in cash and cash equivalents and $1.3 million in restricted cash at July 29, 2017. |
◦ | The Company invested $17.6 million to repurchase 1,118,808 of its common shares during the six months ended August 4, 2018. During the six months ended August 4, 2018, the Company also paid an additional $6.0 million for shares that were repurchased during the fourth quarter of fiscal 2018 but were settled during the first quarter of fiscal 2019. |
◦ | During the third quarter of fiscal 2018, the Company made up-front payments of approximately $22 million related to the modification of certain lease agreements held with a common landlord in North America. |
• | Accounts receivable, which 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, increased by $49.8 million, or 21.3%, to $283.4 million as of August 4, 2018, compared to $233.6 million at July 29, 2017. On a constant currency basis, accounts receivable increased by $55.4 million, or 23.7%, when compared to July 29, 2017. |
• | Inventory increased by $28.5 million, or 6.5%, to $464.5 million as of August 4, 2018, compared to $436.0 million at July 29, 2017. On a constant currency basis, inventory increased by $37.7 million, or 8.6%, when compared to July 29, 2017. |
Stores | Concessions | |||||||||||||||||
Region | Total | Directly Operated | Partner Operated | Total | Directly Operated | Partner Operated | ||||||||||||
United States | 295 | 293 | 2 | 1 | — | 1 | ||||||||||||
Canada | 86 | 86 | — | — | — | — | ||||||||||||
Central and South America | 104 | 61 | 43 | 27 | 27 | — | ||||||||||||
Total Americas | 485 | 440 | 45 | 28 | 27 | 1 | ||||||||||||
Europe and the Middle East | 674 | 440 | 234 | 36 | 36 | — | ||||||||||||
Asia and the Pacific | 503 | 181 | 322 | 365 | 174 | 191 | ||||||||||||
Total | 1,662 | 1,061 | 601 | 429 | 237 | 192 |
Three Months Ended | ||||||||||||||
Aug 4, 2018 | Jul 29, 2017 | Change | % Change | |||||||||||
Net revenue: | ||||||||||||||
Americas Retail | $ | 197,125 | $ | 201,188 | $ | (4,063 | ) | (2.0 | %) | |||||
Americas Wholesale | 34,253 | 32,658 | 1,595 | 4.9 | ||||||||||
Europe | 311,998 | 255,215 | 56,783 | 22.2 | ||||||||||
Asia | 82,786 | 62,733 | 20,053 | 32.0 | ||||||||||
Licensing (1) (2) | 19,709 | 16,498 | 3,211 | 19.5 | ||||||||||
Total net revenue (1) (2) | $ | 645,871 | $ | 568,292 | $ | 77,579 | 13.7 | % | ||||||
Earnings (loss) from operations: | ||||||||||||||
Americas Retail (2) (3) (4) | $ | 5,582 | $ | (3,555 | ) | $ | 9,137 | 257.0 | % | |||||
Americas Wholesale (2) (3) (4) | 5,325 | 5,238 | 87 | 1.7 | ||||||||||
Europe (3) (4) (5) | 30,531 | 30,058 | 473 | 1.6 | ||||||||||
Asia (3) (4) | 1,634 | 2,441 | (807 | ) | (33.1 | ) | ||||||||
Licensing (2) (3) (4) | 17,437 | 14,389 | 3,048 | 21.2 | ||||||||||
Total segment earnings from operations (2) (3) (5) | 60,509 | 48,571 | 11,938 | 24.6 | ||||||||||
Corporate overhead (2) (3) (5) | (25,647 | ) | (23,551 | ) | (2,096 | ) | 8.9 | |||||||
Asset impairment charges (3) | (2,981 | ) | (1,233 | ) | (1,748 | ) | ||||||||
Total earnings from operations (2) (5) | $ | 31,881 | $ | 23,787 | $ | 8,094 | 34.0 | % | ||||||
Operating margins: | ||||||||||||||
Americas Retail (2) (3) (4) | 2.8 | % | (1.8 | %) | ||||||||||
Americas Wholesale (2) (3) (4) | 15.5 | % | 16.0 | % | ||||||||||
Europe (3) (4) (5) | 9.8 | % | 11.8 | % | ||||||||||
Asia (3) (4) | 2.0 | % | 3.9 | % | ||||||||||
Licensing (1) (2) (3) (4) | 88.5 | % | 87.2 | % | ||||||||||
Total Company (1) (2) (5) | 4.9 | % | 4.2 | % |
(1) | During the fourth quarter of fiscal 2018, the Company reclassified net royalties received on the Company’s inventory purchases of licensed product from net revenue to cost of product sales to reflect its treatment as a reduction of the cost of such licensed product. Accordingly, net revenue for the three months ended July 29, 2017 has been adjusted to conform to the current period presentation. This reclassification had no impact on previously reported earnings from operations. |
(2) | During the first quarter of fiscal 2019, the Company adopted a comprehensive new revenue recognition standard using a modified retrospective method that does not restate prior periods to be comparable to the current period presentation. The adoption of this guidance primarily impacted the presentation of advertising contributions received from the Company’s licensees and the related advertising expenditures incurred by the Company. The adoption of this guidance resulted in an increase in net royalty revenue within the Company’s Licensing segment of $2.1 million, as well as an increase in SG&A expenses in our Americas Retail, Americas Wholesale and Licensing segments as well as corporate overhead of $0.5 million, $0.2 million, $0.2 million and $0.5 million, respectively, during the three months ended August 4, 2018 compared to the same prior-year period. The net favorable impact on earnings from operations was approximately $0.6 million during the three months ended August 4, 2018 compared to the same prior-year period. Refer to Note 1 to the Condensed Consolidated Financial Statements for more information regarding the impact from the adoption of this new standard. |
(3) | During the third quarter of fiscal 2018, segment results were adjusted to exclude corporate performance-based compensation costs, net gains (losses) on lease terminations and asset impairment charges due to the fact that these items are no longer included in the segment results provided to the Company’s chief operating decision maker in order to allocate resources and assess performance. Accordingly, segment results have been adjusted for the three months ended July 29, 2017 to conform to the current period presentation. |
(4) | During the first quarter of fiscal 2019, the Company changed the segment accountability for funds received from licensees on the Company’s purchases of its licensed products. These amounts were treated as a reduction of cost of product sales within the Licensing segment but now are considered in the results of the segments that control the respective purchases for purposes of segment performance evaluation. Accordingly, segment results for the three months ended July 29, 2017 have been adjusted to conform to the current period presentation. |
(5) | During the first quarter of fiscal 2019, the Company adopted new authoritative guidance which requires that the non-service components of net periodic defined benefit pension cost be presented outside of earnings (loss) from operations. Accordingly, earnings from operations and segment results for the three months ended July 29, 2017 have been adjusted to conform to the current period presentation. |
Six Months Ended | ||||||||||||||
Aug 4, 2018 | Jul 29, 2017 | Change | % Change | |||||||||||
Net revenue: | ||||||||||||||
Americas Retail | $ | 368,465 | $ | 374,882 | $ | (6,417 | ) | (1.7 | %) | |||||
Americas Wholesale | 74,932 | 68,515 | 6,417 | 9.4 | ||||||||||
Europe | 517,433 | 420,603 | 96,830 | 23.0 | ||||||||||
Asia | 166,837 | 126,114 | 40,723 | 32.3 | ||||||||||
Licensing (1) (2) | 39,493 | 32,523 | 6,970 | 21.4 | ||||||||||
Total net revenue (1) (2) | $ | 1,167,160 | $ | 1,022,637 | $ | 144,523 | 14.1 | % | ||||||
Earnings (loss) from operations: | ||||||||||||||
Americas Retail (2) (3) (4) | $ | (98 | ) | $ | (25,136 | ) | $ | 25,038 | 99.6 | % | ||||
Americas Wholesale (2) (3) (4) | 11,351 | 12,221 | (870 | ) | (7.1 | ) | ||||||||
Europe (3) (4) (5) | 10,198 | 29,052 | (18,854 | ) | (64.9 | ) | ||||||||
Asia (3) (4) | 5,699 | 2,780 | 2,919 | 105.0 | ||||||||||
Licensing (2) (3) (4) | 34,923 | 27,850 | 7,073 | 25.4 | ||||||||||
Total segment earnings from operations (2) (3) (5) | 62,073 | 46,767 | 15,306 | 32.7 | ||||||||||
Corporate overhead (2) (3) (5) | (51,492 | ) | (43,960 | ) | (7,532 | ) | 17.1 | |||||||
Net gains on lease terminations (3) | 152 | — | 152 | |||||||||||
Asset impairment charges (3) | (3,740 | ) | (3,995 | ) | 255 | |||||||||
Total earnings (loss) from operations (2) (5) | $ | 6,993 | $ | (1,188 | ) | $ | 8,181 | 688.6 | % | |||||
Operating margins: | ||||||||||||||
Americas Retail (2) (3) (4) | (0.0 | %) | (6.7 | %) | ||||||||||
Americas Wholesale (2) (3) (4) | 15.1 | % | 17.8 | % | ||||||||||
Europe (3) (4) (5) | 2.0 | % | 6.9 | % | ||||||||||
Asia (3) (4) | 3.4 | % | 2.2 | % | ||||||||||
Licensing (1) (2) (3) (4) | 88.4 | % | 85.6 | % | ||||||||||
Total Company (1) (2) (5) | 0.6 | % | (0.1 | %) |
(1) | During the fourth quarter of fiscal 2018, the Company reclassified net royalties received on the Company’s inventory purchases of licensed product from net revenue to cost of product sales to reflect its treatment as a reduction of the cost of such licensed product. Accordingly, net revenue for the six months ended July 29, 2017 has been adjusted to conform to the current period presentation. This reclassification had no impact on previously reported loss from operations. |
(2) | During the first quarter of fiscal 2019, the Company adopted a comprehensive new revenue recognition standard using a modified retrospective method that does not restate prior periods to be comparable to the current period presentation. The adoption of this guidance primarily impacted the presentation of advertising contributions received from the Company’s licensees and the related advertising expenditures incurred by the Company. The adoption of this guidance resulted in an increase in net royalty revenue within the Company’s Licensing segment of $4.4 million, as well as an increase in SG&A expenses in our Americas Retail, Americas Wholesale and Licensing segments as well as corporate overhead of $2.3 million, $0.9 million, $0.4 million and $1.1 million, respectively, during the six months ended August 4, 2018 compared to the same prior-year period. The net unfavorable impact on earnings from operations was approximately $0.4 million during the six months ended August 4, 2018 compared to the same prior-year period. Refer to Note 1 to the Condensed Consolidated Financial Statements for more information regarding the impact from the adoption of this new standard. |
(3) | During the third quarter of fiscal 2018, segment results were adjusted to exclude corporate performance-based compensation costs, net gains (losses) on lease terminations and asset impairment charges due to the fact that these items are no longer included in the segment results provided to the Company’s chief operating decision maker in order to allocate resources and assess performance. Accordingly, segment results have been adjusted for the six months ended July 29, 2017 to conform to the current period presentation. |
(4) | During the first quarter of fiscal 2019, the Company changed the segment accountability for funds received from licensees on the Company’s purchases of its licensed products. These amounts were treated as a reduction of cost of product sales within the Licensing segment but now are considered in the results of the segments that control the respective purchases for purposes of segment performance evaluation. Accordingly, segment results for the six months ended July 29, 2017 have been adjusted to conform to the current period presentation. |
(5) | During the first quarter of fiscal 2019, the Company adopted new authoritative guidance which requires that the non-service components of net periodic defined benefit pension cost be presented outside of earnings (loss) from operations. Accordingly, loss from operations and segment results for the six months ended July 29, 2017 have been adjusted to conform to the current period presentation. |
ITEM 3. | Quantitative and Qualitative Disclosures About Market Risk. |
ITEM 1. | Legal Proceedings. |
ITEM 2. | Unregistered Sales of Equity Securities and Use of Proceeds. |
Period | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Maximum Number (or Approximate Dollar Value) of Shares That May Yet Be Purchased Under the Plans or Programs | |||||||||
May 6, 2018 to June 2, 2018 | |||||||||||||
Repurchase program (1) | — | — | — | $ | 374,636,677 | ||||||||
Employee transactions (2) | — | — | — | ||||||||||
June 3, 2018 to July 7, 2018 | |||||||||||||
Repurchase program (1) | — | — | — | $ | 374,636,677 | ||||||||
Employee transactions (2) | — | — | — | ||||||||||
July 8, 2018 to August 4, 2018 | |||||||||||||
Repurchase program (1) | — | — | — | $ | 374,636,677 | ||||||||
Employee transactions (2) | 21,324 | $ | 21.97 | — | |||||||||
Total | |||||||||||||
Repurchase program (1) | — | — | — | ||||||||||
Employee transactions (2) | 21,324 | $ | 21.97 | — |
(1) | 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. |
(2) | Consists of shares surrendered to, or withheld by, the Company in satisfaction of employee tax withholding obligations that occur upon vesting of restricted stock awards/units granted under the Company’s 2004 Equity Incentive Plan, as amended. |
ITEM 6. | Exhibits. |
Exhibit Number | Description | |
3.1. | ||
3.2. | ||
4.1. | ||
*†10.1. | ||
*†10.2. | ||
*†10.3. | ||
*†10.4. | ||
†31.1. | ||
†31.2. | ||
†32.1. | ||
†32.2. | ||
†101.INS | XBRL Instance Document | |
†101.SCH | XBRL Taxonomy Extension Schema Document | |
†101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document | |
†101.DEF | XBRL Taxonomy Extension Definition Linkbase Document | |
†101.LAB | XBRL Taxonomy Extension Label Linkbase Document | |
†101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document |
* | Management Contract or Compensatory Plan |
† | Filed herewith |
Guess?, Inc. | |||
Date: | September 6, 2018 | By: | /s/ VICTOR HERRERO |
Victor Herrero | |||
Chief Executive Officer | |||
Date: | September 6, 2018 | By: | /s/ SANDEEP REDDY |
Sandeep Reddy | |||
Chief Financial Officer | |||
(Principal Financial Officer) |
1. | Definitions; Incorporation of Plan Terms. Capitalized terms used herein without definition shall have the meanings assigned to them in the Plan, except where a capitalized term is defined in the Executive Employment Agreement between the Company and the Grantee, entered into [For Paul Marciano, insert: January 26, 2016, as amended; For Victor Herrero, insert: July 7, 2015, as amended] (the “Employment Agreement”), and this Agreement indicates the definition used in the Employment Agreement shall apply for purposes of this Agreement as well. This Award and all rights of the Grantee under this Agreement are subject to, and the Grantee agrees to be bound by, all of the terms and conditions of the Plan, incorporated herein by this reference. Except as specifically provided in this Agreement, in the event of any conflict or inconsistency between the Plan and this Agreement, the Plan shall govern. |
2. | Grant of Restricted Stock Units. The Company hereby grants to the Grantee as of the Date of Grant (set forth above) a right to receive [________] shares of the Company’s common stock subject to the terms, conditions, and restrictions set forth herein (the “Restricted Stock Units”). As used herein, the term “Restricted Stock Unit” shall mean a non-voting unit of measurement which is deemed for bookkeeping purposes to be equivalent to one outstanding share of the Company’s common stock, par value $0.01 per share (the “Common Stock”) solely for purposes of the Plan and this Agreement. The Restricted Stock Units shall be used solely as a device for the determination of the number of shares of Common Stock to eventually be delivered to the Grantee if such Restricted Stock Units vest pursuant to this Agreement. The Restricted Stock Units shall not be treated as property or as a trust fund of any kind. The Grantee shall have no rights as a shareholder of the Company, no dividend rights (except as expressly provided in Section 4 with respect to Dividend Equivalent Rights) and no voting rights with respect to the Restricted Stock Units and any shares of Common Stock underlying or issuable in respect of such Restricted Stock Units (“Award Shares”) until such shares of Common Stock are actually issued to and held of record by the Grantee. This Award, together with the other equity awards granted by the Company to the Grantee on or about the date |
3. | Vesting. |
A. | Subject to the performance condition set forth in Section 3(B) below and except as otherwise expressly provided in Sections 7 and 8 herein, this Award shall vest as to (i) one-third of the Restricted Stock Units on January 30, 2019 (the “First Tranche”), (ii) one-third of the Restricted Stock Units on January 30, 2020 (the “Second Tranche”), and (iii) one-third of the Restricted Stock Units on January 30, 2021 (the “Third Tranche”); provided that Grantee has been continuously in Service with the Company from the Date of Grant through each applicable vesting date. Except as specifically provided herein, employment or service for only a portion of the vesting period, even if a substantial portion, will not entitle the Grantee to any proportionate vesting. As used herein, the term “Service” means employment by the Company or service to the Company as a member of the Board. |
B. | No portion of this Award shall vest notwithstanding satisfaction of the continued Service requirement for vesting described in Section 3(A) above unless the Committee certifies, following the end of the Company’s 2019 fiscal year, that the Company achieved Licensing Segment Earnings from Operations (as defined below) for the Company’s 2019 fiscal year (the “Performance Period”) equal to or above the level established by the Committee with respect to the Award in connection with the grant of the Award; provided, however, that if either a Change in Control (as defined in the Employment Agreement) or the death or Disability (as defined in the Employment Agreement) of the Grantee occurs before the last day of the Performance Period, the performance requirement of this Section 3(B) shall be deemed met as of the date of such event. If such performance requirement is not met (and no such Change in Control, death or Disability (as defined in the Employment Agreement) occurs before the last day of the Performance Period), this Award and the Restricted Stock Units subject hereto shall terminate and be cancelled as of the last day of the Performance Period. |
C. | For purposes of this Award, “Licensing Segment Earnings from Operations” means: the Company’s earnings from operations derived from the Company’s Licensing Segment for the Performance Period as calculated in accordance with generally accepted accounting principles (“GAAP”), but adjusted (without duplication and to the extent that the particular item would have otherwise impacted Earnings from Operations for such period) to exclude the financial statement impact of the following items: (i) any positive or negative charges or accruals incurred for the Performance Period for litigation matters, but only where such charges or accruals for any particular matter exceed $500,000 for the Performance Period, (ii) any professional service and legal fees and related costs excluded from the Corporation’s adjusted results for the FY 2019 Performance Period, as reflected in the Corporation’s press release financials for such period, |
B. | No portion of this Award shall vest notwithstanding satisfaction of the continued Service requirement for vesting described in Section 3(A) above unless the Committee certifies, following the end of the Company’s 2019 fiscal year, that the Company achieved Total Revenues Excluding Net Royalties (as defined below) for the Company’s 2019 fiscal year (the “Performance Period”) equal to or above the level established by the Committee with respect to the Award in connection with the grant of the Award; provided, however, that if either a Change in Control (as defined in the Employment Agreement) or the death or Disability (as defined in the Employment Agreement) of the Grantee occurs before the last day of the Performance Period, the performance requirement of this Section 3(B) shall be deemed met as of the date of such event. If such performance requirement is not met (and no such Change in Control, death or Disability (as defined in the Employment Agreement) occurs before the last day of the Performance Period), this Award and the Restricted Stock Units subject hereto shall terminate and be cancelled as of the last day of the Performance Period. |
C. | For purposes of this Award, “Total Revenues Excluding Net Royalties” means: the Company’s total revenues, excluding net royalties, for the Performance Period as calculated in accordance with generally accepted accounting principles (“GAAP”), but adjusted to (i) exclude the financial statement impact of changes in accounting standards or methods that are implemented during the FY 2019 Performance Period in accordance with GAAP (to the extent not taken into account by the Committee when it established the goals) and (ii) eliminate the impact of currency fluctuations as and to the extent provided by the constant currency methodology approved by the Committee in connection with the grant of this Award.] |
4. | Dividend Equivalents. If a cash dividend is paid with respect to the Common Stock while any Restricted Stock Units subject to the Award are outstanding, the Grantee shall be credited with an amount in cash equal to the dividends the Grantee would have received if he had been the owner of the shares of Common Stock subject to such outstanding Restricted Stock Units; provided, however, that no amount shall be credited |
5. | Delivery of Shares. Except as otherwise provided in Section 8 below with respect to a Change in Control, the Company shall deliver or cause to be delivered to the Grantee the number of Award Shares subject to the First Tranche that vest pursuant to the terms hereof within ten days following certification by the Committee of the satisfaction of the performance criteria set forth in Section 3(B) (and in no event later than 74 days following the end of the Performance Period), the number of Award Shares subject to the Second Tranche that vest pursuant to the terms hereof on (or within three business days following) January 30, 2020 and the number of Award Shares subject to the Third Tranche that vest pursuant to the terms hereof on (or within three business days following) January 30, 2021. Any Dividend Equivalents described in Section 4 above related to such Award Shares shall be paid in cash at the same time as the delivery of the Award Shares under this Section 5. Notwithstanding the foregoing: (a) in the event of the Grantee’s death or Disability (as such term is defined for purposes of Section 409A of the Code), then such shares shall be settled as soon as administratively practicable after (and in all events within 90 days after) such event; and (b) in the event of the Grantee’s “separation from service” (as such term is defined for purposes of Code Section 409A) upon or within two years following a Section 409A Change in Control (as such term is defined in Section 8(A)), then such shares shall be settled as soon as administratively possible after (and in all events within ten days after) such event (subject to Section 10(C)). |
6. | Adjustments Upon Specified Events. Upon the occurrence of certain events relating to the Company’s Common Stock contemplated by Section 16(b) of the Plan, the Committee will make adjustments, if appropriate, in the number of Restricted Stock Units and the number and kind of securities subject to the Award. |
7. | Effect of Certain Cessations of Service. The continued Service vesting requirement set forth under Section 3(A) of this Award shall be deemed to be satisfied, and any then-outstanding Restricted Stock Units shall be deemed vested (subject to Section 3(B) of this Award), in the event that (a) the Grantee’s employment is terminated by the Company without “Cause” (as defined in the Employment Agreement), (b) the Grantee’s employment is terminated by the Grantee for “Good Reason” (as defined in the Employment Agreement) or (c) in the event of the Grantee’s Disability (as defined in the Employment Agreement) or death while in Service. For purposes of clarity, any Restricted Stock Units that vest pursuant to the preceding sentence shall still be paid at the applicable time set forth in Section 5. If the Grantee’s Service terminates for any other reason, this Award and the Restricted Stock Units subject hereto, to the extent outstanding and unvested as of the date of such termination of Service, shall terminate and be cancelled as of the date of such termination of Service. Sections 14(a) and 14(b) of the Plan shall not apply to the Award. |
8. | Change in Control. Notwithstanding anything to the contrary in Section 3, Section 5 or Section 7 of this Agreement or any provision of the Plan, the following provisions shall apply upon a Change in Control (as defined in the Employment Agreement): |
A. | If a Change in Control occurs and the then-outstanding and unvested portion of this Award is not continued following such event or assumed or converted into restricted stock units of any successor entity to the Company or a parent thereof (the “Successor Entity”), the continued Service vesting requirement set forth under Section 3(A) of this Award shall be deemed to be satisfied, the outstanding Restricted Stock Units subject to such portion shall be deemed vested, and such Restricted Stock Units shall be settled at the time(s) otherwise provided in Section 5; provided that if such Change in Control constitutes a “change in the ownership or effective control” of the Company, or a change “in the ownership of a substantial portion of the assets” of the Company within the meaning of Section 409A of the Code (a “Section 409A Change in Control”), outstanding and vested Restricted Stock Units (including any that vest pursuant to the foregoing provisions of this sentence) and related Dividend Equivalents shall be settled upon or as soon as practicable after the date of such Change in Control to the extent such acceleration of payment can be made in accordance with Treas. Reg. §1.409A-3(j)(4)(ix) (or other exemption from the general prohibitions on accelerations of payments under Section 409A of the Code) and not result in any tax, penalty or interest under Section 409A of the Code. In connection with any such Change in Control where payment of outstanding Restricted Stock Units subject to the Award will not be made in connection with the Change in Control, the Committee may make provision for such Restricted Stock Units to become payable in cash based on the Fair Market Value of a share of Common Stock at the time of such Change in Control (with interest for the period from the date of such Change in Control to the applicable payment date at such rate as determined by the Committee based on the interest earned by interest bearing, FDIC insured deposits) as opposed to being payable in securities. |
B. | If the then-outstanding and unvested portion of this Award is continued following such event or is assumed or converted into restricted stock units of any Successor Entity, the continued Service requirement set forth in Section 3(A) above (and the accelerated vesting provisions set forth in Section 7 above) shall continue to apply following such Change in Control, and any portion of the Award that vests pursuant to such provisions shall be settled as provided in Section 5 of this Agreement. |
9. | Restrictions on Transfer. The Grantee may not sell, assign, transfer, pledge, encumber or otherwise alienate, hypothecate or dispose of this Award or the Grantee’s right hereunder to receive Award Shares, except as otherwise provided in the Committee’s sole discretion consistent with the Plan and applicable securities laws. |
10. | Taxes. |
A. | The settlement of this Award is conditioned on the Grantee making arrangements reasonably satisfactory to the Company for the withholding of all applicable federal, state, local or foreign taxes as may be required under applicable law. |
B. | It is intended that any amounts payable under this Agreement shall either be exempt from or comply with Section 409A of the Code (including the Treasury regulations and other published guidance relating thereto) (“Code Section 409A”) so as not to subject the Grantee to payment of any additional tax, penalty or interest imposed under Code Section 409A. The provisions of this Agreement shall be construed and interpreted to avoid the imputation of any such additional tax, penalty or interest under Code Section 409A yet preserve (to the nearest extent reasonably possible) the intended benefit payable to the Grantee. |
C. | If the Grantee is a “specified employee” within the meaning of Treasury Regulation Section 1.409A-1(i) as of the date of the Grantee’s “separation from service” (as such term is defined for purposes of Code Section 409A), the Grantee shall not be entitled to any payment or benefit pursuant to this Award until the earlier of (i) the date which is six (6) months after the Grantee’s separation from service for any reason other than death, or (ii) the date of the Grantee’s death. The provisions of this Section 10(C) shall only apply if, and to the extent, required to avoid the imputation of any tax, penalty or interest pursuant to Code Section 409A. Any amounts otherwise payable to the Grantee upon or in the six (6) month period following the Grantee’s separation from service that are not so paid by reason of this Section 10(C) shall be paid (without interest, except as otherwise provided for in Section 8(A)) as soon as practicable (and in all events within thirty (30) days) after the date that is six (6) months after the Grantee’s separation from service (or, if earlier, as soon as practicable, and in all events within thirty (30) days, after the date of the Grantee’s death). For avoidance of doubt, Dividend Equivalents under Section 4 shall continue to be credited during the period of such six-month delay until the vested Restricted Stock Units are actually settled. |
11. | Compliance. The Grantee hereby agrees to cooperate with the Company, regardless of Grantee’s employment status with the Company, to the extent necessary for the Company to comply with applicable state and federal laws and regulations relating to the Restricted Stock Units. |
12. | Notices. Any notice required or permitted under this Agreement shall be deemed given when personally delivered, or when deposited in a United States Post Office, postage prepaid, addressed, as appropriate, to the Grantee either at the address on record with the Company or such other address as may be designated by Grantee in writing to the Company; or to the Company, Attention: Stock Plan Administration, 1444 South Alameda Street, Los Angeles, California 90021, or such other address as the Company may designate in writing to the Grantee. |
13. | Failure to Enforce Not a Waiver. The failure of the Company or the Grantee to enforce at any time any provision of this Agreement shall in no way be construed to be a waiver of such provision or of any other provision hereof. |
14. | Governing Law. This Agreement shall be governed by and construed according to the laws of the State of Delaware, without regard to Delaware or other laws that might cause other law to govern under applicable principles of conflicts of law. For purposes of litigating any dispute that arises under this Agreement, the parties hereby submit to and consent to the jurisdiction of the State of California, and agree that such litigation shall be conducted in the courts of Los Angeles County, or the federal courts for the United States for the Central District of California, and no other courts, where this Agreement is made and/or to be performed. |
15. | Electronic Delivery. The Company may, in its sole discretion, decide to deliver any documents related to the Restricted Stock Units awarded under the Plan or future restricted stock or restricted stock units that may be awarded under the Plan by electronic means or request Grantee’s consent to participate in the Plan by electronic means. Grantee hereby consents to receive such documents by electronic delivery and agrees to participate in the Plan through an on-line or electronic system established and maintained by the Company or another third party designated by the Company. |
16. | Severability. The provisions of this Agreement are severable and if any one or more provisions are determined to be illegal or otherwise unenforceable, in whole or in part, the remaining provisions shall nevertheless be binding and enforceable. |
17. | Amendments. This Agreement may be amended or modified at any time by an instrument in writing signed by both parties. |
18. | Agreement Not a Contract of Employment. Neither the grant of the Restricted Stock Units, this Agreement nor any other action taken in connection herewith shall constitute or be evidence of any agreement or understanding, express or implied, that the Grantee is an employee of the Company or any subsidiary of the Company. |
19. | Committee’s Powers. No provision contained in this Agreement shall in any way terminate, modify or alter, or be construed or interpreted as terminating, modifying or altering any of the powers, rights or authority vested in the Committee or, to the extent delegated, in its delegate pursuant to the terms of the Plan or resolutions adopted in furtherance of the Plan, including, without limitation, the right to make certain determinations and elections with respect to the Restricted Stock Units. |
20. | Termination of this Agreement. Upon termination of this Agreement, all rights of the Grantee hereunder shall cease. |
21. | Clawback Policy. This Award is subject to the terms of the Company’s recoupment, clawback or similar policy as it may be in effect from time to time, as well as any similar provisions of applicable law, any of which could in certain circumstances require repayment or forfeiture of the Award or any shares of Common Stock or other cash or property received with respect to the Award (including any value received from a disposition of the shares acquired in respect of the Award). |
GUESS?, INC., | ||||
a Delaware corporation | ||||
By: | ||||
Print Name: | Jason T. Miller | |||
Its: | General Counsel and Secretary | |||
GRANTEE | ||||
Signature | ||||
Print Name | ||||
Employee ID | ||||
o | I AM NOT MARRIED. | |||
o | I AM MARRIED AND HAVE INFORMED MY SPOUSE OF THIS EQUITY GRANT. (Please have your spouse sign the Consent of Spouse section below.) | |||
GRANTEE | ||||
Signature | ||||
Print Name | ||||
Signature of Spouse | ||||
Print Name | ||||
1. | Definitions; Incorporation of Plan Terms. Capitalized terms used herein without definition shall have the meanings assigned to them in the Plan, except where a capitalized term is defined in the Executive Employment Agreement between the Company and the Grantee, entered into [For Paul Marciano, insert: January 26, 2016, as amended; For Victor Herrero, insert: July 7, 2015, as amended] (the “Employment Agreement”), and this Agreement indicates the definition used in the Employment Agreement shall apply for purposes of this Agreement as well. This Award and all rights of the Grantee under this Agreement are subject to, and the Grantee agrees to be bound by, all of the terms and conditions of the Plan, incorporated herein by this reference. Except as specifically provided in this Agreement, in the event of any conflict or inconsistency between the Plan and this Agreement, the Plan shall govern. |
2. | Grant of Restricted Stock Units. The Company hereby grants to the Grantee as of the Date of Grant (set forth above) a right to receive a “target” of [________] shares of the Company’s common stock subject to the terms, conditions, and restrictions set forth herein (the “Restricted Stock Units,” and such target number of Restricted Stock Units, the “Target Number of Restricted Stock Units”). As used herein, the term “Restricted Stock Unit” shall mean a non-voting unit of measurement which is deemed for bookkeeping purposes to be equivalent to one outstanding share of the Company’s common stock, par value $0.01 per share (the “Common Stock”), solely for purposes of the Plan and this Agreement. The Restricted Stock Units shall be used solely as a device for the determination of the number of shares of Common Stock to eventually be delivered to the Grantee if such Restricted Stock Units vest pursuant to this Agreement. The Restricted Stock Units shall not be treated as property or as a trust fund of any kind. The Grantee shall have no rights as a shareholder of the Company, no dividend rights (except as expressly provided in Section 4 with respect to Dividend Equivalent rights) and no voting rights with respect to the Restricted Stock Units and any shares of Common Stock underlying or issuable in respect of such Restricted Stock Units (“Award Shares”) until such shares of Common Stock are actually issued to and held of record by the Grantee. |
3. | Vesting. |
A. | Subject to Section 3(B) below and except as otherwise expressly provided in Sections 7 and 8 herein, this Award shall vest and become nonforfeitable on the last day of the Performance Period (as defined below) (the “Vesting Date”); provided that the Grantee has been continuously in Service with the Company from the Date of Grant through the Vesting Date. Except as specifically provided herein, Service for only a portion of the vesting period, even if a substantial portion, will not entitle the Grantee to any proportionate vesting. The number of Restricted Stock Units subject to this Award that vest will be equal to the Target Number of Restricted Stock Units multiplied by a “Vesting Percentage” determined based on the Company’s TSR Percentile (as defined below) for the Performance Period in accordance with the following table: |
TSR Percentile for the Performance Period | Vesting Percentage | |
Below 25th TSR Percentile | 0% | |
25th TSR Percentile | 25% | |
50th TSR Percentile | 100% | |
75th TSR Percentile and Above | 150% |
B. | Notwithstanding anything to the contrary in this Agreement, the number of Restricted Stock Units subject to this Award that become Vested Restricted Stock Units shall not exceed the number of Restricted Stock Units determined by dividing [For Paul Marciano, insert: $3,705,000; For Victor Herrero, insert: $4,200,000] by the Fair Market Value of a share of Common Stock on the applicable vesting |
C. | For purposes of this Award, the following definitions shall apply: |
i. | “Performance Period” means the period consisting of the Company’s 2019, 2020 and 2021 fiscal years. |
ii. | “TSR Percentile” means the percentile ranking of the Company’s TSR among the TSRs for the Company Peer Group members for the Performance Period. |
iii. | “TSR” means total shareholder return and shall be determined with respect to the Company and any other Company Peer Group member by dividing: (a) the sum of (1) the difference obtained by subtracting the applicable Beginning Price from the applicable Ending Price plus (2) all dividends and other distributions as to which the ex-dividend date occurs during the Performance Period (for purposes of clarity, without duplicating any dividends and other distributions as to which the ex-dividend date occurs during the period of twenty (20) consecutive trading days ending on the last trading day of the Performance Period that are taken into account in the determination of Ending Price) by (b) the Beginning Price. Any non-cash distributions shall be ascribed such dollar value as may be determined by or at the direction of the Committee. For the purpose of determining TSR, the value of dividends and other distributions shall be determined by treating them as reinvested in additional shares of stock at the closing market price on the corresponding ex-dividend date. |
iv. | “Beginning Price” means, with respect to the Company and any other Company Peer Group member, the average of the closing market prices of such company’s common stock on the principal exchange on which such stock is traded for the twenty (20) consecutive trading days ending with the last day before the beginning of the Performance Period. For the purpose of determining Beginning Price, the value of dividends and other distributions shall be determined by treating them as reinvested in additional shares of stock at the closing market price on the corresponding ex-dividend date. |
v. | “Ending Price” means, with respect to the Company and any other Company Peer Group member, the average of the closing market prices of such company’s common stock on the principal exchange on which such stock is traded for the twenty (20) consecutive trading days ending on the last trading day of the Performance Period. For the purpose of determining Ending Price, the value of dividends and other distributions shall be determined by treating them as reinvested in additional shares of stock at the closing market price on the corresponding ex-dividend date. |
vi. | “Company Peer Group” means the Company and each of the following companies: |
Abercrombie & Fitch Co. | Fossil Group, Inc. |
American Eagle Outfitters, Inc. | lululemon athletica inc. |
Chico’s FAS, Inc. | Michael Kors Holdings Limited |
The Children’s Place, Inc. | New York & Company, Inc. |
Tapestry, Inc. | PVH Corp. |
Columbia Sportswear Company | Ralph Lauren Corporation |
Deckers Outdoor Corporation | Gap Inc. |
Express, Inc. | Urban Outfitters, Inc. |
4. | Dividend Equivalents. If a cash dividend is paid with respect to the Common Stock during the Performance Period and while any Restricted Stock Units subject to this Award are outstanding, the Grantee shall be credited with an amount in cash equal to the dividends |
5. | Delivery of Shares. Except as otherwise provided in Section 8 below with respect to a Change in Control, the Company shall deliver or cause to be delivered to the Grantee the number of Award Shares subject to any Restricted Stock Units that vest pursuant to the terms hereof as soon as administratively practicable after (and in no event later than 74 days following) the Vesting Date. Any Dividend Equivalents described in Section 4 above related to such Award Shares shall be paid in cash at the same time as the delivery of the Award Shares under this Section 5. Notwithstanding the foregoing: (a) in the event of the Grantee’s death or Disability (as such term is defined for purposes of Section 409A of the Code), then such shares shall be settled as soon as administratively practicable after (and in all events within 90 days after) such event; and (b) in the event of the Grantee’s “separation from service” (as such term is defined for purposes of Code Section 409A) upon or within two years following a Section 409A Change in Control (as such term is defined in Section 8(A)), then such shares shall be settled as soon as administratively possible after (and in all events within ten days after) such event (subject to Section 10(C)). |
6. | Adjustments Upon Specified Events. Upon the occurrence of certain events relating to the Company’s Common Stock contemplated by Section 16(b) of the Plan, the Committee will make adjustments, if appropriate, in the number of Restricted Stock Units and the number and kind of securities subject to this Award. |
7. | Effect of Certain Cessations of Service. |
A. | If, at any time prior to the Vesting Date, the Grantee’s employment is terminated by the Company without “Cause” (as defined in the Employment Agreement) or by the Grantee for “Good Reason” (as defined in the Employment Agreement) and a Change in Control has not previously occurred, the following shall apply with respect to this Award: (i) the Target Number of Restricted Stock Units shall be pro-rated by multiplying the Target Number of Restricted Stock Units by a fraction, the numerator of which is the number of days of the Grantee’s employment between the first day of the Performance Period and the date of such termination of the Grantee’s employment, and the denominator of which is the total number of days in the Performance Period, and (ii) such pro-rated number of Target Number of Restricted Stock Units shall remain outstanding and eligible to vest on the Vesting Date based on the Vesting Percentage determined under Section 3(A) as though the Grantee’s employment had not been terminated. This Section 7(A) is subject to Section 8(C) should a Change in Control occur within twelve (12) months after such a termination of the Grantee’s employment with the Company. If a Change in Control occurs during the Performance Period but more than twelve (12) months after such a termination of the Grantee’s employment with the Company, Section 8(A) shall apply to the Award and the pro-rata vesting provision of this Section |
B. | If, at any time prior to the Vesting Date, the Grantee’s death or “Disability” (as such term is defined in the Employment Agreement) occurs while the Grantee is in Service with the Company and a Change in Control has not previously occurred, this Award will vest as of the date of such event with respect to the Target Number of Restricted Stock Units. |
C. | If the Grantee’s Service terminates for any other reason, this Award and the Restricted Stock Units subject hereto, to the extent outstanding and unvested as of the date of such termination of Service, shall terminate and be cancelled as of the date of such termination of Service. Sections 14(a) and 14(b) of the Plan shall not apply to this Award. |
D. | For purposes of clarity, any Restricted Stock Units that vest pursuant to this Section 7 (and any Dividend Equivalents related thereto) shall still be paid at the applicable time set forth in Section 5. |
8. | Change in Control. Notwithstanding anything to the contrary in Section 3, Section 5 or Section 7 of this Agreement or any provision of the Plan, the following provisions shall apply upon a Change in Control (as defined in the Employment Agreement): |
A. | If a Change in Control occurs and this Award (to the extent outstanding) is not continued following such event or assumed or converted into restricted stock units of any successor entity to the Company or a parent thereof (the “Successor Entity”), this Award will vest as of the date of such Change in Control with respect to a number of Restricted Stock Units determined as follows: |
i. | If the Change in Control occurs during the Company’s 2019 fiscal year, this Award shall be become vested as to the Target Number of Restricted Stock Units. |
ii. | If the Change in Control occurs during the Company’s 2020 fiscal year or 2021 fiscal year, the number of Restricted Stock Units subject to this Award that vest in accordance with this Section 8(A)(ii) shall be determined as though the Performance Period ended as of the date of the Change in Control, and the Vesting Percentage under Section 3(A) shall be determined based on actual TSR performance for such shortened performance period. |
B. | If this Award (to the extent then outstanding) is continued following a Change in Control or is assumed or converted into restricted stock units of any Successor Entity, the number of Restricted Stock Units subject to this Award shall be adjusted as provided in the next sentence, and such adjusted number of Restricted Stock Units shall remain eligible to vest on the Vesting Date in accordance with this Section 8(B). In such circumstances, the number of Restricted Stock Units subject to this Award shall be adjusted in connection with the Change in Control as follows: |
i. | If the Change in Control occurs during the Company’s 2019 fiscal year, the number of Restricted Stock Units subject to this Award that shall remain eligible to vest in accordance with this Section 8(B) shall be equal to the Target Number of Restricted Stock Units. |
ii. | If the Change in Control occurs during the Company’s 2020 fiscal year or 2021 fiscal year, the number of Restricted Stock Units subject to this Award that shall remain eligible to vest in accordance with this Section 8(B) shall be determined as though the Performance Period ended as of the date of the Change in Control, and the Vesting Percentage under Section 3(A) shall be determined based on actual TSR performance for such shortened performance period. |
i. | If the Change in Control occurs after the end of the Performance Period, an additional number of Restricted Stock Units subject to this Award shall vest, with the number of Restricted Stock Units vesting equal to the number necessary to cause the total number of Restricted Stock Units subject to this Award that vest (including Restricted Stock Units subject to this Award that previously vested) equal to the number of Restricted Stock Units subject to this Award that would have vested had the pro-ration provision of Section 7(A) not applied. |
ii. | If the Change in Control occurs on or before the last day of the Performance Period, the Award shall be treated as provided in Section 8(A) as though it was not continued following such event or assumed or converted into restricted stock units of any Successor Entity and the pro-ration provision of Section 7(A) shall not apply. |
9. | Restrictions on Transfer. The Grantee may not sell, assign, transfer, pledge, encumber or otherwise alienate, hypothecate or dispose of this Award or the Grantee’s right hereunder to receive Award Shares, except as otherwise provided in the Committee’s sole discretion consistent with the Plan and applicable securities laws. |
10. | Taxes. |
A. | The settlement of this Award is conditioned on the Grantee making arrangements reasonably satisfactory to the Company for the withholding of all applicable federal, state, local or foreign taxes as may be required under applicable law. |
B. | It is intended that any amounts payable under this Agreement shall either be exempt from or comply with Section 409A of the Code (including the Treasury regulations and other published guidance relating thereto) (“Code Section 409A”) so as not to subject the Grantee to payment of any additional tax, penalty or interest imposed under Code Section 409A. The provisions of this Agreement shall be construed and interpreted to avoid the imputation of any such additional tax, penalty or interest under Code Section 409A yet preserve (to the nearest extent reasonably possible) the intended benefit payable to the Grantee. |
C. | If the Grantee is a “specified employee” within the meaning of Treasury Regulation Section 1.409A-1(i) as of the date of the Grantee’s “separation from service” (as such term is defined for purposes of Code Section 409A), the Grantee shall not be entitled to any payment or benefit pursuant to this Award until the earlier of (i) the date which is six (6) months after the Grantee’s separation from service for any reason other than death, or (ii) the date of the Grantee’s death. The provisions of this Section 10(C) shall only apply if, and to the extent, required to avoid the imputation of any tax, penalty or interest pursuant to Code Section 409A. Any |
11. | Compliance. The Grantee hereby agrees to cooperate with the Company, regardless of Grantee’s employment status with the Company, to the extent necessary for the Company to comply with applicable state and federal laws and regulations relating to the Restricted Stock Units. |
12. | Notices. Any notice required or permitted under this Agreement shall be deemed given when personally delivered, or when deposited in a United States Post Office, postage prepaid, addressed, as appropriate, to the Grantee either at the address on record with the Company or such other address as may be designated by Grantee in writing to the Company; or to the Company, Attention: Stock Plan Administration, 1444 South Alameda Street, Los Angeles, California 90021, or such other address as the Company may designate in writing to the Grantee. |
13. | Failure to Enforce Not a Waiver. The failure of the Company or the Grantee to enforce at any time any provision of this Agreement shall in no way be construed to be a waiver of such provision or of any other provision hereof. |
14. | Governing Law. This Agreement shall be governed by and construed according to the laws of the State of Delaware, without regard to Delaware or other laws that might cause other law to govern under applicable principles of conflicts of law. For purposes of litigating any dispute that arises under this Agreement, the parties hereby submit to and consent to the jurisdiction of the State of California, and agree that such litigation shall be conducted in the courts of Los Angeles County, or the federal courts for the United States for the Central District of California, and no other courts, where this Agreement is made and/or to be performed. |
15. | Electronic Delivery. The Company may, in its sole discretion, decide to deliver any documents related to the Restricted Stock Units awarded under the Plan or future restricted stock or restricted stock units that may be awarded under the Plan by electronic means or request Grantee’s consent to participate in the Plan by electronic means. Grantee hereby consents to receive such documents by electronic delivery and agrees to participate in the Plan through an on-line or electronic system established and maintained by the Company or another third party designated by the Company. |
16. | Severability. The provisions of this Agreement are severable and if any one or more provisions are determined to be illegal or otherwise unenforceable, in whole or in part, the remaining provisions shall nevertheless be binding and enforceable. |
17. | Amendments. This Agreement may be amended or modified at any time by an instrument in writing signed by both parties. |
18. | Agreement Not a Contract of Employment. Neither the grant of the Restricted Stock Units, this Agreement nor any other action taken in connection herewith shall constitute or be |
19. | Committee’s Powers. No provision contained in this Agreement shall in any way terminate, modify or alter, or be construed or interpreted as terminating, modifying or altering any of the powers, rights or authority vested in the Committee or, to the extent delegated, in its delegate pursuant to the terms of the Plan or resolutions adopted in furtherance of the Plan, including, without limitation, the right to make certain determinations and elections with respect to the Restricted Stock Units. |
20. | Termination of this Agreement. Upon termination of this Agreement, all rights of the Grantee hereunder shall cease. |
21. | Clawback Policy. This Award is subject to the terms of the Company’s recoupment, clawback or similar policy as it may be in effect from time to time, as well as any similar provisions of applicable law, any of which could in certain circumstances require repayment or forfeiture of this Award or any shares of Common Stock or other cash or property received with respect to this Award (including any value received from a disposition of the shares acquired in respect of this Award). |
GUESS?, INC., | ||||
a Delaware corporation | ||||
By: | ||||
Print Name: | Jason T. Miller | |||
Its: | General Counsel and Secretary | |||
GRANTEE | ||||
Signature | ||||
Print Name | ||||
Employee ID | ||||
o | I AM NOT MARRIED. | |||
o | I AM MARRIED AND HAVE INFORMED MY SPOUSE OF THIS EQUITY GRANT. (Please have your spouse sign the Consent of Spouse section below.) | |||
GRANTEE | ||||
Signature | ||||
Print Name | ||||
Signature of Spouse | ||||
Print Name | ||||
1. | Definitions; Incorporation of Plan Terms. Capitalized terms used herein without definition shall have the meanings assigned to them in the Plan, except where a capitalized term is defined in the Executive Employment Agreement between the Company and the Grantee, entered into [For Paul Marciano, insert: January 26, 2016, as amended; For Victor Herrero, insert: July 7, 2015, as amended] (the “Employment Agreement”), and this Agreement indicates the definition used in the Employment Agreement shall apply for purposes of this Agreement as well. This Award and all rights of the Grantee under this Agreement are subject to, and the Grantee agrees to be bound by, all of the terms and conditions of the Plan, incorporated herein by this reference. Except as specifically provided in this Agreement, in the event of any conflict or inconsistency between the Plan and this Agreement, the Plan shall govern. |
2. | Grant of Restricted Stock Units. The Company hereby grants to the Grantee as of the Date of Grant (set forth above) a right to receive a “target” of [________] shares of the Company’s common stock subject to the terms, conditions, and restrictions set forth herein (the “Restricted Stock Units,” and such target number of Restricted Stock Units, the “Target Number of Restricted Stock Units”). As used herein, the term “Restricted Stock Unit” shall mean a non-voting unit of measurement which is deemed for bookkeeping purposes to be equivalent to one outstanding share of the Company’s common stock, par value $0.01 per share (the “Common Stock”), solely for purposes of the Plan and this Agreement. The Restricted Stock Units shall be used solely as a device for the determination of the number of shares of Common Stock to eventually be delivered to the Grantee if such Restricted Stock Units vest pursuant to this Agreement. The Restricted Stock Units shall not be treated as property or as a trust fund of any kind. The Grantee shall have no rights as a shareholder of the Company, no dividend rights (except as expressly provided in Section 4 with respect to Dividend Equivalent rights) and no voting rights with respect to the Restricted Stock Units and any shares of Common Stock underlying or issuable in respect of such Restricted Stock Units (“Award Shares”) until |
3. | Vesting. Except as otherwise expressly provided in Sections 7 and 8 herein, this Award shall vest and become nonforfeitable on the last day of the Performance Period (as defined in Exhibit A hereto) (the “Vesting Date”); provided that the Grantee has been continuously in Service with the Company from the Date of Grant through the Vesting Date. Except as specifically provided herein, Service for only a portion of the vesting period, even if a substantial portion, will not entitle the Grantee to any proportionate vesting. The number of Restricted Stock Units subject to this Award that vest will be determined based on the Vesting Percentage (as such term is defined in Exhibit A hereto and as calculated in accordance with Exhibit A based on the Company’s performance during the Performance Period). |
4. | Dividend Equivalents. If a cash dividend is paid with respect to the Common Stock after the Date of Grant and before the end of the Performance Period and while any Restricted Stock Units subject to this Award are outstanding, the Grantee shall be credited with an amount in cash equal to the dividends the Grantee would have received if he had been the owner of the shares of Common Stock subject to the outstanding Target Number of Restricted Stock Units; provided, however, that no amount shall be credited with respect to shares that have been delivered to the Grantee as of the applicable dividend record date. Any amounts credited under this Section 4 (“Dividend Equivalents”) shall be subject to the same terms and conditions as the Restricted Stock Units to which they relate (including, without limitation, application of the applicable Vesting Percentage) and shall vest and be paid (or, if applicable, be forfeited) at the same time as the Restricted Stock Units to which they relate. |
5. | Delivery of Shares. Except as otherwise provided in Section 8 below with respect to a Change in Control, the Company shall deliver or cause to be delivered to the Grantee the number of Award Shares subject to any Restricted Stock Units that vest pursuant to the terms hereof as soon as administratively practicable after (and in no event later than 74 days following) the Vesting Date. Any Dividend Equivalents described in Section 4 above related to such Award Shares shall be paid in cash at the same time as the delivery of the Award Shares under this Section 5. Notwithstanding the foregoing: (a) in the event of the Grantee’s death or Disability (as such term is defined for purposes of Section 409A of the |
6. | Adjustments Upon Specified Events. Upon the occurrence of certain events relating to the Company’s Common Stock contemplated by Section 16(b) of the Plan, the Committee will make adjustments, if appropriate, in the number of Restricted Stock Units and the number and kind of securities subject to this Award. |
7. | Effect of Certain Cessations of Service. |
A. | If, at any time prior to the Vesting Date, the Grantee’s employment is terminated by the Company without “Cause” (as defined in the Employment Agreement) or by the Grantee for “Good Reason” (as defined in the Employment Agreement) and a Change in Control has not previously occurred, the following shall apply with respect to this Award: (i) the Target Number of Restricted Stock Units shall be pro-rated by multiplying the Target Number of Restricted Stock Units by a fraction, the numerator of which is the number of days of the Grantee’s employment between the first day of the Company’s fiscal year 2019 and the date of such termination of the Grantee’s employment, and the denominator of which is the total number of days in the period beginning with the first day of the Company’s fiscal year 2019 and ending with the last day of the Company’s fiscal year 2021, and (ii) such pro-rated number of Target Number of Restricted Stock Units shall remain outstanding and eligible to vest on the Vesting Date based on the Vesting Percentage determined under Exhibit A as though the Grantee’s employment had not been terminated. This Section 7(A) is subject to Section 8(C) should a Change in Control occur within twelve (12) months after such a termination of the Grantee’s employment with the Company. If a Change in Control occurs before the end of the Performance Period but more than twelve (12) months after such a termination of the Grantee’s employment with the Company, Section 8(A) shall apply to the Award and the pro-rata vesting provision of this Section 7(A) shall be given effect in calculating the number of Restricted Stock Units that vest. |
B. | If, at any time prior to the Vesting Date, the Grantee’s death or “Disability” (as such term is defined in the Employment Agreement) occurs while the Grantee is in Service with the Company and a Change in Control has not previously occurred, this Award will vest as of the date of such event with respect to the Target Number of Restricted Stock Units. |
C. | If the Grantee’s Service terminates for any other reason, this Award and the Restricted Stock Units subject hereto, to the extent outstanding and unvested as of the date of such termination of Service, shall terminate and be cancelled as of the date of such termination of Service. Sections 14(a) and 14(b) of the Plan shall not apply to this Award. |
D. | For purposes of clarity, any Restricted Stock Units that vest pursuant to this Section 7 (and any Dividend Equivalents related thereto) shall still be paid at the applicable time set forth in Section 5. |
8. | Change in Control. Notwithstanding anything to the contrary in Section 3, Section 5 or Section 7 of this Agreement or any provision of the Plan, the following provisions shall apply upon a Change in Control (as defined in the Employment Agreement): |
A. | If a Change in Control occurs and this Award (to the extent outstanding) is not continued following such event or assumed or converted into restricted stock units of any successor entity to the Company or a parent thereof (the “Successor Entity”), this Award will vest as of the date of such Change in Control with respect to the Target Number of Restricted Stock Units. |
B. | If this Award (to the extent then outstanding) is continued following a Change in Control or is assumed or converted into restricted stock units of any Successor Entity, the performance-based vesting conditions of Section 3 shall no longer apply to this Award, and the Target Number of Restricted Stock Units subject to this Award shall remain eligible to vest on the original Vesting Date (without such date being modified due to the occurrence of the Change in Control), subject to the Grantee remaining continuously in Service with the Company following such Change in Control through the Vesting Date (subject to the accelerated vesting provisions set forth in Section 7(A) and 7(B) above); provided, however, that if a termination of the Grantee’s Service described in Section 7(A) or 7(B) above occurs after such Change in Control and prior to the Vesting Date, this Award will vest as of the date of such termination of the Grantee’s Service with respect to the Target |
i. | If the Change in Control occurs after the end of the Performance Period, an additional number of Restricted Stock Units subject to this Award shall vest, with the number of Restricted Stock Units vesting equal to the number necessary to cause the total number of Restricted Stock Units subject to this Award that vest (including Restricted Stock Units subject to this Award that previously vested) equal to the number of Restricted Stock Units subject to this Award that would have vested had the pro-ration provision of Section 7(A) not applied. |
ii. | If the Change in Control occurs on or before the last day of the Performance Period, the Award shall be treated as provided in Section 8(A) as though it was not continued following such event or assumed or converted into restricted stock units of any Successor Entity and the pro-ration provision of Section 7(A) shall not apply. |
9. | Restrictions on Transfer. The Grantee may not sell, assign, transfer, pledge, encumber or otherwise alienate, hypothecate or dispose of this Award or the Grantee’s right hereunder to receive Award Shares, except as otherwise provided in the Committee’s sole discretion consistent with the Plan and applicable securities laws. |
10. | Taxes. |
A. | The settlement of this Award is conditioned on the Grantee making arrangements reasonably satisfactory to the Company for the withholding of all applicable federal, state, local or foreign taxes as may be required under applicable law. |
B. | It is intended that any amounts payable under this Agreement shall either be exempt from or comply with Section 409A of the Code (including the Treasury regulations and other published guidance relating thereto) (“Code Section 409A”) so as not to subject the Grantee to payment of any additional tax, penalty or interest imposed under Code Section 409A. The provisions of this Agreement shall be construed and interpreted to avoid the imputation of any such additional tax, penalty or interest under Code Section 409A yet preserve (to the nearest extent reasonably possible) the intended benefit payable to the Grantee. |
C. | If the Grantee is a “specified employee” within the meaning of Treasury Regulation Section 1.409A-1(i) as of the date of the Grantee’s “separation from service” (as such term is defined for purposes of Code Section 409A), the Grantee shall not be entitled to any payment or benefit pursuant to this Award until the earlier of (i) the date which is six (6) months after the Grantee’s separation from service for any |
11. | Compliance. The Grantee hereby agrees to cooperate with the Company, regardless of Grantee’s employment status with the Company, to the extent necessary for the Company to comply with applicable state and federal laws and regulations relating to the Restricted Stock Units. |
12. | Notices. Any notice required or permitted under this Agreement shall be deemed given when personally delivered, or when deposited in a United States Post Office, postage prepaid, addressed, as appropriate, to the Grantee either at the address on record with the Company or such other address as may be designated by Grantee in writing to the Company; or to the Company, Attention: Stock Plan Administration, 1444 South Alameda Street, Los Angeles, California 90021, or such other address as the Company may designate in writing to the Grantee. |
13. | Failure to Enforce Not a Waiver. The failure of the Company or the Grantee to enforce at any time any provision of this Agreement shall in no way be construed to be a waiver of such provision or of any other provision hereof. |
14. | Governing Law. This Agreement shall be governed by and construed according to the laws of the State of Delaware, without regard to Delaware or other laws that might cause other law to govern under applicable principles of conflicts of law. For purposes of litigating any dispute that arises under this Agreement, the parties hereby submit to and consent to the jurisdiction of the State of California, and agree that such litigation shall be conducted in the courts of Los Angeles County, or the federal courts for the United States for the Central District of California, and no other courts, where this Agreement is made and/or to be performed. |
15. | Electronic Delivery. The Company may, in its sole discretion, decide to deliver any documents related to the Restricted Stock Units awarded under the Plan or future restricted stock or restricted stock units that may be awarded under the Plan by electronic means or request Grantee’s consent to participate in the Plan by electronic means. Grantee hereby consents to receive such documents by electronic delivery and agrees to participate in the Plan through an on-line or electronic system established and maintained by the Company or another third party designated by the Company. |
16. | Severability. The provisions of this Agreement are severable and if any one or more provisions are determined to be illegal or otherwise unenforceable, in whole or in part, the remaining provisions shall nevertheless be binding and enforceable. |
17. | Amendments. This Agreement may be amended or modified at any time by an instrument in writing signed by both parties. |
18. | Agreement Not a Contract of Employment. Neither the grant of the Restricted Stock Units, this Agreement nor any other action taken in connection herewith shall constitute or be evidence of any agreement or understanding, express or implied, that the Grantee is an employee of the Company or any subsidiary of the Company. |
19. | Committee’s Powers. No provision contained in this Agreement shall in any way terminate, modify or alter, or be construed or interpreted as terminating, modifying or altering any of the powers, rights or authority vested in the Committee or, to the extent delegated, in its delegate pursuant to the terms of the Plan or resolutions adopted in furtherance of the Plan, including, without limitation, the right to make certain determinations and elections with respect to the Restricted Stock Units. |
20. | Termination of this Agreement. Upon termination of this Agreement, all rights of the Grantee hereunder shall cease. |
21. | Clawback Policy. This Award is subject to the terms of the Company’s recoupment, clawback or similar policy as it may be in effect from time to time, as well as any similar provisions of applicable law, any of which could in certain circumstances require repayment or forfeiture of this Award or any shares of Common Stock or other cash or property received with respect to this Award (including any value received from a disposition of the shares acquired in respect of this Award). |
GUESS?, INC., | ||||
a Delaware corporation | ||||
By: | ||||
Print Name: | Jason T. Miller | |||
Its: | General Counsel and Secretary | |||
GRANTEE | ||||
Signature | ||||
Print Name | ||||
Employee ID | ||||
o | I AM NOT MARRIED. | |||
o | I AM MARRIED AND HAVE INFORMED MY SPOUSE OF THIS EQUITY GRANT. (Please have your spouse sign the Consent of Spouse section below.) | |||
GRANTEE | ||||
Signature | ||||
Print Name | ||||
Signature of Spouse | ||||
Print Name | ||||
Company Revenue for the Performance Period (in millions) | Company Earnings from Operations for the Performance Period (in millions) | Vesting Percentage | ||
Below Threshold | Below Threshold | 0% | ||
Threshold | Threshold | 50% | ||
Target | Target | 100% | ||
Stretch and Above | Stretch and Above | 200% |
• | “GAAP” means U.S. generally accepted accounting principles. |
• | “Earnings from Operations” means the Company’s worldwide earnings from operations for the Performance Period, as determined by the Company in accordance with GAAP and reflected in its reporting of financial results. |
• | “Performance Metric” means Revenue or Earnings from Operations, as applicable. |
• | “Revenue” means the Company’s worldwide revenue (excluding revenue for the Company’s Americas Retail and Americas Wholesale Segments) for the Performance Period, as determined by the Company in accordance with GAAP and reflected in its reporting of financial results. |
(a) | increased or decreased to eliminate the financial statement impact of any charges or accruals during the Performance Period for litigation matters, but only where such charges or accruals for any particular matter exceed $500,000 for the Performance Period; |
(b) | increased or decreased to eliminate the financial statement impact of any costs associated with any special committee of the Board incurred during the Performance Period; |
(c) | increased or decreased to eliminate the financial statement impact of restructuring charges incurred during the Performance Period, including employee severance related costs, store closure related costs and other real estate closure related costs; |
(d) | increased or decreased to eliminate the financial statement impact of any store impairment charges; |
(e) | increased or decreased to eliminate the financial statement impact of any changes in accounting standards or methods that are implemented between the first day of the Company’s fiscal year 2019 and the end of the Performance Period in accordance with GAAP (to the extent not taken into account by the Committee when it established the goals); |
(f) | increased or decreased to eliminate the financial statement impact of acquisitions, costs associated with acquisitions, and the costs incurred in connection with potential acquisitions that are required to be expensed under GAAP during the Performance Period; |
(g) | increased or decreased to eliminate the financial statement impact of gains or losses on dispositions of investments accounted for under the equity method of accounting in accordance with GAAP and costs associated with such transactions, in each case during the Performance Period; |
(h) | increased or decreased to eliminate the impact of currency fluctuations as and to the extent provided by the constant currency methodology approved by the Committee in connection with the grant of the Award; and |
(i) | increased or decreased to eliminate the financial statement impact of corresponding income tax expenses and/or benefits for the Performance Period associated with items (a) through (h) herein. |
1. | Definitions; Incorporation of Plan Terms. Capitalized terms used herein without definition shall have the meanings assigned to them in the Plan. This Award and all rights of the Grantee under this Agreement are subject to, and the Grantee agrees to be bound by, all of the terms and conditions of the Plan, incorporated herein by this reference. Except as specifically provided in this Agreement, in the event of any conflict or inconsistency between the Plan and this Agreement, the Plan shall govern. |
2. | Grant of Restricted Stock Units. The Company hereby grants to the Grantee as of the Date of Grant (set forth above) a right to receive a “target” of [________] shares of the Company’s common stock subject to the terms, conditions, and restrictions set forth herein (the “Restricted Stock Units,” and such target number of Restricted Stock Units, the “Target Number of Restricted Stock Units”). As used herein, the term “Restricted Stock Unit” shall mean a non-voting unit of measurement which is deemed for bookkeeping purposes to be equivalent to one outstanding share of the Company’s common stock, par value $0.01 per share (the “Common Stock”), solely for purposes of the Plan and this Agreement. The Restricted Stock Units shall be used solely as a device for the determination of the number of shares of Common Stock to eventually be delivered to the Grantee if such Restricted Stock Units vest pursuant to this Agreement. The Restricted Stock Units shall not be treated as property or as a trust fund of any kind. The Grantee shall have no rights as a shareholder of the Company, no dividend rights (except as expressly provided in Section 4 with respect to Dividend Equivalent rights) and no voting rights with respect to the Restricted Stock Units and any shares of Common Stock underlying or issuable in respect of such Restricted Stock Units (“Award Shares”) until such shares of Common Stock are actually issued to and held of record by the Grantee. This Award, together with the other equity awards granted by the Company to the Grantee on or about the date hereof, is in complete satisfaction of the Grantee’s right to receive stock options or other equity-based awards from the Company with respect to the Company’s 2019 fiscal year. |
3. | Vesting. Except as otherwise expressly provided in Sections 7 and 8 herein, this Award shall vest and become nonforfeitable on the last day of the Performance Period (as defined in Exhibit A hereto) (the “Vesting Date”); provided that the Grantee has been continuously in Service with the Company from the Date of Grant through the Vesting Date. Except as specifically provided herein, Service for only a portion of the vesting period, even if a substantial portion, will not entitle the Grantee to any proportionate vesting. The number of Restricted Stock Units subject to this Award that vest will be determined based on the Vesting Percentage (as such term is defined in Exhibit A hereto and as calculated in accordance with Exhibit A based on the Company’s performance during the Performance Period). |
4. | Dividend Equivalents. If a cash dividend is paid with respect to the Common Stock after the Date of Grant and before the end of the Performance Period and while any Restricted Stock Units subject to this Award are outstanding, the Grantee shall be credited with an amount in cash equal to the dividends the Grantee would have received if he had been the owner of the shares of Common Stock subject to the outstanding Target Number of Restricted Stock Units; provided, however, that no amount shall be credited with respect to shares that have been delivered to the Grantee as of the applicable dividend record date. Any amounts credited under this Section 4 (“Dividend Equivalents”) shall be subject to the same terms and conditions as the Restricted Stock Units to which they relate (including, without limitation, application of the applicable Vesting Percentage) and shall vest and be paid (or, if applicable, be forfeited) at the same time as the Restricted Stock Units to which they relate. |
5. | Delivery of Shares. Except as otherwise provided in Section 8 below with respect to a Change in Control, the Company shall deliver or cause to be delivered to the Grantee the number of Award Shares subject to any Restricted Stock Units that vest pursuant to the terms hereof as soon as administratively practicable after (and in no event later than 74 days following) the Vesting Date. Any Dividend Equivalents described in Section 4 above related to such Award Shares shall be paid in cash at the same time as the delivery of the Award Shares under this Section 5. Notwithstanding the foregoing: (a) in the event of the Grantee’s death or Disability (as such term is defined for purposes of Section 409A of the Code), then such shares shall be settled as soon as administratively practicable after (and in all events within 90 days after) such event; and (b) in the event of the Grantee’s “separation from service” (as such term is defined for purposes of Code Section 409A) upon or within two years following a Section 409A Change in Control (as such term is defined in Section 8(A)), then such shares shall be settled as soon as |
6. | Adjustments Upon Specified Events. Upon the occurrence of certain events relating to the Company’s Common Stock contemplated by Section 16(b) of the Plan, the Committee will make adjustments, if appropriate, in the number of Restricted Stock Units and the number and kind of securities subject to this Award. |
7. | Effect of Certain Cessations of Service. |
A. | If, at any time prior to the Vesting Date, the Grantee’s death or Disability (as such term is defined in the Plan) occurs while the Grantee is in Service with the Company and a Change in Control has not previously occurred, this Award will vest as of the date of such event with respect to the Target Number of Restricted Stock Units. |
B. | If the Grantee’s Service terminates for any other reason, this Award and the Restricted Stock Units subject hereto, to the extent outstanding and unvested as of the date of such termination of Service, shall terminate and be cancelled as of the date of such termination of Service. Sections 14(a) and 14(b) of the Plan shall not apply to this Award. |
C. | For purposes of clarity, any Restricted Stock Units that vest pursuant to this Section 7 (and any Dividend Equivalents related thereto) shall still be paid at the applicable time set forth in Section 5. |
8. | Change in Control. Notwithstanding anything to the contrary in Section 3, Section 5 or Section 7 of this Agreement or any provision of the Plan, the following provisions shall apply upon a Change in Control (as defined in the Plan): |
A. | If a Change in Control occurs and this Award (to the extent outstanding) is not continued following such event or assumed or converted into restricted stock units of any successor entity to the Company or a parent thereof (the “Successor Entity”), this Award will vest as of the date of such Change in Control with respect to the Target Number of Restricted Stock Units. |
B. | If this Award (to the extent then outstanding) is continued following a Change in Control or is assumed or converted into restricted stock units of any Successor Entity, the performance-based vesting conditions of Section 3 shall no longer apply to this Award, and the Target Number of Restricted Stock Units subject to this Award shall remain eligible to vest on the original Vesting Date (without such date being modified due to the occurrence of the Change in Control), subject to the Grantee remaining continuously in Service with the Company following such Change in Control through the Vesting Date; provided, however, that if a termination of the Grantee’s Service described in Section 7(A) above occurs after such Change in Control and prior to the Vesting Date, this Award will vest as of the date of such termination of the Grantee’s Service with respect to the Target Number of Restricted Stock Units. Any Restricted Stock Units (and any related Dividend Equivalents) that vest pursuant to this Section 8(B) shall be paid at the time(s) otherwise provided in Section 5. |
9. | Restrictions on Transfer. The Grantee may not sell, assign, transfer, pledge, encumber or otherwise alienate, hypothecate or dispose of this Award or the Grantee’s right hereunder to receive Award Shares, except as otherwise provided in the Committee’s sole discretion consistent with the Plan and applicable securities laws. |
10. | Taxes. |
A. | The settlement of this Award is conditioned on the Grantee making arrangements reasonably satisfactory to the Company for the withholding of all applicable federal, state, local or foreign taxes as may be required under applicable law. |
B. | It is intended that any amounts payable under this Agreement shall either be exempt from or comply with Section 409A of the Code (including the Treasury regulations and other published guidance relating thereto) (“Code Section 409A”) so as not to subject the Grantee to payment of any additional tax, penalty or interest imposed under Code Section 409A. The provisions of this Agreement shall be construed and interpreted to avoid the imputation of any such additional tax, penalty or interest under Code Section 409A yet preserve (to the nearest extent reasonably possible) the intended benefit payable to the Grantee. |
C. | If the Grantee is a “specified employee” within the meaning of Treasury Regulation Section 1.409A-1(i) as of the date of the Grantee’s “separation from service” (as such term is defined for purposes of Code Section 409A), the Grantee shall not be entitled to any payment or benefit pursuant to this Award until the |
11. | Compliance. The Grantee hereby agrees to cooperate with the Company, regardless of Grantee’s employment status with the Company, to the extent necessary for the Company to comply with applicable state and federal laws and regulations relating to the Restricted Stock Units. |
12. | Notices. Any notice required or permitted under this Agreement shall be deemed given when personally delivered, or when deposited in a United States Post Office, postage prepaid, addressed, as appropriate, to the Grantee either at the address on record with the Company or such other address as may be designated by Grantee in writing to the Company; or to the Company, Attention: Stock Plan Administration, 1444 South Alameda Street, Los Angeles, California 90021, or such other address as the Company may designate in writing to the Grantee. |
13. | Failure to Enforce Not a Waiver. The failure of the Company or the Grantee to enforce at any time any provision of this Agreement shall in no way be construed to be a waiver of such provision or of any other provision hereof. |
14. | Governing Law. This Agreement shall be governed by and construed according to the laws of the State of Delaware, without regard to Delaware or other laws that might cause other law to govern under applicable principles of conflicts of law. For purposes of litigating any dispute that arises under this Agreement, the parties hereby submit to and consent to the jurisdiction of the State of California, and agree that such litigation shall be conducted in the courts of Los Angeles County, or the federal courts for the United States for the Central District of California, and no other courts, where this Agreement is made and/or to be performed. |
15. | Electronic Delivery. The Company may, in its sole discretion, decide to deliver any documents related to the Restricted Stock Units awarded under the Plan or future restricted stock or restricted stock units that may be awarded under the Plan by electronic means or request Grantee’s consent to participate in the Plan by electronic means. Grantee hereby consents to receive such documents by electronic delivery and agrees to participate in the Plan through an on-line or electronic system established and maintained by the Company or another third party designated by the Company. |
16. | Severability. The provisions of this Agreement are severable and if any one or more provisions are determined to be illegal or otherwise unenforceable, in whole or in part, the remaining provisions shall nevertheless be binding and enforceable. |
17. | Amendments. This Agreement may be amended or modified at any time by an instrument in writing signed by both parties. |
18. | Continuance of Employment. Nothing contained in this Agreement or the Plan constitutes an employment or service commitment by the Company, affects the Grantee’s status as an employee at will who is subject to termination without cause, confers upon the Grantee any right to remain employed by or in service to the Company or any of its subsidiaries, interferes in any way with the right of the Company or any of its subsidiaries at any time to terminate such employment or services, or affects the right of the Company or any of its subsidiaries to increase or decrease the Grantee’s other compensation or benefits. Nothing in this Agreement, however, is intended to adversely affect any independent contractual right of the Grantee without his or her consent thereto. |
19. | Agreement Not a Contract of Employment. Neither the grant of the Restricted Stock Units, this Agreement nor any other action taken in connection herewith shall constitute or be evidence of any agreement or understanding, express or implied, that the Grantee is an employee of the Company or any subsidiary of the Company. |
20. | Committee’s Powers. No provision contained in this Agreement shall in any way terminate, modify or alter, or be construed or interpreted as terminating, modifying or altering any of the powers, rights or authority vested in the Committee or, to the extent delegated, in its delegate pursuant to the terms of the Plan or resolutions adopted in furtherance of the Plan, including, without limitation, the right to make certain determinations and elections with respect to the Restricted Stock Units. |
21. | Termination of this Agreement. Upon termination of this Agreement, all rights of the Grantee hereunder shall cease. |
22. | Clawback Policy. This Award is subject to the terms of the Company’s recoupment, clawback or similar policy as it may be in effect from time to time, as well as any similar provisions of applicable law, any of which could in certain circumstances require repayment or forfeiture of this Award or any shares of Common Stock or other cash or property received with respect to this Award (including any value received from a disposition of the shares acquired in respect of this Award). |
GUESS?, INC., | ||||
a Delaware corporation | ||||
By: | ||||
Print Name: | Jason T. Miller | |||
Its: | General Counsel and Secretary | |||
GRANTEE | ||||
Signature | ||||
Print Name | ||||
Employee ID | ||||
o | I AM NOT MARRIED. | |||
o | I AM MARRIED AND HAVE INFORMED MY SPOUSE OF THIS EQUITY GRANT. (Please have your spouse sign the Consent of Spouse section below.) | |||
GRANTEE | ||||
Signature | ||||
Print Name | ||||
Signature of Spouse | ||||
Print Name | ||||
Company Revenue for the Performance Period (in millions) | Company Earnings from Operations for the Performance Period (in millions) | Vesting Percentage | ||
Below Threshold | Below Threshold | 0% | ||
Threshold | Threshold | 50% | ||
Target | Target | 100% | ||
Stretch and Above | Stretch and Above | 200% |
• | “GAAP” means U.S. generally accepted accounting principles. |
• | “Earnings from Operations” means the Company’s worldwide earnings from operations for the Performance Period, as determined by the Company in accordance with GAAP and reflected in its reporting of financial results. |
• | “Performance Metric” means Revenue or Earnings from Operations, as applicable. |
• | “Revenue” means the Company’s worldwide revenue (excluding revenue for the Company’s Americas Retail and Americas Wholesale Segments) for the Performance Period, as determined by the Company in accordance with GAAP and reflected in its reporting of financial results. |
(a) | increased or decreased to eliminate the financial statement impact of any charges or accruals during the Performance Period for litigation matters, but only where such charges or accruals for any particular matter exceed $500,000 for the Performance Period; |
(b) | increased or decreased to eliminate the financial statement impact of any costs associated with any special committee of the Board incurred during the Performance Period; |
(c) | increased or decreased to eliminate the financial statement impact of restructuring charges incurred during the Performance Period, including employee severance related costs, store closure related costs and other real estate closure related costs; |
(d) | increased or decreased to eliminate the financial statement impact of any store impairment charges; |
(e) | increased or decreased to eliminate the financial statement impact of any changes in accounting standards or methods that are implemented between the first day of the Company’s fiscal year 2019 and the end of the Performance Period in accordance with GAAP (to the extent not taken into account by the Committee when it established the goals); |
(f) | increased or decreased to eliminate the financial statement impact of acquisitions, costs associated with acquisitions, and costs incurred in connection with potential acquisitions that are required to be expensed under GAAP during the Performance Period; |
(g) | increased or decreased to eliminate the financial statement impact of gains or losses on dispositions of investments accounted for under the equity |
(h) | increased or decreased to eliminate the impact of currency fluctuations as and to the extent provided by the constant currency methodology approved by the Committee in connection with the grant of the Award; and |
(i) | increased or decreased to eliminate the financial statement impact of corresponding income tax expenses and/or benefits for the Performance Period associated with items (a) through (h) herein. |
1. | I have reviewed this quarterly report on Form 10-Q of Guess?, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: | September 6, 2018 | By: | /s/ VICTOR HERRERO |
Victor Herrero Chief Executive Officer |
1. | I have reviewed this quarterly report on Form 10-Q of Guess?, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: | September 6, 2018 | By: | /s/ SANDEEP REDDY |
Sandeep Reddy Chief Financial Officer |
• | the Quarterly Report on Form 10-Q of the Company for the period ended August 4, 2018, as filed with the Securities and Exchange Commission (the “Report”), fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and |
• | the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: | September 6, 2018 | By: | /s/ VICTOR HERRERO |
Victor Herrero Chief Executive Officer |
• | the Quarterly Report on Form 10-Q of the Company for the period ended August 4, 2018, as filed with the Securities and Exchange Commission (the “Report”), fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and |
• | the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: | September 6, 2018 | By: | /s/ SANDEEP REDDY |
Sandeep Reddy Chief Financial Officer |
Document and Entity Information - shares |
6 Months Ended | |
---|---|---|
Aug. 04, 2018 |
Sep. 04, 2018 |
|
Document and Entity Information | ||
Entity Registrant Name | GUESS INC | |
Trading Symbol | GES | |
Entity Central Index Key | 0000912463 | |
Document Type | 10-Q | |
Document Period End Date | Aug. 04, 2018 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --02-02 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 81,025,423 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q2 |
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares |
Aug. 04, 2018 |
Feb. 03, 2018 |
---|---|---|
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) | 142,373,036 | 141,623,687 |
Common stock, outstanding (in shares) | 81,030,202 | 81,371,118 |
Treasury stock (in shares) | 61,342,834 | 60,252,569 |
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS) - USD ($) shares in Thousands, $ in Thousands |
3 Months Ended | 6 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Aug. 04, 2018 |
Jul. 29, 2017 |
Aug. 04, 2018 |
Jul. 29, 2017 |
||||||||
Income Statement [Abstract] | |||||||||||
Product sales | $ 626,162 | $ 551,794 | $ 1,127,667 | $ 990,114 | |||||||
Net royalties | 19,709 | 16,498 | 39,493 | 32,523 | |||||||
Net revenue | [1],[2] | 645,871 | 568,292 | 1,167,160 | 1,022,637 | ||||||
Cost of product sales | 406,440 | 370,265 | 753,791 | 679,968 | |||||||
Gross profit | 239,431 | 198,027 | 413,369 | 342,669 | |||||||
Selling, general and administrative expenses | 204,569 | 173,007 | 402,788 | 339,862 | |||||||
Net gains on lease terminations | 0 | 0 | (152) | 0 | |||||||
Asset impairment charges | 2,981 | 1,233 | 3,740 | 3,995 | |||||||
Earnings (loss) from operations | [1],[3] | 31,881 | 23,787 | 6,993 | (1,188) | ||||||
Other income (expense): | |||||||||||
Interest expense | (863) | (544) | (1,602) | (958) | |||||||
Interest income | 1,132 | 1,260 | 2,109 | 2,131 | |||||||
Other income (expense), net | 1,360 | (2,169) | (1,254) | (281) | |||||||
Total other income (expense) | 1,629 | (1,453) | (747) | 892 | |||||||
Earnings (loss) before income tax expense | 33,510 | 22,334 | 6,246 | (296) | |||||||
Income tax expense | 7,776 | 6,453 | 1,499 | 5,050 | |||||||
Net earnings (loss) | 25,734 | 15,881 | 4,747 | (5,346) | |||||||
Net earnings attributable to noncontrolling interests | 204 | 662 | 438 | 728 | |||||||
Net earnings (loss) attributable to Guess, Inc. | $ 25,530 | $ 15,219 | $ 4,309 | $ (6,074) | |||||||
Net earnings (loss) per common share attributable to common stockholders (Note 3): | |||||||||||
Basic (in dollars per share) | $ 0.32 | $ 0.18 | $ 0.05 | $ (0.08) | |||||||
Diluted (in dollars per share) | $ 0.31 | $ 0.18 | $ 0.05 | $ (0.08) | |||||||
Weighted average common shares outstanding attributable to common stockholders (Note 3): | |||||||||||
Basic (in shares) | 80,110 | 82,396 | 80,006 | 82,703 | |||||||
Diluted (in shares) | 81,550 | 82,763 | 81,248 | 82,703 | |||||||
Dividends declared per common share (in dollars per share) | $ 0.225 | $ 0.225 | $ 0.45 | $ 0.45 | |||||||
|
Basis of Presentation and New Accounting Guidance |
6 Months Ended |
---|---|
Aug. 04, 2018 | |
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 August 4, 2018 and February 3, 2018, the condensed consolidated statements of income (loss) and comprehensive income (loss) for the three and six months ended August 4, 2018 and July 29, 2017 and the condensed consolidated statements of cash flows for the six months ended August 4, 2018 and July 29, 2017. 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. 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 and six months ended August 4, 2018 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 3, 2018. The three and six months ended August 4, 2018 had the same number of days as the three and six months ended July 29, 2017. All references herein to “fiscal 2019,” “fiscal 2018” and “fiscal 2017” represent the results of the 52-week fiscal year ending February 2, 2019, the 53-week fiscal year ended February 3, 2018 and the 52-week fiscal year ended January 28, 2017, respectively. Reclassifications The Company has made certain reclassifications to prior year amounts to conform to the current period presentation within the accompanying notes to the condensed consolidated financial statements. Net Gains on Lease Terminations During the six months ended August 4, 2018, the Company recorded net gains on lease terminations of approximately $0.2 million related primarily to the early termination of certain lease agreements in North America. The net gains on lease terminations were recorded during the three months ended May 5, 2018. There were no net gains on lease terminations during the three or six months ended July 29, 2017. New Accounting Guidance Changes in Accounting Policies In May 2014, the Financial Accounting Standards Board (“FASB”) issued a comprehensive new revenue recognition standard which superseded previous existing revenue recognition guidance. The standard is intended to clarify the principles of recognizing revenue and create common revenue recognition guidance between GAAP and International Financial Reporting Standards. The standard also requires expanded disclosures surrounding revenue recognition. During fiscal 2017, the FASB issued additional clarification guidance on the new revenue recognition standard which also included certain scope improvements and practical expedients. The Company adopted this guidance (including clarification guidance issued) effective February 4, 2018 using the modified retrospective method and, as a result, recorded a cumulative adjustment to increase retained earnings by approximately $5.8 million, net of taxes. The adjustment related primarily to changes in the presentation of advertising contributions received from the Company’s licensees and the related advertising expenditures incurred by the Company. Under previous guidance, the Company recorded advertising contributions received from its licensees and the related advertising expenditures incurred by the Company on a net basis in its consolidated balance sheet. To the extent that the advertising contributions exceeded the Company’s advertising expenditures for its licensees, the excess contribution was treated as a deferred liability and was included in accrued expenses in the Company’s consolidated balance sheet. Under the new revenue recognition standard, advertising contributions and related advertising expenditures related to the Company’s licensing business are recorded on a gross basis in the Company’s condensed consolidated statements of income (loss). This change resulted in an increase to net revenue and selling, general, and administrative (“SG&A”) expenses of $2.1 million and $1.5 million, respectively, during the three months ended August 4, 2018 compared to the same prior-year period. During the six months ended August 4, 2018, this change resulted in an increase to net revenue and SG&A expenses of $4.4 million and $4.8 million, respectively, compared to the same prior-year period. Other minor differences related to the timing of revenue recognition from the Company’s e-commerce operations, which are now recognized when merchandise is transferred to a common carrier rather than upon receipt by the customer, and a minimal change in the valuation of the amount that is deferred related to points earned under the Company’s loyalty programs. Additionally, allowances for wholesale sales returns and wholesale markdowns are now presented as accrued expenses rather than as reductions to accounts receivable and the estimated cost associated with the allowance for sales returns is presented within other current assets rather than included in inventories in the Company’s consolidated balance sheet. Refer to Note 2 for the Company’s expanded disclosures on revenue recognition. In January 2016, the FASB issued authoritative guidance which requires equity investments not accounted for under the equity method of accounting or consolidation accounting to be measured at fair value, with subsequent changes in fair value recognized in net income. In February 2018, the FASB issued additional clarification guidance which made targeted improvements to address certain aspects of recognition, measurement, presentation and disclosure requirements for financial instruments. The Company adopted this guidance (including the clarification guidance) effective February 4, 2018. The adoption of this guidance did not result in a cumulative-effect adjustment as of the beginning of the current year and did not have a material impact on the Company’s consolidated financial statements or related disclosures. In October 2016, the FASB issued authoritative guidance which amends the accounting for income taxes on intra-entity transfers of assets other than inventory. This guidance requires that entities recognize the income tax consequences of an intra-entity transfer of an asset, other than inventory, when the transfer occurs. The income tax consequences on intra-entity transfers of inventory will continue to be deferred until the inventory has been sold to a third party. The Company adopted this guidance effective February 4, 2018. The adoption of this guidance did not have an impact on the Company’s consolidated financial statements or related disclosures. In March 2017, the FASB issued authoritative guidance related to the presentation of net periodic pension cost in the income statement. This guidance requires that the service cost component of net periodic pension cost be presented in the same line as other compensation costs arising from services rendered by the employees during the period. The other non-service components of net periodic pension cost are required to be presented in the income statement separately from the service cost component and outside of earnings from operations. This guidance also allows for the service cost component to be eligible for capitalization when applicable. The Company adopted this guidance effective February 4, 2018 on a retrospective basis for the presentation of the service cost component and other non-service components of net periodic pension cost in the income statement and on a prospective basis for capitalization of the service cost component. As a result, the Company reclassified $0.5 million and $1.1 million from SG&A expenses to other income (expense) during the three and six months ended July 29, 2017, respectively, which resulted in a related improvement in operating earnings (loss) during each of the respective periods. Other than the change in presentation of other non-service components of net periodic pension cost within the Company’s consolidated statements of income (loss), the adoption of this guidance did not have an impact on the Company’s consolidated financial statements and related disclosures. In May 2017, the FASB issued authoritative guidance that provides clarification on accounting for modifications in share-based payment awards. The Company adopted this guidance effective February 4, 2018. The adoption of this guidance did not have an impact on the Company’s consolidated financial statements or related disclosures. In June 2018, the FASB issued authoritative guidance that expanded the scope of ASC Topic 718, Compensation - Stock Compensation, to include nonemployee share-based payment transactions. The Company early adopted this guidance during the second quarter of fiscal 2019. The adoption of this guidance did not have a material impact on the Company’s consolidated financial statements or related disclosures. Recently Issued Accounting Guidance In February 2016, the FASB issued a comprehensive new lease standard which will supersede previous lease guidance. The standard requires a lessee to recognize assets and liabilities related to long-term leases that were classified as operating leases under previous guidance in its balance sheet. An asset would be recognized related to the right to use the underlying asset and a liability would be recognized related to the obligation to make lease payments over the term of the lease. The standard also requires expanded disclosures surrounding leases. The standard (including clarification guidance issued during fiscal 2019) is effective for fiscal periods beginning after December 15, 2018, which will be the Company’s first quarter of fiscal 2020, with early adoption permitted. The Company has completed the design phase of its selected lease management system and is in the process of completing its inventory of its lease contracts as well as implementing processes and controls to enable the preparation of the required financial information for this standard. The Company will apply this guidance retrospectively at the beginning of the period of adoption through a cumulative-effect adjustment to retained earnings and expects that this guidance will result in material increases in assets and liabilities in its consolidated balance sheet as well as enhanced disclosures. In June 2016, the FASB issued authoritative guidance related to the measurement of credit losses on financial instruments. This guidance is effective for fiscal years beginning after December 15, 2019, which will be the Company’s first quarter of fiscal 2021. Early adoption is permitted for fiscal periods beginning after December 15, 2018, which will be the Company’s first quarter of fiscal 2020. The Company is currently evaluating the impact of the adoption of this standard on its consolidated financial statements and related disclosures. In January 2017, the FASB issued authoritative guidance to simplify the testing for goodwill impairment by removing step two from the goodwill testing. Under current guidance, if the fair value of a reporting unit is lower than its carrying amount (step one), an entity would calculate an impairment charge by comparing the implied fair value of goodwill with its carrying amount (step two). The implied fair value of goodwill was calculated by deducting the fair value of the assets and liabilities of the respective reporting unit from the reporting unit’s fair value as determined under step one. This guidance instead provides that an impairment charge should be recognized based on the difference between a reporting unit’s fair value and its carrying value. This guidance also does not require a qualitative test to be performed on reporting units with zero or negative carrying amounts. However, entities need to disclose any reporting units with zero or negative carrying amounts that have goodwill and the amount of goodwill allocated to each. This guidance is effective for fiscal years beginning after December 15, 2019, which will be the Company’s first quarter of fiscal 2021, with early adoption permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The adoption of this guidance is not expected to have a material impact on the Company’s consolidated financial statements or related disclosures. In August 2017, the FASB issued authoritative guidance to better align the results of hedge accounting with an entity’s risk management activities. This guidance updates the designation and measurement guidance for qualifying hedging relationships and the presentation of hedge results in the financial statements. This guidance is effective for fiscal years beginning after December 15, 2018, which will be the Company’s first quarter of fiscal 2020, and requires a cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption, with early adoption permitted. The updated presentation and disclosure guidance is required only on a prospective basis. The adoption of this guidance is not expected to 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 in ASC 820, Fair Value Measurement. This guidance is effective for fiscal years beginning after December 15, 2019, which will be the Company’s first quarter of fiscal 2021, with early adoption permitted. The Company is currently evaluating the impact of the adoption of this standard on its related disclosures. 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 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 guidance provides criteria for determining which implementation costs to capitalize as an asset related to the service contract and which costs to expense. The capitalized implementation costs are required to be expensed over the term of the hosting arrangement. The guidance also clarifies the presentation requirements for reporting such costs in the entity’s financial statements. This guidance is effective for fiscal years beginning after December 15, 2019, which will be the Company’s first quarter of fiscal 2021, 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. |
Revenue Recognition |
6 Months Ended |
---|---|
Aug. 04, 2018 | |
Revenue Recognition [Abstract] | |
Revenue Recognition | Revenue Recognition Significant Accounting Policies and Practices Products Transferred at a Point in Time 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. For the Company’s brick-and-mortar retail stores and concessions, revenue is typically recognized at the point of sale. Revenue generated from the Company’s e-commerce sites is recognized when merchandise is transferred to a common carrier. This is a change compared to the Company’s treatment under previous guidance where revenue from the Company’s e-commerce sites was recognized based on the estimated customer receipt date. This change had an immaterial impact on revenue for the three and six months ended August 4, 2018. Revenue generated from the Company’s wholesale distribution channel is recognized when control transfers to the customer, which generally occurs upon shipment. The amount of revenue that is recognized is based on the transaction price, which represents the invoiced amount and includes estimates of variable consideration such as allowances for sales returns, markdowns and loyalty award obligations, where applicable. The amount of variable consideration included in the transaction price may be constrained and is included only to the extent that it is probable that a significant reversal in the amount of the cumulative revenue recognized under the contract will not occur in a future period. The Company accepts payments at its brick-and-mortar retail locations and its e-commerce sites in the form of cash, credit cards, gift cards and loyalty points, where applicable. Payment terms, typically less than one year, are offered to the Company’s wholesale customers and do not include a significant financing component. The Company extends credit to wholesale customers based upon an evaluation of the customer’s financial condition and credit history and generally requires no collateral but does obtain credit insurance when considered appropriate. As of August 4, 2018, approximately 52% of the Company’s total net trade receivables and 62% 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. The Company maintains allowances for doubtful accounts for estimated losses that result from the inability of its wholesale customers 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 economic conditions and whether the Company has obtained credit insurance or other guarantees. Management performs regular evaluations concerning the ability of its customers to satisfy their obligations and records a provision for doubtful accounts based on these evaluations. The Company’s credit losses for the periods presented were immaterial and did not significantly exceed management’s estimates. Refer to Note 5 for further information regarding the Company’s allowance for doubtful accounts. Shipping and handling costs associated with outbound freight incurred to transfer a product to a customer are accounted for as fulfillment costs and are included in SG&A expenses. Sales and usage-based taxes collected from customers and remitted directly to governmental authorities are excluded from net revenues. This is consistent with the presentation of such amounts in previous years. The Company does not have significant contract balances related to its direct-to-consumer or wholesale distribution channels other than the allowance for sales returns and markdowns as well as liabilities related to its gift cards and loyalty programs. The Company also does not have significant contract acquisition costs related to its direct-to-consumer or wholesale distribution channels. Sales Return Allowances The Company accrues for estimated sales returns in the period in which the related revenue is recognized. To recognize the financial impact of sales returns, the Company estimates the amount of goods that will be returned based on historical experience and current trends and reduces sales and cost of sales accordingly. The Company’s policy allows retail customers in certain regions a grace period to return merchandise following the date of sale. Substantially all of these returns are considered to be resalable at a price that exceeds the cost of the merchandise. The Company adopted the new revenue recognition standard effective as of the first quarter of fiscal 2019, and accordingly, has included the allowance for sales returns in accrued expenses and the estimated cost associated with such sales returns within other current assets in its condensed consolidated balance sheet. Prior to the adoption of the new revenue recognition standard, the Company recorded the allowance for wholesale sales returns against accounts receivable and the estimated cost of inventory associated with the allowance for sales returns in inventories. The allowance for retail sales returns was included in accrued expenses which is consistent with the current presentation. As of August 4, 2018, the Company included $27.0 million in accrued expenses related to the allowance for sales returns and $11.6 million in other current assets related to the estimated cost of such sales returns. As of February 3, 2018, the Company included $25.0 million and $2.9 million in accounts receivable and accrued expenses, respectively, related to the allowance for sales returns and $11.9 million in inventories related to the estimated cost of such sales returns. Markdown Allowances Costs associated with customer markdowns are recorded as a reduction to revenues and any amounts unapplied to existing receivables are included in accrued expenses. These markdown allowances resulted from seasonal negotiations with the Company’s wholesale customers, as well as historical trends and the evaluation of the impact of current economic conditions. The Company adopted the new revenue recognition standard effective as of the first quarter of fiscal 2019, and accordingly, has included the allowance for markdowns in accrued expenses in its condensed consolidated balance sheet. As of August 4, 2018, the Company included $10.8 million in accrued expenses related to the allowance for markdowns. As of February 3, 2018, the Company included $10.8 million in accounts receivable related to the allowance for markdowns. Gift Cards Gift card breakage is income recognized due to the non-redemption of a portion of gift cards sold by the Company for which a liability was recorded in prior periods. Gifts cards are mainly used in the U.S. and Canada. The Company issues its gift cards in the U.S. and Canada through one of its subsidiaries and is not required by law to escheat the value of unredeemed gift cards to the state in which the subsidiary is domiciled. Estimated breakage amounts are accounted for under the redemption recognition method and are classified as additional net revenues as the gift cards are redeemed. The Company’s gift card breakage rate is approximately 6.1% and 5.1% for the U.S. retail business and Canadian retail business, respectively, based upon historical redemption patterns, which represents the cumulative estimated amount of gift card breakage from the inception of the electronic gift card program in late 2002. Based upon historical redemption trends, the Company recognizes estimated gift card breakage as a component of net revenue in proportion to actual gift card redemptions, over the period that remaining gift card values are redeemed. Any future revisions to the estimated breakage rate may result in changes in the amount of breakage income recognized in future periods. There have been no changes to the Company’s accounting for gift card breakage upon adoption of the new revenue recognition standard effective as of the first quarter of fiscal 2019. During the three and six months ended August 4, 2018, the Company recognized $0.1 million and $0.2 million, respectively, of gift card breakage to revenue. During the three and six months ended July 29, 2017, the Company recognized $0.1 million and $0.2 million, respectively, of gift card breakage to revenue. As of August 4, 2018 and February 3, 2018, the Company included $4.6 million and $5.2 million in accrued expenses related to its gift card liability, respectively. Loyalty Programs The Company has customer loyalty programs in North America, Europe and Asia which cover all of its brands. Under certain of the programs, primarily in the U.S. and Canada, customers accumulate points based on purchase activity. Once a loyalty program member achieves a certain point level, the member earns awards that may only be redeemed for merchandise. Unredeemed points generally expire after six months without additional purchase activity and unredeemed awards generally expire after two months. Where applicable, the Company allocates a portion of the transaction price from sales in its direct-to-consumer channel to its loyalty program by using historical redemption rates to estimate the value of future award redemptions. This amount is accrued in current liabilities and recorded as a reduction of net revenue in the period which the related revenue is recognized. During the three months ended August 4, 2018, activity related to the Company’s loyalty programs had a minimal impact on net revenue. During the six months ended August 4, 2018, activity related to the Company’s loyalty programs decreased net revenue by $0.4 million. During the three and six months ended July 29, 2017, activity related to the Company’s loyalty programs increased net revenue by $0.2 million and $0.5 million, respectively. The aggregate dollar value of the loyalty program accruals included accrued expense was $4.4 million and $3.8 million as of August 4, 2018 and February 3, 2018, respectively. Future revisions to the estimated liability may result in changes to net revenue. Intellectual Property Transferred Over Time 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 typical license agreement requires that the licensee pay the Company the greater of a royalty based on a percentage of the licensee’s net sales of licensed products or a guaranteed annual minimum royalty that typically increases over the term of the license agreement. Generally, licensees are also required to make contributions to advertising funds, as a percentage of their sales, over the term of the licensing agreement, and may elect to make additional contributions to support specific brand-building initiatives. The Company recognizes revenue from sales-based royalty and advertising fund contributions when the related sales occur which is consistent with the timing of when the performance obligation is satisfied. The Company adopted the new revenue recognition standard effective as of the first quarter of fiscal 2019, and accordingly, has recorded advertising contributions in revenue on a gross basis separate from any related advertising expenditures made by the Company which are recorded in SG&A expenses in the Company’s condensed consolidated statements of income (loss). Prior to the adoption of the new revenue recognition standard, the Company recorded advertising contributions received from its licensees and the related advertising expenditures incurred by the Company on a net basis in its consolidated balance sheet. Under previous guidance, to the extent that the advertising contributions exceed the Company’s advertising expenditures for its licensees, the excess contribution was treated as a deferred liability and was included in accrued expenses in the Company’s condensed consolidated balance sheet. Refer to Note 1 for detail regarding the impact of this change on the Company’s condensed consolidated balance sheet and its condensed consolidated statements of income (loss) as a result of the adoption of the new revenue recognition standard. The Company records royalty and advertising payments received on the Company’s purchases of licensed product as a reduction of the cost of the licensed product. 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. Several of the Company’s key license agreements provide for specified, fixed payments over and above the normal, ongoing royalty payments in consideration of the grant of the license rights. These payments are recognized ratably as revenue over the term of the license agreement and do not include a significant financing component. 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 August 4, 2018, the Company had $7.3 million and $16.5 million of deferred royalties related to these upfront payments included in accrued expenses and other long-term liabilities, respectively. This compares to $6.8 million and $12.8 million of deferred royalties related to these upfront payments included in accrued expenses and other long-term liabilities, respectively, at February 3, 2018. During the three and six months ended August 4, 2018, the Company recognized $3.6 million and $6.9 million in net royalties related to the amortization of the deferred royalties, respectively. During the three and six months ended July 29, 2017, the Company recognized $3.0 million and $6.0 million in net royalties related to the amortization of the deferred royalties, respectively. Contract balances related to the Company’s licensing distribution channel consist primarily of royalty receivables and liabilities related to deferred royalties. Refer to Note 5 for further information on royalty receivables. The Company does not have significant contract acquisition costs related to its licensing operations. Refer to Note 8 for further information on disaggregation of revenue by segment and country. |
Earnings (Loss) Per Share |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings (Loss) Per Share | Earnings (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 represent 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. 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 due to the net loss incurred for the period. 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 were 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 earnings (loss) per common share attributable to common stockholders is as follows (in thousands, except per share data):
For the three months ended August 4, 2018 and July 29, 2017, equity awards granted for 1,385,422 and 4,522,618, respectively, of the Company’s common shares and for the six months ended August 4, 2018 and July 29, 2017, equity awards granted for 2,116,751 and 4,310,197, 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. For three and six months ended August 4, 2018, the Company also excluded 1,361,550 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 August 4, 2018. For the three and six months ended July 29, 2017, the Company excluded 1,140,080 nonvested stock units which were 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 July 29, 2017. 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. During the six months ended August 4, 2018, the Company repurchased 1,118,808 shares under the program at an aggregate cost of $17.6 million. The shares were repurchased during the three months ended May 5, 2018. During the six months ended August 4, 2018, the Company also paid an additional $6.0 million for shares that were repurchased during the fourth quarter of fiscal 2018 but were settled during the first quarter of fiscal 2019. During the six months ended July 29, 2017, the Company repurchased 1,485,195 shares under the program at an aggregate cost of $17.8 million. The shares were repurchased during the three months ended April 29, 2017. As of August 4, 2018, the Company had remaining authority under the program to purchase $374.6 million of its common stock. |
Stockholders' Equity and Redeemable Noncontrolling Interests |
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Stockholders' Equity and Redeemable Noncontrolling Interests [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stockholders' Equity and Redeemable Noncontrolling Interests | Stockholders’ Equity and Redeemable Noncontrolling Interests A reconciliation of common stock outstanding, treasury stock and the total carrying amount of total stockholders’ equity, Guess?, Inc. stockholders’ equity and stockholders’ equity attributable to nonredeemable and redeemable noncontrolling interests for the fiscal year ended February 3, 2018 and six months ended August 4, 2018 is as follows (in thousands, except share data):
Accumulated Other Comprehensive Income (Loss) The changes in accumulated other comprehensive income (loss), net of related income taxes, for the three and six months ended August 4, 2018 and July 29, 2017 are as follows (in thousands):
Details on reclassifications out of accumulated other comprehensive income (loss) to net earnings (loss) during the three and six months ended August 4, 2018 and July 29, 2017 are as follows (in thousands):
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 beginning in the sixth year of the agreement, or sooner in certain limited circumstances, and every third anniversary from the end of the sixth year thereafter 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 condensed consolidated balance sheet. The carrying value of the redeemable noncontrolling interest related to Guess Brazil was $1.4 million and $1.6 million as of August 4, 2018 and February 3, 2018, 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 condensed consolidated balance sheet. During fiscal 2018, the Company and the noncontrolling interest holder made additional capital contribution totaling $3.2 million, of which $2.2 million was paid by the Company and the remaining amount was paid by the noncontrolling interest holder to retain the same pro-rata interest in Guess CIS. The carrying value of the redeemable noncontrolling interest related to Guess CIS was $3.6 million and $4.0 million as of August 4, 2018 and February 3, 2018, respectively. |
Accounts Receivable |
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Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounts Receivable | Accounts Receivable Accounts receivable is summarized as follows (in thousands):
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 |
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Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventories | Inventories Inventories consist of the following (in thousands):
The above balances include an allowance to write down inventories to the lower of cost or net realizable value of $27.5 million and $29.9 million as of August 4, 2018 and February 3, 2018, respectively. |
Income Taxes |
6 Months Ended |
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Aug. 04, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes 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 24.0% for the six months ended August 4, 2018, compared to negative 1,706.1% for the six months ended July 29, 2017. The improvement in the effective income tax rate during the six months ended August 4, 2018 was due primarily to lower losses in jurisdictions which the Company has valuation allowances and, to a lesser extent, the reversal of a valuation allowance on certain deferred taxes and the favorable impact from the enactment of the 2017 Tax Cuts and Jobs Act in the U.S. (referred to herein as the “Tax Reform”). In December 2017, the U.S. government enacted the Tax Reform, which significantly changed the U.S. corporate income tax laws, including lowering the U.S. federal corporate income tax rate from 35% to 21% and requiring a one-time mandatory transition tax on accumulated foreign earnings. The Tax Reform also establishes new tax laws that are effective for calendar 2018, including but not limited to (i) a new provision designed to tax global intangible low-taxed income (“GILTI”), (ii) a general elimination of U.S. federal income taxes on dividends from foreign subsidiaries, (iii) a limitation on deductible interest expense and (iv) limitations on the deductibility of certain executive compensation. The income tax payable related to the transition tax is due over an eight-year period beginning in calendar 2018. The Company included $0.4 million and $17.7 million related to the transition tax in accrued expenses and other long-term liabilities in its condensed consolidated balance sheets as of August 4, 2018, respectively. The Company included $1.9 million and $17.7 million related to the transition tax in accrued expenses and other long-term liabilities in its condensed consolidated balance sheets as of February 3, 2018, respectively. The Securities and Exchange Commission (“SEC”) issued authoritative guidance which addresses accounting for the impact of the Tax Reform. This guidance provides a measurement period, which should not extend beyond one year from the enactment date, during which the Company may finalize the accounting for the impacts of the Tax Reform, and allows for the Company to record provisional estimates of such amounts. Based on the Company’s interpretation of the Tax Reform, reasonable estimates were made to record provisional adjustments during the fourth quarter of fiscal 2018. These estimates may change, and the Company will continue to refine such amounts within the measurement period allowed. The Company continues to analyze the provisions of the Tax Reform, including but not limited to, the creation of a new minimum tax called the base erosion anti-abuse tax; a new provision that taxes U.S. allocated expenses (e.g. interest and general administrative expenses) as well as certain GILTI from foreign operations; a general elimination of U.S. federal income taxes on dividends from foreign subsidiaries; a new limitation on deductible interest expense; and limitations on the deductibility of certain employee compensation. Under GAAP, companies are allowed to make an accounting policy election to either treat taxes resulting from GILTI as a current-period expense when they are incurred or factor such amounts into the measurement of deferred taxes. The Company has not completed its analysis of the effects of the GILTI provisions and will further consider the accounting policy election within the measurement period allowed. From time-to-time, the Company is subject to routine income tax audits on various tax matters around the world in the ordinary course of business. As of August 4, 2018, several income tax audits were underway for various periods in multiple jurisdictions. The Company accrues an amount for its estimate of additional income tax liability which the Company, more likely than not, will incur as a result of the ultimate resolution of income tax audits (“uncertain tax positions”). The Company reviews and updates the estimates used in the accrual for uncertain tax positions as more definitive information becomes available from taxing authorities, upon completion of tax audits, 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 $18.9 million and $19.0 million as of August 4, 2018 and February 3, 2018, respectively. |
Segment Information |
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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, net gains (losses) from lease terminations, asset impairment charges and restructuring 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 North and Central America and the Company’s retail operations in South America. 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, net gains (losses) on lease terminations, asset impairment charges and restructuring charges. 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 and six months ended August 4, 2018 and July 29, 2017 (in thousands):
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):
Due to the seasonal nature of the Company’s business segments, the above net revenue and operating results are not necessarily indicative of the results that may be expected for the full fiscal year. |
Borrowings and Capital Lease Obligations |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Borrowings and Capital Lease Obligations | Borrowings and Capital Lease Obligations Borrowings and capital lease obligations are summarized as follows (in thousands):
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 August 4, 2018, outstanding borrowings under the Mortgage Debt, net of debt issuance costs of $0.1 million, were $20.0 million. At February 3, 2018, outstanding borrowings under the Mortgage Debt, net of debt issuance costs of $0.1 million, were $20.3 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 and short term investment balances 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 asset for each of the periods ended August 4, 2018 and February 3, 2018 was approximately $1.5 million. Capital Lease Obligations During fiscal 2018, the Company began the relocation of its European distribution center to the Netherlands. As a result, the Company entered into a capital lease of $17.0 million for equipment used in the new facility. The capital lease primarily provides for monthly minimum lease payments through May 2027 with an effective interest rate of approximately 6%. As of August 4, 2018 and February 3, 2018, the capital lease obligation was $15.4 million and $17.3 million, respectively. The Company also has smaller capital leases related primarily to computer hardware and software. As of August 4, 2018 and February 3, 2018, these capital lease obligations totaled $2.3 million and $1.3 million, respectively. Credit Facilities On June 23, 2015, the Company entered into a five-year senior secured asset-based revolving credit facility with Bank of America, N.A. and the other lenders party thereto (the “Credit Facility”). The Credit Facility provides for a borrowing capacity in an amount up to $150 million, including a Canadian sub-facility up to $50 million, subject to a borrowing base. Based on applicable accounts receivable, inventory, eligible cash balances and relevant covenant restrictions as of August 4, 2018, the Company could have borrowed up to $104 million under the Credit Facility. The Credit Facility has an option to expand the borrowing capacity by up to $150 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 0.25% to 0.75%) or at LIBOR plus an applicable margin (varying from 1.25% to 1.75%). 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 0.25% to 0.75%) or at the Canadian BA rate plus an applicable margin (varying from 1.25% to 1.75%). The Canadian prime rate is based on the greater of (i) the Canadian prime rate, (ii) the Bank of Canada overnight rate, plus 0.5%, and (iii) the Canadian BA rate for a one month interest period, plus 1.0%. 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 August 4, 2018, the Company had $1.6 million in outstanding standby letters of credit, no outstanding documentary letters of credit and no 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 uncommitted borrowing agreements, primarily for working capital purposes, with various banks in Europe. The majority of the borrowings under these agreements are secured by specific accounts receivable balances. Based on the applicable accounts receivable balances as of August 4, 2018, the Company could have borrowed or entered into documentary letters of credit totaling up to $83.7 million under these agreements. As of August 4, 2018, the Company had no outstanding borrowings or outstanding documentary letters of credit under these agreements. The agreements are denominated primarily in euros and provide for annual interest rates ranging from 0.5% to 4.6%. The maturities of any short-term borrowings under these arrangements are generally linked to the credit terms of the underlying accounts receivable that secure the borrowings. With the exception of one facility for up to $40.5 million that has a minimum net equity requirement, there are no other financial ratio covenants. Other From time-to-time, the Company will obtain other financing in foreign countries for working capital to finance its local operations. |
Share-Based Compensation |
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Disclosure of Compensation Related Costs, Share-based Payments [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 and six months ended August 4, 2018 and July 29, 2017 (in thousands):
Unrecognized compensation cost related to nonvested stock options and nonvested stock awards/units totaled approximately $4.8 million and $44.5 million, respectively, as of August 4, 2018. This cost is expected to be recognized over a weighted average period of 1.7 years. The weighted average grant date fair value of stock options granted was $5.89 and $1.57 during the six months ended August 4, 2018 and July 29, 2017, respectively. Grants On June 25, 2018, the Company granted select key management 619,578 nonvested stock units which are subject to certain performance-based vesting or market-based vesting conditions. On April 28, 2017, the Company granted select key management 1,056,042 nonvested stock units which are subject to certain performance-based vesting or market-based vesting conditions. Annual Grants On March 30, 2018, the Company made an annual grant of 431,371 stock options and 490,528 nonvested stock awards/units to its employees. On March 29, 2017, the Company made an annual grant of 1,283,175 stock options and 707,675 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 six months ended August 4, 2018:
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 six months ended August 4, 2018:
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Related Party Transactions |
6 Months Ended |
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Aug. 04, 2018 | |
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 August 4, 2018 with expiration or option exercise dates ranging from calendar years 2018 to 2020. Aggregate rent, common area maintenance charges and property tax expense recorded under these four related party leases were approximately $2.5 million for each of the six months ended August 4, 2018 and July 29, 2017. 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 six months ended August 4, 2018 and July 29, 2017 were approximately $0.8 million and $0.4 million, respectively. 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 3, 2018. |
Commitments and Contingencies |
6 Months Ended |
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Aug. 04, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Leases The Company 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 October 2037. Some of these leases require the Company to make periodic payments for property taxes, utilities and common area operating expenses. Certain retail store leases provide for rents based upon the minimum annual rental amount and a percentage of annual sales volume, generally ranging from 4% to 20%, when specific sales volumes are exceeded. The Company’s retail concession leases also provide for rents primarily based upon a percentage of annual sales volume which average approximately 35% of annual sales volume. Some leases include lease incentives, rent abatements and fixed rent escalations, which are amortized and recorded over the initial lease term on a straight-line basis. The Company also leases some of its equipment under operating lease agreements expiring at various dates through June 2023. As discussed in further detail in Note 9, the Company leases equipment as well as computer hardware and software under capital lease obligations. Investment Commitments As of August 4, 2018, the Company had an unfunded commitment to invest €3.6 million ($4.2 million) in a private equity fund. Refer to Note 14 for further information. Legal 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 or results of operations. 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. On May 6, 2009, Gucci America, Inc. filed a complaint in the U.S. District Court for the Southern District of New York against Guess?, Inc. and certain third party licensees for the Company asserting, among other things, trademark and trade dress law violations and unfair competition. The complaint sought injunctive relief, compensatory damages, including treble damages, and certain other relief. Complaints similar to those in the above action were subsequently filed by Gucci entities against the Company and certain of its subsidiaries in the Court of Milan, Italy, the Intermediate People’s Court of Nanjing, China and the Court of Paris, France. The three-week bench trial in the U.S. matter concluded on April 19, 2012, with the court issuing a preliminary ruling on May 21, 2012 and a final ruling on July 19, 2012. Although the plaintiff was seeking compensation in the U.S. matter in the form of damages of $26 million and an accounting of profits of $99 million, the final ruling provided for monetary damages of $2.3 million against the Company and $2.3 million against certain of its licensees. The court also granted narrow injunctions in favor of the plaintiff for certain of the claimed infringements. On August 20, 2012, the appeal period expired without any party having filed an appeal, rendering the judgment final. On May 2, 2013, the Court of Milan ruled in favor of the Company in the Milan, Italy matter. In the ruling, the Court rejected all of the plaintiff’s claims and ordered the cancellation of three of the plaintiff’s Italian and four of the plaintiff’s European Community trademark registrations. On June 10, 2013, the plaintiff appealed the Court’s ruling in the Milan matter. On September 15, 2014, the Court of Appeal of Milan affirmed the majority of the lower Court’s ruling in favor of the Company, but overturned the lower Court’s finding with respect to an unfair competition claim. That portion of the matter moved to a damages phase based on the ruling. On October 16, 2015, the plaintiff appealed the remainder of the Court of Appeal of Milan’s ruling in favor of the Company to the Italian Supreme Court of Cassation. In the China matter, the Intermediate People’s Court of Nanjing, China issued a ruling on November 8, 2013 granting an injunction in favor of the plaintiff for certain of the claimed infringements on handbags and small leather goods and awarding the plaintiff statutory damages in the amount of approximately $80,000. The Company strongly disagreed with the Court’s decision and appealed the ruling. On August 31, 2016, the Court of Appeal for the China matter issued a decision in favor of the Company, rejecting all of the plaintiff’s claims. In March 2017, the plaintiff petitioned the China Supreme Court for a retrial of the matter. On January 30, 2015, the Court of Paris ruled in favor of the Company in the France matter, rejecting all of the plaintiff’s claims and partially canceling two of the plaintiff’s community trademark registrations and one of the plaintiff’s international trademark registrations. On February 17, 2015, the plaintiff appealed the Court of Paris’ ruling. In April 2018, the parties entered into an agreement to settle all pending worldwide intellectual property litigation and trademark office matters between the parties and their subsidiaries, including the previously active litigation matters in Italy, China and France. As part of the settlement, the parties agreed on the use of various design elements by each party on a go-forward basis. The settlement did not have a significant impact on the Company’s financial results, and the terms of the settlement are not expected to have a negative impact on the Company’s business operations going forward. 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 ($11.4 million), including potential penalties and interest. The Company strongly disagrees with the positions that the ICA has taken and therefore filed appeals with the Milan First Degree Tax Court (“MFDTC”). In May 2015, the MFDTC issued a judgment in favor of the Company in relation to the first set of appeals (covering the period through September 2010) and canceled the related assessments totaling €1.7 million ($2.0 million). In November 2015, the ICA notified the Company of its intent to appeal this first MFDTC judgment. During fiscal 2017, the Appeals Court ruled in favor of the Company and rejected the appeal by the ICA on the first MFDTC judgment. The ICA has appealed the majority of these to the Italian Supreme Court. During fiscal 2017, the MFDTC also issued judgments in favor of the Company in relation to the second through seventh set of appeals (covering the period from October 2010 through December 2012) and canceled the related assessments totaling €8.1 million ($9.4 million). Subsequently, the Italian Customs Agency has appealed the majority of these favorable MFDTC judgments, as well as certain of the Appeals Court judgments. In April 2018, a different judge within the Appeals Court ruled in favor of the ICA with respect to a portion of the outstanding appeals (covering the period from October through December 2010) totaling €1.2 million ($1.4 million). The Company believes that this recent 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. In July 2018, a different section of the Appeals Court ruled in favor of the Company and rejected the appeals by the ICA with respect to a portion of the outstanding appeals (covering the periods from January through June 2012 and August through December 2012) totaling €3.0 million ($3.4 million). 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 or results of operations. On June 6, 2017, the European Commission notified the Company that it had initiated proceedings to investigate whether certain of the Company’s practices and agreements concerning the distribution of apparel and accessories within the European Union breach European Union competition rules related to cross-border transactions, internet sales limitations and resale price restrictions. The Company has cooperated and plans to continue to cooperate with the European Commission, including through responses to requests for information and through changes to certain business practices and agreements, as appropriate. Depending on the outcome of the proceedings, a broad range of remedies is potentially available to the European Commission, including imposing a fine and/or injunctive relief prohibiting or restricting certain business practices. However, the Company does not currently believe that any changes to its business practices or agreements made in connection with these proceedings will have a material impact on its ongoing business operations within the European Union. As of November 6, 2017, the Company and the European Commission agreed to begin a settlement discussion process to determine if the parties can mutually agree on an outcome of the proceedings. Those discussions are still ongoing. To the extent the Company and the European Commission are able to reach an agreement, such agreement could occur as early as during fiscal 2019, although any resolution may be delayed due to the inherent unpredictability of the proceedings. Although it is currently not possible to assess the impact any settlement or other conclusion may have on our consolidated financial statements because the process is still ongoing, it is possible that the result could have a material adverse effect on our financial statements in the applicable reporting period. |
Defined Benefit Plans |
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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 $64.3 million and $64.5 million as of August 4, 2018 and February 3, 2018, 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 of $1.7 million and $0.7 million in other income during the three and six months ended August 4, 2018, respectively, and unrealized gains of $1.9 million and $3.8 million in other income during the three and six months ended July 29, 2017, respectively. The projected benefit obligation was $54.9 million and $54.8 million as of August 4, 2018 and February 3, 2018, 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 $0.4 million and $0.8 million were made during the three and six months ended August 4, 2018, respectively. SERP benefit payments of $0.4 million and $0.8 million were made during the three and six months ended July 29, 2017, 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 August 4, 2018 and February 3, 2018, the foreign pension plans had a total projected benefit obligation of $27.5 million and $26.4 million, respectively, and plan assets held in independent investment fiduciaries of $22.2 million and $21.4 million, respectively. The net liability of $5.3 million and $5.0 million was included in other long-term liabilities in the Company’s condensed consolidated balance sheets as of August 4, 2018 and February 3, 2018, respectively. The components of net periodic defined benefit pension cost for the three and six months ended August 4, 2018 and July 29, 2017 related to the Company’s defined benefit plans are as follows (in thousands):
During the first quarter of fiscal 2019, the Company adopted new authoritative guidance which requires that the non-service components of net periodic defined benefit pension cost be presented outside of earnings (loss) from operations. The Company adopted this guidance on a retrospective basis and, as a result, reclassified approximately $0.5 million and $1.1 million from SG&A expenses to other income (expense) for the three and six months ended July 29, 2017, respectively. |
Fair Value Measurements |
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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 August 4, 2018 and February 3, 2018 (in thousands):
There were no transfers of financial instruments between the three levels of fair value hierarchy during the six months ended August 4, 2018 or during the year ended February 3, 2018. Foreign exchange currency contracts are entered into by the Company principally 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. During fiscal 2018, the Company invested €0.5 million ($0.5 million) in a private equity fund. During the six months ended August 4, 2018, the Company made additional investments totaling €0.9 million ($1.1 million). 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 August 4, 2018, the Company recorded an immaterial unrealized gain as a result of changes in the value of the private equity investment. During the six months ended August 4, 2018, the Company recorded an unrealized loss of €0.1 million ($0.2 million) in other expense. As of August 4, 2018 and February 3, 2018, the Company included €1.2 million ($1.4 million) and €0.5 million ($0.6 million), respectively, in other assets in the Company’s condensed consolidated balance sheet related to this investment. As of August 4, 2018, the Company had an unfunded commitment to invest an additional €3.6 million ($4.2 million) in the private equity fund. 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. 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 August 4, 2018 and February 3, 2018, the carrying value of all financial instruments was not materially different from fair value, as the interest rates on the Company’s debt approximated rates currently available to the Company. Long-Lived Assets Long-lived assets, such as property and equipment, and purchased intangibles subject to amortization, 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 and certain long-term security deposits and lease acquisition costs. 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, an impairment charge is recognized in the amount by which the carrying amount of the asset exceeds the estimated fair value, which is determined based on discounted future cash flows. 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. The estimated cash flows used for this nonrecurring fair value measurement are considered a Level 3 input as defined above. 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 $3.0 million and $3.7 million during the three and six months ended August 4, 2018, respectively, and $1.2 million and $4.0 million during the three and six months ended July 29, 2017, respectively. The asset impairment charges related primarily to the impairment of certain retail locations in Europe and North America resulting from under-performance and expected store closures. |
Derivative Financial Instruments |
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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 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. 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 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 August 4, 2018, 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 also hedges 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 also has 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 August 4, 2018 and February 3, 2018 is as follows (in thousands):
Derivatives Designated as Hedging Instruments Foreign Exchange Currency Contracts Designated as Cash Flow Hedges During the six months ended August 4, 2018, the Company purchased U.S. dollar forward contracts in Europe totaling US$21.6 million that were designated as cash flow hedges. As of August 4, 2018, the Company had forward contracts outstanding for its European and Canadian operations of US$103.7 million and US$17.4 million, respectively, to hedge forecasted merchandise purchases, which are expected to mature over the next 12 months. As of August 4, 2018, accumulated other comprehensive income (loss) related to foreign exchange currency contracts included a net unrealized loss of approximately $1.3 million, net of tax, of which $2.5 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 3, 2018, the Company had forward contracts outstanding for its European and Canadian operations of US$145.8 million and US$38.7 million, respectively, 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 debt. This interest rate swap agreement matures in January 2026 and converts the nature of the Company’s real estate secured term loan from LIBOR floating-rate debt to fixed-rate debt, resulting in a swap fixed rate of approximately 3.06%. As of August 4, 2018, accumulated other comprehensive income (loss) related to the interest rate swap agreement included a net unrealized gain of approximately $1.2 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 earnings (loss) for the three and six months ended August 4, 2018 and July 29, 2017 (in thousands):
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The following table summarizes net after-tax derivative activity recorded in accumulated other comprehensive income (loss) (in thousands):
Foreign Exchange Currency Contracts Not Designated as Hedging Instruments As of August 4, 2018, the Company had euro foreign exchange currency contracts to purchase US$38.0 million expected to mature over the next nine months and Canadian dollar foreign exchange currency contracts to purchase US$7.7 million expected to mature over the next five months. The following table summarizes the gains (losses) before taxes recognized on the derivative instruments not designated as hedging instruments in other income (expense) for the three and six months ended August 4, 2018 and July 29, 2017 (in thousands):
At February 3, 2018, the Company had euro foreign exchange currency contracts to purchase US$68.2 million and Canadian dollar foreign exchange currency contracts to purchase US$17.6 million. |
Subsequent Events |
6 Months Ended |
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Aug. 04, 2018 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events Dividends On August 29, 2018, the Company announced a regular quarterly cash dividend of $0.225 per share on the Company’s common stock. The cash dividend will be paid on September 28, 2018 to shareholders of record as of the close of business on September 12, 2018. |
Basis of Presentation and New Accounting Guidance (Policies) |
6 Months Ended |
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Aug. 04, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Reclassifications | Reclassifications The Company has made certain reclassifications to prior year amounts to conform to the current period presentation within the accompanying notes to the condensed consolidated financial statements. |
New Accounting Guidance | New Accounting Guidance Changes in Accounting Policies In May 2014, the Financial Accounting Standards Board (“FASB”) issued a comprehensive new revenue recognition standard which superseded previous existing revenue recognition guidance. The standard is intended to clarify the principles of recognizing revenue and create common revenue recognition guidance between GAAP and International Financial Reporting Standards. The standard also requires expanded disclosures surrounding revenue recognition. During fiscal 2017, the FASB issued additional clarification guidance on the new revenue recognition standard which also included certain scope improvements and practical expedients. The Company adopted this guidance (including clarification guidance issued) effective February 4, 2018 using the modified retrospective method and, as a result, recorded a cumulative adjustment to increase retained earnings by approximately $5.8 million, net of taxes. The adjustment related primarily to changes in the presentation of advertising contributions received from the Company’s licensees and the related advertising expenditures incurred by the Company. Under previous guidance, the Company recorded advertising contributions received from its licensees and the related advertising expenditures incurred by the Company on a net basis in its consolidated balance sheet. To the extent that the advertising contributions exceeded the Company’s advertising expenditures for its licensees, the excess contribution was treated as a deferred liability and was included in accrued expenses in the Company’s consolidated balance sheet. Under the new revenue recognition standard, advertising contributions and related advertising expenditures related to the Company’s licensing business are recorded on a gross basis in the Company’s condensed consolidated statements of income (loss). This change resulted in an increase to net revenue and selling, general, and administrative (“SG&A”) expenses of $2.1 million and $1.5 million, respectively, during the three months ended August 4, 2018 compared to the same prior-year period. During the six months ended August 4, 2018, this change resulted in an increase to net revenue and SG&A expenses of $4.4 million and $4.8 million, respectively, compared to the same prior-year period. Other minor differences related to the timing of revenue recognition from the Company’s e-commerce operations, which are now recognized when merchandise is transferred to a common carrier rather than upon receipt by the customer, and a minimal change in the valuation of the amount that is deferred related to points earned under the Company’s loyalty programs. Additionally, allowances for wholesale sales returns and wholesale markdowns are now presented as accrued expenses rather than as reductions to accounts receivable and the estimated cost associated with the allowance for sales returns is presented within other current assets rather than included in inventories in the Company’s consolidated balance sheet. Refer to Note 2 for the Company’s expanded disclosures on revenue recognition. In January 2016, the FASB issued authoritative guidance which requires equity investments not accounted for under the equity method of accounting or consolidation accounting to be measured at fair value, with subsequent changes in fair value recognized in net income. In February 2018, the FASB issued additional clarification guidance which made targeted improvements to address certain aspects of recognition, measurement, presentation and disclosure requirements for financial instruments. The Company adopted this guidance (including the clarification guidance) effective February 4, 2018. The adoption of this guidance did not result in a cumulative-effect adjustment as of the beginning of the current year and did not have a material impact on the Company’s consolidated financial statements or related disclosures. In October 2016, the FASB issued authoritative guidance which amends the accounting for income taxes on intra-entity transfers of assets other than inventory. This guidance requires that entities recognize the income tax consequences of an intra-entity transfer of an asset, other than inventory, when the transfer occurs. The income tax consequences on intra-entity transfers of inventory will continue to be deferred until the inventory has been sold to a third party. The Company adopted this guidance effective February 4, 2018. The adoption of this guidance did not have an impact on the Company’s consolidated financial statements or related disclosures. In March 2017, the FASB issued authoritative guidance related to the presentation of net periodic pension cost in the income statement. This guidance requires that the service cost component of net periodic pension cost be presented in the same line as other compensation costs arising from services rendered by the employees during the period. The other non-service components of net periodic pension cost are required to be presented in the income statement separately from the service cost component and outside of earnings from operations. This guidance also allows for the service cost component to be eligible for capitalization when applicable. The Company adopted this guidance effective February 4, 2018 on a retrospective basis for the presentation of the service cost component and other non-service components of net periodic pension cost in the income statement and on a prospective basis for capitalization of the service cost component. As a result, the Company reclassified $0.5 million and $1.1 million from SG&A expenses to other income (expense) during the three and six months ended July 29, 2017, respectively, which resulted in a related improvement in operating earnings (loss) during each of the respective periods. Other than the change in presentation of other non-service components of net periodic pension cost within the Company’s consolidated statements of income (loss), the adoption of this guidance did not have an impact on the Company’s consolidated financial statements and related disclosures. In May 2017, the FASB issued authoritative guidance that provides clarification on accounting for modifications in share-based payment awards. The Company adopted this guidance effective February 4, 2018. The adoption of this guidance did not have an impact on the Company’s consolidated financial statements or related disclosures. In June 2018, the FASB issued authoritative guidance that expanded the scope of ASC Topic 718, Compensation - Stock Compensation, to include nonemployee share-based payment transactions. The Company early adopted this guidance during the second quarter of fiscal 2019. The adoption of this guidance did not have a material impact on the Company’s consolidated financial statements or related disclosures. Recently Issued Accounting Guidance In February 2016, the FASB issued a comprehensive new lease standard which will supersede previous lease guidance. The standard requires a lessee to recognize assets and liabilities related to long-term leases that were classified as operating leases under previous guidance in its balance sheet. An asset would be recognized related to the right to use the underlying asset and a liability would be recognized related to the obligation to make lease payments over the term of the lease. The standard also requires expanded disclosures surrounding leases. The standard (including clarification guidance issued during fiscal 2019) is effective for fiscal periods beginning after December 15, 2018, which will be the Company’s first quarter of fiscal 2020, with early adoption permitted. The Company has completed the design phase of its selected lease management system and is in the process of completing its inventory of its lease contracts as well as implementing processes and controls to enable the preparation of the required financial information for this standard. The Company will apply this guidance retrospectively at the beginning of the period of adoption through a cumulative-effect adjustment to retained earnings and expects that this guidance will result in material increases in assets and liabilities in its consolidated balance sheet as well as enhanced disclosures. In June 2016, the FASB issued authoritative guidance related to the measurement of credit losses on financial instruments. This guidance is effective for fiscal years beginning after December 15, 2019, which will be the Company’s first quarter of fiscal 2021. Early adoption is permitted for fiscal periods beginning after December 15, 2018, which will be the Company’s first quarter of fiscal 2020. The Company is currently evaluating the impact of the adoption of this standard on its consolidated financial statements and related disclosures. In January 2017, the FASB issued authoritative guidance to simplify the testing for goodwill impairment by removing step two from the goodwill testing. Under current guidance, if the fair value of a reporting unit is lower than its carrying amount (step one), an entity would calculate an impairment charge by comparing the implied fair value of goodwill with its carrying amount (step two). The implied fair value of goodwill was calculated by deducting the fair value of the assets and liabilities of the respective reporting unit from the reporting unit’s fair value as determined under step one. This guidance instead provides that an impairment charge should be recognized based on the difference between a reporting unit’s fair value and its carrying value. This guidance also does not require a qualitative test to be performed on reporting units with zero or negative carrying amounts. However, entities need to disclose any reporting units with zero or negative carrying amounts that have goodwill and the amount of goodwill allocated to each. This guidance is effective for fiscal years beginning after December 15, 2019, which will be the Company’s first quarter of fiscal 2021, with early adoption permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The adoption of this guidance is not expected to have a material impact on the Company’s consolidated financial statements or related disclosures. In August 2017, the FASB issued authoritative guidance to better align the results of hedge accounting with an entity’s risk management activities. This guidance updates the designation and measurement guidance for qualifying hedging relationships and the presentation of hedge results in the financial statements. This guidance is effective for fiscal years beginning after December 15, 2018, which will be the Company’s first quarter of fiscal 2020, and requires a cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption, with early adoption permitted. The updated presentation and disclosure guidance is required only on a prospective basis. The adoption of this guidance is not expected to 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 in ASC 820, Fair Value Measurement. This guidance is effective for fiscal years beginning after December 15, 2019, which will be the Company’s first quarter of fiscal 2021, with early adoption permitted. The Company is currently evaluating the impact of the adoption of this standard on its related disclosures. 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 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 guidance provides criteria for determining which implementation costs to capitalize as an asset related to the service contract and which costs to expense. The capitalized implementation costs are required to be expensed over the term of the hosting arrangement. The guidance also clarifies the presentation requirements for reporting such costs in the entity’s financial statements. This guidance is effective for fiscal years beginning after December 15, 2019, which will be the Company’s first quarter of fiscal 2021, 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. |
Revenue Recognition | Products Transferred at a Point in Time 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. For the Company’s brick-and-mortar retail stores and concessions, revenue is typically recognized at the point of sale. Revenue generated from the Company’s e-commerce sites is recognized when merchandise is transferred to a common carrier. This is a change compared to the Company’s treatment under previous guidance where revenue from the Company’s e-commerce sites was recognized based on the estimated customer receipt date. This change had an immaterial impact on revenue for the three and six months ended August 4, 2018. Revenue generated from the Company’s wholesale distribution channel is recognized when control transfers to the customer, which generally occurs upon shipment. The amount of revenue that is recognized is based on the transaction price, which represents the invoiced amount and includes estimates of variable consideration such as allowances for sales returns, markdowns and loyalty award obligations, where applicable. The amount of variable consideration included in the transaction price may be constrained and is included only to the extent that it is probable that a significant reversal in the amount of the cumulative revenue recognized under the contract will not occur in a future period. The Company accepts payments at its brick-and-mortar retail locations and its e-commerce sites in the form of cash, credit cards, gift cards and loyalty points, where applicable. Payment terms, typically less than one year, are offered to the Company’s wholesale customers and do not include a significant financing component. The Company extends credit to wholesale customers based upon an evaluation of the customer’s financial condition and credit history and generally requires no collateral but does obtain credit insurance when considered appropriate. As of August 4, 2018, approximately 52% of the Company’s total net trade receivables and 62% 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. The Company maintains allowances for doubtful accounts for estimated losses that result from the inability of its wholesale customers 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 economic conditions and whether the Company has obtained credit insurance or other guarantees. Management performs regular evaluations concerning the ability of its customers to satisfy their obligations and records a provision for doubtful accounts based on these evaluations. The Company’s credit losses for the periods presented were immaterial and did not significantly exceed management’s estimates. Refer to Note 5 for further information regarding the Company’s allowance for doubtful accounts. Shipping and handling costs associated with outbound freight incurred to transfer a product to a customer are accounted for as fulfillment costs and are included in SG&A expenses. Sales and usage-based taxes collected from customers and remitted directly to governmental authorities are excluded from net revenues. This is consistent with the presentation of such amounts in previous years. The Company does not have significant contract balances related to its direct-to-consumer or wholesale distribution channels other than the allowance for sales returns and markdowns as well as liabilities related to its gift cards and loyalty programs. The Company also does not have significant contract acquisition costs related to its direct-to-consumer or wholesale distribution channels. Sales Return Allowances The Company accrues for estimated sales returns in the period in which the related revenue is recognized. To recognize the financial impact of sales returns, the Company estimates the amount of goods that will be returned based on historical experience and current trends and reduces sales and cost of sales accordingly. The Company’s policy allows retail customers in certain regions a grace period to return merchandise following the date of sale. Substantially all of these returns are considered to be resalable at a price that exceeds the cost of the merchandise. The Company adopted the new revenue recognition standard effective as of the first quarter of fiscal 2019, and accordingly, has included the allowance for sales returns in accrued expenses and the estimated cost associated with such sales returns within other current assets in its condensed consolidated balance sheet. Prior to the adoption of the new revenue recognition standard, the Company recorded the allowance for wholesale sales returns against accounts receivable and the estimated cost of inventory associated with the allowance for sales returns in inventories. The allowance for retail sales returns was included in accrued expenses which is consistent with the current presentation. As of August 4, 2018, the Company included $27.0 million in accrued expenses related to the allowance for sales returns and $11.6 million in other current assets related to the estimated cost of such sales returns. As of February 3, 2018, the Company included $25.0 million and $2.9 million in accounts receivable and accrued expenses, respectively, related to the allowance for sales returns and $11.9 million in inventories related to the estimated cost of such sales returns. Markdown Allowances Costs associated with customer markdowns are recorded as a reduction to revenues and any amounts unapplied to existing receivables are included in accrued expenses. These markdown allowances resulted from seasonal negotiations with the Company’s wholesale customers, as well as historical trends and the evaluation of the impact of current economic conditions. The Company adopted the new revenue recognition standard effective as of the first quarter of fiscal 2019, and accordingly, has included the allowance for markdowns in accrued expenses in its condensed consolidated balance sheet. As of August 4, 2018, the Company included $10.8 million in accrued expenses related to the allowance for markdowns. As of February 3, 2018, the Company included $10.8 million in accounts receivable related to the allowance for markdowns. Gift Cards Gift card breakage is income recognized due to the non-redemption of a portion of gift cards sold by the Company for which a liability was recorded in prior periods. Gifts cards are mainly used in the U.S. and Canada. The Company issues its gift cards in the U.S. and Canada through one of its subsidiaries and is not required by law to escheat the value of unredeemed gift cards to the state in which the subsidiary is domiciled. Estimated breakage amounts are accounted for under the redemption recognition method and are classified as additional net revenues as the gift cards are redeemed. The Company’s gift card breakage rate is approximately 6.1% and 5.1% for the U.S. retail business and Canadian retail business, respectively, based upon historical redemption patterns, which represents the cumulative estimated amount of gift card breakage from the inception of the electronic gift card program in late 2002. Based upon historical redemption trends, the Company recognizes estimated gift card breakage as a component of net revenue in proportion to actual gift card redemptions, over the period that remaining gift card values are redeemed. Any future revisions to the estimated breakage rate may result in changes in the amount of breakage income recognized in future periods. There have been no changes to the Company’s accounting for gift card breakage upon adoption of the new revenue recognition standard effective as of the first quarter of fiscal 2019. During the three and six months ended August 4, 2018, the Company recognized $0.1 million and $0.2 million, respectively, of gift card breakage to revenue. During the three and six months ended July 29, 2017, the Company recognized $0.1 million and $0.2 million, respectively, of gift card breakage to revenue. As of August 4, 2018 and February 3, 2018, the Company included $4.6 million and $5.2 million in accrued expenses related to its gift card liability, respectively. Loyalty Programs The Company has customer loyalty programs in North America, Europe and Asia which cover all of its brands. Under certain of the programs, primarily in the U.S. and Canada, customers accumulate points based on purchase activity. Once a loyalty program member achieves a certain point level, the member earns awards that may only be redeemed for merchandise. Unredeemed points generally expire after six months without additional purchase activity and unredeemed awards generally expire after two months. Where applicable, the Company allocates a portion of the transaction price from sales in its direct-to-consumer channel to its loyalty program by using historical redemption rates to estimate the value of future award redemptions. This amount is accrued in current liabilities and recorded as a reduction of net revenue in the period which the related revenue is recognized. During the three months ended August 4, 2018, activity related to the Company’s loyalty programs had a minimal impact on net revenue. During the six months ended August 4, 2018, activity related to the Company’s loyalty programs decreased net revenue by $0.4 million. During the three and six months ended July 29, 2017, activity related to the Company’s loyalty programs increased net revenue by $0.2 million and $0.5 million, respectively. The aggregate dollar value of the loyalty program accruals included accrued expense was $4.4 million and $3.8 million as of August 4, 2018 and February 3, 2018, respectively. Future revisions to the estimated liability may result in changes to net revenue. Intellectual Property Transferred Over Time 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 typical license agreement requires that the licensee pay the Company the greater of a royalty based on a percentage of the licensee’s net sales of licensed products or a guaranteed annual minimum royalty that typically increases over the term of the license agreement. Generally, licensees are also required to make contributions to advertising funds, as a percentage of their sales, over the term of the licensing agreement, and may elect to make additional contributions to support specific brand-building initiatives. The Company recognizes revenue from sales-based royalty and advertising fund contributions when the related sales occur which is consistent with the timing of when the performance obligation is satisfied. The Company adopted the new revenue recognition standard effective as of the first quarter of fiscal 2019, and accordingly, has recorded advertising contributions in revenue on a gross basis separate from any related advertising expenditures made by the Company which are recorded in SG&A expenses in the Company’s condensed consolidated statements of income (loss). Prior to the adoption of the new revenue recognition standard, the Company recorded advertising contributions received from its licensees and the related advertising expenditures incurred by the Company on a net basis in its consolidated balance sheet. Under previous guidance, to the extent that the advertising contributions exceed the Company’s advertising expenditures for its licensees, the excess contribution was treated as a deferred liability and was included in accrued expenses in the Company’s condensed consolidated balance sheet. Refer to Note 1 for detail regarding the impact of this change on the Company’s condensed consolidated balance sheet and its condensed consolidated statements of income (loss) as a result of the adoption of the new revenue recognition standard. The Company records royalty and advertising payments received on the Company’s purchases of licensed product as a reduction of the cost of the licensed product. 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. Several of the Company’s key license agreements provide for specified, fixed payments over and above the normal, ongoing royalty payments in consideration of the grant of the license rights. These payments are recognized ratably as revenue over the term of the license agreement and do not include a significant financing component. 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 August 4, 2018, the Company had $7.3 million and $16.5 million of deferred royalties related to these upfront payments included in accrued expenses and other long-term liabilities, respectively. This compares to $6.8 million and $12.8 million of deferred royalties related to these upfront payments included in accrued expenses and other long-term liabilities, respectively, at February 3, 2018. During the three and six months ended August 4, 2018, the Company recognized $3.6 million and $6.9 million in net royalties related to the amortization of the deferred royalties, respectively. During the three and six months ended July 29, 2017, the Company recognized $3.0 million and $6.0 million in net royalties related to the amortization of the deferred royalties, respectively. Contract balances related to the Company’s licensing distribution channel consist primarily of royalty receivables and liabilities related to deferred royalties. |
Earnings (Loss) Per Share (Tables) |
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Computation of basic and diluted net earnings (loss) per common share attributable to common stockholders | The computation of basic and diluted net earnings (loss) per common share attributable to common stockholders is as follows (in thousands, except per share data):
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Stockholders' Equity and Redeemable Noncontrolling Interests (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Aug. 04, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stockholders' Equity and Redeemable Noncontrolling Interests [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reconciliation of common stock outstanding, treasury stock and the total carrying amount of total stockholders' equity, Guess, Inc. stockholders' equity and stockholders' equity attributable to nonredeemable and redeemable noncontrolling interests | A reconciliation of common stock outstanding, treasury stock and the total carrying amount of total stockholders’ equity, Guess?, Inc. stockholders’ equity and stockholders’ equity attributable to nonredeemable and redeemable noncontrolling interests for the fiscal year ended February 3, 2018 and six months ended August 4, 2018 is as follows (in thousands, except share data):
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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 and six months ended August 4, 2018 and July 29, 2017 are as follows (in thousands):
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Reclassifications out of accumulated other comprehensive income (loss) to net earnings (loss) | Details on reclassifications out of accumulated other comprehensive income (loss) to net earnings (loss) during the three and six months ended August 4, 2018 and July 29, 2017 are as follows (in thousands):
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Accounts Receivable (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Aug. 04, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of accounts receivable | Accounts receivable is summarized as follows (in thousands):
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Inventories (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Aug. 04, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of inventories | Inventories consist of the following (in thousands):
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Segment Information (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Aug. 04, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 and six months ended August 4, 2018 and July 29, 2017 (in thousands):
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Summary of net revenue by country | Net revenue is classified primarily based on the country where the Company’s customer is located (in thousands):
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Borrowings and Capital Lease Obligations (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Aug. 04, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of borrowings and capital lease obligations | Borrowings and capital lease obligations are summarized as follows (in thousands):
|
Share-Based Compensation (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Aug. 04, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [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 and six months ended August 4, 2018 and July 29, 2017 (in thousands):
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Schedule of activity for nonvested performance-based units | The following table summarizes the activity for nonvested performance-based units during the six months ended August 4, 2018:
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Schedule of activity for nonvested market-based units | The following table summarizes the activity for nonvested market-based units during the six months ended August 4, 2018:
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Defined Benefit Plans (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Aug. 04, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 and six months ended August 4, 2018 and July 29, 2017 related to the Company’s defined benefit plans are as follows (in thousands):
|
Fair Value Measurements (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Aug. 04, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 August 4, 2018 and February 3, 2018 (in thousands):
|
Derivative Financial Instruments (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Aug. 04, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 August 4, 2018 and February 3, 2018 is as follows (in thousands):
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Summary of gains (losses) before taxes recognized on the derivative instruments designated as cash flow hedges in OCI and net earnings (loss) | The following table summarizes the gains (losses) before taxes recognized on the derivative instruments designated as cash flow hedges in OCI and net earnings (loss) for the three and six months ended August 4, 2018 and July 29, 2017 (in thousands):
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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):
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Summary of gains (losses) before taxes recognized on the derivative instruments not designated as hedging instruments in other income (expense) | The following table summarizes the gains (losses) before taxes recognized on the derivative instruments not designated as hedging instruments in other income (expense) for the three and six months ended August 4, 2018 and July 29, 2017 (in thousands):
|
Basis of Presentation and New Accounting Guidance (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | 12 Months Ended | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Aug. 04, 2018 |
May 05, 2018 |
Jul. 29, 2017 |
Aug. 04, 2018 |
Jul. 29, 2017 |
Feb. 02, 2019 |
Feb. 03, 2018 |
Jan. 28, 2017 |
||||||||
Fiscal year | |||||||||||||||
Number of days in fiscal year | 371 days | 364 days | |||||||||||||
Net gains on lease terminations | |||||||||||||||
Net gains on lease terminations | $ 0 | $ 0 | $ (152) | $ 0 | |||||||||||
New accounting pronouncements and changes in accounting principles | |||||||||||||||
Cumulative adjustment from adoption of new accounting guidance | $ 5,829 | ||||||||||||||
Retained earnings | 1,105,173 | 1,105,173 | 1,132,173 | ||||||||||||
Net revenue | [1],[2] | 645,871 | 568,292 | 1,167,160 | 1,022,637 | ||||||||||
Selling, general and administrative expenses | 204,569 | 173,007 | 402,788 | 339,862 | |||||||||||
Other income (expense), net | 1,360 | (2,169) | (1,254) | (281) | |||||||||||
Operating earnings (loss) improvement | [1],[3] | 31,881 | 23,787 | 6,993 | (1,188) | ||||||||||
Accounting Standards Update 2017-07 | |||||||||||||||
New accounting pronouncements and changes in accounting principles | |||||||||||||||
Selling, general and administrative expenses | (500) | (1,100) | |||||||||||||
Other income (expense), net | (500) | (1,100) | |||||||||||||
Operating earnings (loss) improvement | $ 500 | $ 1,100 | |||||||||||||
Forecast | |||||||||||||||
Fiscal year | |||||||||||||||
Number of days in fiscal year | 364 days | ||||||||||||||
North America | |||||||||||||||
Net gains on lease terminations | |||||||||||||||
Net gains on lease terminations | $ (152) | (152) | |||||||||||||
Impact from adoption of new revenue recognition guidance | Accounting Standards Update 2014-09 | |||||||||||||||
New accounting pronouncements and changes in accounting principles | |||||||||||||||
Retained earnings | $ 5,829 | ||||||||||||||
Net revenue | 2,100 | 4,400 | |||||||||||||
Selling, general and administrative expenses | 1,500 | 4,800 | |||||||||||||
Operating earnings (loss) improvement | $ 600 | $ (400) | |||||||||||||
|
Earnings (Loss) Per Share (Details 2) - USD ($) |
3 Months Ended | 6 Months Ended | 12 Months Ended | ||||
---|---|---|---|---|---|---|---|
May 05, 2018 |
Feb. 03, 2018 |
Apr. 29, 2017 |
Aug. 04, 2018 |
Jul. 29, 2017 |
Feb. 03, 2018 |
Jun. 26, 2012 |
|
Share repurchase program | |||||||
Shares repurchased, aggregate cost | $ 17,587,000 | $ 56,159,000 | |||||
Share Repurchase Program | |||||||
Share repurchase program | |||||||
Value of common stock authorized to be repurchased | $ 500,000,000 | ||||||
Number of common stock repurchased (in shares) | 1,118,808 | 1,485,195 | 1,118,808 | 1,485,195 | |||
Shares repurchased, aggregate cost | $ 17,600,000 | $ 6,000,000 | $ 17,827,000 | $ 17,600,000 | $ 17,827,000 | ||
Value of common stock remaining to be repurchased | $ 374,600,000 |
Stockholders' Equity and Redeemable Noncontrolling Interests (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | 12 Months Ended | ||
---|---|---|---|---|---|
Aug. 04, 2018 |
Jul. 29, 2017 |
Aug. 04, 2018 |
Jul. 29, 2017 |
Feb. 03, 2018 |
|
Stockholders' equity reconciliation | |||||
Stock (in shares), beginning of the period | 81,371,118 | ||||
Stockholders' equity, balance at the beginning of the period | $ 933,475 | $ 980,994 | $ 980,994 | ||
Cumulative adjustment from adoption of new accounting guidance | 5,829 | ||||
Net earnings (loss) | $ 25,734 | $ 15,881 | 4,747 | $ (5,346) | (3,901) |
Foreign currency translation adjustment | (47,525) | 93,416 | |||
Gain (loss) on derivative financial instruments designated as cash flow hedges, net of income tax | 14,227 | (19,994) | |||
Actuarial valuation loss and related amortization, prior service credit amortization and foreign currency and other adjustments on defined benefit plans, net of income tax | 527 | (1,647) | |||
Issuance of common stock under stock compensation plans, net of tax effect | 4,169 | (1,257) | |||
Issuance of stock under Employee Stock Purchase Plan | 465 | 566 | |||
Share-based compensation | 7,989 | 18,852 | |||
Dividends | (37,166) | (76,048) | |||
Share repurchases | (17,587) | (56,159) | |||
Noncontrolling interest capital contribution | 11 | ||||
Noncontrolling interest capital distribution | $ (3,069) | $ (1,358) | |||
Stock (in shares), end of the period | 81,030,202 | 81,030,202 | 81,371,118 | ||
Stockholders' equity, balance at the end of the period | $ 866,081 | $ 866,081 | $ 933,475 | ||
Comprehensive income (loss), income tax effect | |||||
Gain (loss) on derivative financial instruments designated as cash flow hedges, tax effect | (2,130) | 2,738 | |||
Actuarial valuation loss and related amortization, prior service credit amortization and foreign currency and other adjustments on defined benefit plans, tax effect | $ (65) | $ 435 | |||
Common Stock | |||||
Stockholders' equity reconciliation | |||||
Stock (in shares), beginning of the period | 81,371,118 | 84,069,492 | 84,069,492 | ||
Issuance of common stock under stock compensation plans (in shares) | 749,349 | 1,113,713 | |||
Issuance of stock under Employee Stock Purchase Plan (in shares) | 28,543 | 54,300 | |||
Share repurchases (in shares) | (1,118,808) | (3,866,387) | |||
Stock (in shares), end of the period | 81,030,202 | 81,030,202 | 81,371,118 | ||
Treasury Stock | |||||
Stockholders' equity reconciliation | |||||
Stock (in shares), beginning of the period | 60,252,569 | 56,440,482 | 56,440,482 | ||
Issuance of stock under Employee Stock Purchase Plan (in shares) | (28,543) | (54,300) | |||
Share repurchases (in shares) | 1,118,808 | 3,866,387 | |||
Stock (in shares), end of the period | 61,342,834 | 61,342,834 | 60,252,569 | ||
Guess, Inc. Stockholders’ Equity | |||||
Stockholders' equity reconciliation | |||||
Stockholders' equity, balance at the beginning of the period | $ 916,819 | $ 969,222 | $ 969,222 | ||
Cumulative adjustment from adoption of new accounting guidance | 5,829 | ||||
Net earnings (loss) | 4,309 | (7,894) | |||
Foreign currency translation adjustment | (47,712) | 91,178 | |||
Gain (loss) on derivative financial instruments designated as cash flow hedges, net of income tax | 14,227 | (19,994) | |||
Actuarial valuation loss and related amortization, prior service credit amortization and foreign currency and other adjustments on defined benefit plans, net of income tax | 527 | (1,647) | |||
Issuance of common stock under stock compensation plans, net of tax effect | 4,169 | (1,257) | |||
Issuance of stock under Employee Stock Purchase Plan | 465 | 566 | |||
Share-based compensation | 7,989 | 18,852 | |||
Dividends | (37,166) | (76,048) | |||
Share repurchases | (17,587) | (56,159) | |||
Noncontrolling interest capital contribution | 0 | ||||
Noncontrolling interest capital distribution | 0 | 0 | |||
Stockholders' equity, balance at the end of the period | $ 851,869 | 851,869 | 916,819 | ||
Nonredeemable Noncontrolling Interests | |||||
Stockholders' equity reconciliation | |||||
Stockholders' equity, balance at the beginning of the period | 16,656 | $ 11,772 | 11,772 | ||
Cumulative adjustment from adoption of new accounting guidance | 0 | ||||
Net earnings (loss) | 438 | 3,993 | |||
Foreign currency translation adjustment | 187 | 2,238 | |||
Gain (loss) on derivative financial instruments designated as cash flow hedges, net of income tax | 0 | 0 | |||
Actuarial valuation loss and related amortization, prior service credit amortization and foreign currency and other adjustments on defined benefit plans, net of income tax | 0 | 0 | |||
Issuance of common stock under stock compensation plans, net of tax effect | 0 | 0 | |||
Issuance of stock under Employee Stock Purchase Plan | 0 | 0 | |||
Share-based compensation | 0 | 0 | |||
Dividends | 0 | 0 | |||
Share repurchases | 0 | 0 | |||
Noncontrolling interest capital contribution | 11 | ||||
Noncontrolling interest capital distribution | (3,069) | (1,358) | |||
Stockholders' equity, balance at the end of the period | $ 14,212 | $ 14,212 | $ 16,656 |
Stockholders' Equity and Redeemable Noncontrolling Interests (Details 2) - USD ($) $ in Thousands |
6 Months Ended | 12 Months Ended | |
---|---|---|---|
Aug. 04, 2018 |
Feb. 03, 2018 |
Aug. 04, 2018 |
|
Redeemable noncontrolling interests reconciliation | |||
Redeemable noncontrolling interests, carrying value at the beginning of the period | $ 5,590 | $ 4,452 | |
Redeemable noncontrolling interests, foreign currency translation adjustment | (639) | 187 | |
Redeemable noncontrolling interests, capital contribution | 951 | ||
Redeemable noncontrolling interests, carrying value at the end of the period | 4,951 | 5,590 | |
Redeemable noncontrolling interests put arrangements | |||
Redeemable noncontrolling interests | 5,590 | 4,452 | $ 4,951 |
Guess Brazil | |||
Redeemable noncontrolling interests reconciliation | |||
Redeemable noncontrolling interests, carrying value at the beginning of the period | 1,600 | ||
Redeemable noncontrolling interests, carrying value at the end of the period | $ 1,400 | 1,600 | |
Redeemable noncontrolling interests put arrangements | |||
Total outstanding equity interest in subsidiary covered by put arrangement (as a percent) | 40.00% | ||
Initial period put option can be exercised by noncontrolling owners | 6 years | ||
Period put option can be exercised by noncontrolling owners | 3 years | ||
Redeemable noncontrolling interests | $ 1,600 | 1,600 | $ 1,400 |
Guess CIS | |||
Redeemable noncontrolling interests reconciliation | |||
Redeemable noncontrolling interests, carrying value at the beginning of the period | 4,000 | ||
Redeemable noncontrolling interests, carrying value at the end of the period | $ 3,600 | 4,000 | |
Redeemable noncontrolling interests put arrangements | |||
Total outstanding equity interest in subsidiary covered by put arrangement (as a percent) | 30.00% | ||
Initial period put option can be exercised by noncontrolling owners | 5 years | ||
Redeemable noncontrolling interests | $ 4,000 | 4,000 | $ 3,600 |
Total cash contributions in the joint venture made by the Company and the noncontrolling interest holder | 3,200 | ||
Payments made by the Company related to its controlling interest in joint venture | $ 2,200 |
Stockholders' Equity and Redeemable Noncontrolling Interests (Details 3) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Aug. 04, 2018 |
Jul. 29, 2017 |
Aug. 04, 2018 |
Jul. 29, 2017 |
|
Accumulated other comprehensive income (loss), net of tax | ||||
Stockholders' equity, balance at the beginning of the period | $ 933,475 | $ 980,994 | ||
Gains (losses) arising during the period | $ (19,387) | $ 29,904 | (36,856) | 41,488 |
Reclassifications to net earnings (loss) for (gains) losses realized | 2,157 | (521) | 3,898 | (1,008) |
Net other comprehensive income (loss) | (17,230) | 29,383 | (32,958) | 40,480 |
Stockholders' equity, balance at the end of the period | 866,081 | 866,081 | ||
Foreign Currency Translation Adjustment | ||||
Accumulated other comprehensive income (loss), net of tax | ||||
Stockholders' equity, balance at the beginning of the period | (91,297) | (146,754) | (67,049) | (158,227) |
Gains (losses) arising during the period | (23,464) | 43,079 | (47,712) | 54,552 |
Reclassifications to net earnings (loss) for (gains) losses realized | 0 | 0 | 0 | 0 |
Net other comprehensive income (loss) | (23,464) | 43,079 | (47,712) | 54,552 |
Stockholders' equity, balance at the end of the period | (114,761) | (103,675) | (114,761) | (103,675) |
Derivative Financial Instruments Designated as Cash Flow Hedges | ||||
Accumulated other comprehensive income (loss), net of tax | ||||
Stockholders' equity, balance at the beginning of the period | (6,285) | 4,948 | (14,369) | 5,400 |
Gains (losses) arising during the period | 4,111 | (13,093) | 10,579 | (12,969) |
Reclassifications to net earnings (loss) for (gains) losses realized | 2,032 | (606) | 3,648 | (1,182) |
Net other comprehensive income (loss) | 6,143 | (13,699) | 14,227 | (14,151) |
Stockholders' equity, balance at the end of the period | (142) | (8,751) | (142) | (8,751) |
Defined Benefit Plans | ||||
Accumulated other comprehensive income (loss), net of tax | ||||
Stockholders' equity, balance at the beginning of the period | (11,208) | (8,486) | (11,644) | (8,562) |
Gains (losses) arising during the period | (34) | (82) | 277 | (95) |
Reclassifications to net earnings (loss) for (gains) losses realized | 125 | 85 | 250 | 174 |
Net other comprehensive income (loss) | 91 | 3 | 527 | 79 |
Stockholders' equity, balance at the end of the period | (11,117) | (8,483) | (11,117) | (8,483) |
Accumulated Other Comprehensive Loss | ||||
Accumulated other comprehensive income (loss), net of tax | ||||
Stockholders' equity, balance at the beginning of the period | (108,790) | (150,292) | (93,062) | (161,389) |
Stockholders' equity, balance at the end of the period | $ (126,020) | $ (120,909) | $ (126,020) | $ (120,909) |
Stockholders' Equity and Redeemable Noncontrolling Interests (Details 4) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | |||||
---|---|---|---|---|---|---|---|
Aug. 04, 2018 |
Jul. 29, 2017 |
Aug. 04, 2018 |
Jul. 29, 2017 |
||||
Reclassifications out of accumulated other comprehensive income (loss) to net earnings (loss) | |||||||
Cost of product sales | $ 406,440 | $ 370,265 | $ 753,791 | $ 679,968 | |||
Other income (expense) | (1,360) | 2,169 | 1,254 | 281 | |||
Interest expense | 863 | 544 | 1,602 | 958 | |||
Income tax expense | 7,776 | 6,453 | 1,499 | 5,050 | |||
Net earnings (loss) attributable to Guess, Inc. | (25,530) | (15,219) | (4,309) | 6,074 | |||
Reclassifications out of accumulated other comprehensive income (loss) | |||||||
Reclassifications out of accumulated other comprehensive income (loss) to net earnings (loss) | |||||||
Net earnings (loss) attributable to Guess, Inc. | 2,157 | (521) | 3,898 | (1,008) | |||
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) | |||||||
Income tax expense | (279) | 43 | (542) | 128 | |||
Net earnings (loss) attributable to Guess, Inc. | 2,032 | (606) | 3,648 | (1,182) | |||
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) | [1] | 151 | 111 | 303 | 228 | ||
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) | [1] | (7) | (6) | (14) | (13) | ||
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 expense | (19) | (20) | (39) | (41) | |||
Net earnings (loss) attributable to Guess, Inc. | 125 | 85 | 250 | 174 | |||
Foreign exchange currency contracts | 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 | 2,342 | (661) | 4,028 | (1,279) | |||
Other income (expense) | 0 | (14) | 201 | (93) | |||
Interest rate swap | 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) | |||||||
Interest expense | $ (31) | $ 26 | $ (39) | $ 62 | |||
|
Accounts Receivable (Details) - USD ($) $ in Thousands |
Aug. 04, 2018 |
Feb. 03, 2018 |
||
---|---|---|---|---|
Accounts receivable | ||||
Accounts receivable, gross | $ 294,958 | $ 309,215 | ||
Less allowances | [1] | 11,583 | 49,219 | |
Accounts receivable, net | 283,375 | 259,996 | ||
Accrued expenses | ||||
Accounts receivable | ||||
Allowance for sales returns | 27,000 | 2,900 | ||
Allowance for markdowns | Accrued expenses | ||||
Accounts receivable | ||||
Liability related to contract with customer | 10,800 | |||
Trade receivables | ||||
Accounts receivable | ||||
Accounts receivable, gross | 280,739 | 290,478 | ||
Royalty receivables | ||||
Accounts receivable | ||||
Accounts receivable, gross | 6,859 | 5,504 | ||
Other receivables | ||||
Accounts receivable | ||||
Accounts receivable, gross | $ 7,360 | $ 13,233 | ||
|
Inventories (Details) - USD ($) $ in Thousands |
Aug. 04, 2018 |
Feb. 03, 2018 |
||
---|---|---|---|---|
Inventories | ||||
Raw materials | $ 697 | $ 604 | ||
Work in progress | 21 | 16 | ||
Finished goods | [1] | 463,813 | 427,684 | |
Inventories | 464,531 | 428,304 | ||
Allowance to write down inventories to the lower of cost or net realizable value | 27,500 | $ 29,900 | ||
Other current assets | ||||
Inventories | ||||
Cost of sales returns | $ 11,600 | |||
|
Income Taxes (Details) - USD ($) $ in Millions |
6 Months Ended | ||
---|---|---|---|
Aug. 04, 2018 |
Jul. 29, 2017 |
Feb. 03, 2018 |
|
Income Tax Disclosure [Abstract] | |||
Effective income tax rate (as a percent) | 24.00% | (1706.10%) | |
Aggregate accruals for uncertain tax positions, including penalties and interest | $ 18.9 | $ 19.0 | |
Accrued expenses | |||
Transition Tax | |||
Current portion related to transition tax | 0.4 | 1.9 | |
Other long-term liabilities | |||
Transition Tax | |||
Long-term portion related to transition tax | $ 17.7 | $ 17.7 |
Segment Information (Details) $ in Thousands |
3 Months Ended | 6 Months Ended | |||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Aug. 04, 2018
USD ($)
|
Jul. 29, 2017
USD ($)
|
Aug. 04, 2018
USD ($)
segment
|
Jul. 29, 2017
USD ($)
|
||||||||||||||||
Segment Reporting Information | |||||||||||||||||||
Number of reportable segments | segment | 5 | ||||||||||||||||||
Net revenue | [1],[2] | $ 645,871 | $ 568,292 | $ 1,167,160 | $ 1,022,637 | ||||||||||||||
Royalty revenue | 19,709 | 16,498 | 39,493 | 32,523 | |||||||||||||||
Earnings (loss) from operations | [1],[3] | 31,881 | 23,787 | 6,993 | (1,188) | ||||||||||||||
Net gains on lease terminations | 0 | 0 | 152 | 0 | |||||||||||||||
Asset impairment charges | (2,981) | (1,233) | (3,740) | (3,995) | |||||||||||||||
Selling, general and administrative expenses | 204,569 | 173,007 | 402,788 | 339,862 | |||||||||||||||
Corporate overhead | |||||||||||||||||||
Segment Reporting Information | |||||||||||||||||||
Earnings (loss) from operations | [1],[3],[4] | (25,647) | (23,551) | (51,492) | (43,960) | ||||||||||||||
Reconciling items | |||||||||||||||||||
Segment Reporting Information | |||||||||||||||||||
Net gains on lease terminations | [4],[5] | 0 | 0 | 152 | 0 | ||||||||||||||
Asset impairment charges | [4],[6] | (2,981) | (1,233) | (3,740) | (3,995) | ||||||||||||||
Americas Retail | Operating Segments | |||||||||||||||||||
Segment Reporting Information | |||||||||||||||||||
Net revenue | 197,125 | 201,188 | 368,465 | 374,882 | |||||||||||||||
Earnings (loss) from operations | [1],[4],[7] | 5,582 | (3,555) | (98) | (25,136) | ||||||||||||||
Americas Wholesale | Operating Segments | |||||||||||||||||||
Segment Reporting Information | |||||||||||||||||||
Net revenue | 34,253 | 32,658 | 74,932 | 68,515 | |||||||||||||||
Earnings (loss) from operations | [1],[4],[7] | 5,325 | 5,238 | 11,351 | 12,221 | ||||||||||||||
Europe | Operating Segments | |||||||||||||||||||
Segment Reporting Information | |||||||||||||||||||
Net revenue | 311,998 | 255,215 | 517,433 | 420,603 | |||||||||||||||
Earnings (loss) from operations | [3],[4],[7] | 30,531 | 30,058 | 10,198 | 29,052 | ||||||||||||||
Asia | Operating Segments | |||||||||||||||||||
Segment Reporting Information | |||||||||||||||||||
Net revenue | 82,786 | 62,733 | 166,837 | 126,114 | |||||||||||||||
Earnings (loss) from operations | [4],[7] | 1,634 | 2,441 | 5,699 | 2,780 | ||||||||||||||
Licensing | Operating Segments | |||||||||||||||||||
Segment Reporting Information | |||||||||||||||||||
Royalty revenue | [1],[2] | 19,709 | 16,498 | 39,493 | 32,523 | ||||||||||||||
Earnings (loss) from operations | [1],[4],[7] | 17,437 | 14,389 | 34,923 | 27,850 | ||||||||||||||
Operating Segments | |||||||||||||||||||
Segment Reporting Information | |||||||||||||||||||
Earnings (loss) from operations | [1],[3],[4] | 60,509 | $ 48,571 | 62,073 | $ 46,767 | ||||||||||||||
Accounting Standards Update 2014-09 | Impact from adoption of new revenue recognition guidance | |||||||||||||||||||
Segment Reporting Information | |||||||||||||||||||
Net revenue | 2,100 | 4,400 | |||||||||||||||||
Earnings (loss) from operations | 600 | (400) | |||||||||||||||||
Selling, general and administrative expenses | 1,500 | 4,800 | |||||||||||||||||
Accounting Standards Update 2014-09 | Impact from adoption of new revenue recognition guidance | Corporate overhead | |||||||||||||||||||
Segment Reporting Information | |||||||||||||||||||
Selling, general and administrative expenses | 500 | 1,100 | |||||||||||||||||
Accounting Standards Update 2014-09 | Impact from adoption of new revenue recognition guidance | Americas Retail | Operating Segments | |||||||||||||||||||
Segment Reporting Information | |||||||||||||||||||
Selling, general and administrative expenses | 500 | 2,300 | |||||||||||||||||
Accounting Standards Update 2014-09 | Impact from adoption of new revenue recognition guidance | Americas Wholesale | Operating Segments | |||||||||||||||||||
Segment Reporting Information | |||||||||||||||||||
Selling, general and administrative expenses | 200 | 900 | |||||||||||||||||
Accounting Standards Update 2014-09 | Impact from adoption of new revenue recognition guidance | Licensing | Operating Segments | |||||||||||||||||||
Segment Reporting Information | |||||||||||||||||||
Royalty revenue | 2,100 | 4,400 | |||||||||||||||||
Selling, general and administrative expenses | $ 200 | $ 400 | |||||||||||||||||
|
Segment Information (Details 2) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||||||
---|---|---|---|---|---|---|---|---|
Aug. 04, 2018 |
Jul. 29, 2017 |
Aug. 04, 2018 |
Jul. 29, 2017 |
|||||
Segment Reporting Information | ||||||||
Net revenue | [1],[2] | $ 645,871 | $ 568,292 | $ 1,167,160 | $ 1,022,637 | |||
U.S. | ||||||||
Segment Reporting Information | ||||||||
Net revenue | 176,064 | 174,991 | 338,434 | 337,171 | ||||
Italy | ||||||||
Segment Reporting Information | ||||||||
Net revenue | 89,380 | 81,196 | 148,286 | 128,394 | ||||
Canada | ||||||||
Segment Reporting Information | ||||||||
Net revenue | 45,822 | 49,130 | 86,335 | 89,524 | ||||
South Korea | ||||||||
Segment Reporting Information | ||||||||
Net revenue | 35,996 | 34,283 | 74,083 | 72,838 | ||||
Other foreign countries | ||||||||
Segment Reporting Information | ||||||||
Net revenue | $ 298,609 | $ 228,692 | $ 520,022 | $ 394,710 | ||||
|
Borrowings and Capital Lease Obligations (Details) |
6 Months Ended | 12 Months Ended | |||
---|---|---|---|---|---|
Feb. 16, 2016
USD ($)
|
Jun. 23, 2015
USD ($)
|
Aug. 04, 2018
USD ($)
facility
|
Jul. 29, 2017
USD ($)
|
Feb. 03, 2018
USD ($)
|
|
Borrowings and capital lease obligations | |||||
Mortgage debt, maturing monthly through January 2026 | $ 19,982,000 | $ 20,323,000 | |||
Capital lease obligations | 17,671,000 | 18,589,000 | |||
Other | 2,796,000 | 3,129,000 | |||
Total debt and capital lease obligations | 40,449,000 | 42,041,000 | |||
Less current installments | 3,504,000 | 2,845,000 | |||
Long-term debt and capital lease obligations | 36,945,000 | 39,196,000 | |||
Mortgage Debt | |||||
Mortgage debt, maturing monthly through January 2026 | 19,982,000 | 20,323,000 | |||
Capital Lease | |||||
Capital lease obligations incurred | 1,164,000 | $ 17,522,000 | |||
Capital lease obligations | $ 17,671,000 | 18,589,000 | |||
Interest rate swap | Derivatives designated as hedging instruments | Cash flow hedges | |||||
Borrowings and capital lease obligations | |||||
Fixed rate of interest rate swap derivative (as a percent) | 3.06% | ||||
Europe | Foreign line of credit | |||||
Credit Facilities | |||||
Current borrowing capacity | $ 83,700,000 | ||||
Credit Facility, outstanding amount | $ 0 | ||||
Number of credit facilities subject to minimum net equity requirement | facility | 1 | ||||
Maximum borrowing capacity of the credit facility which is subject to a minimum net equity requirement | $ 40,500,000 | ||||
Europe | Foreign line of credit | Minimum | |||||
Credit Facilities | |||||
Interest rate (as a percent) | 0.50% | ||||
Europe | Foreign line of credit | Maximum | |||||
Credit Facilities | |||||
Interest rate (as a percent) | 4.60% | ||||
Europe | Documentary letters of credit | Foreign line of credit | |||||
Credit Facilities | |||||
Letters of credit outstanding | $ 0 | ||||
Mortgage debt | Building | U.S. | |||||
Borrowings and capital lease obligations | |||||
Mortgage debt, maturing monthly through January 2026 | $ 21,500,000.0 | 19,982,000 | 20,323,000 | ||
Mortgage Debt | |||||
Debt maturity period (in years) | 10 years | ||||
Mortgage debt, maturing monthly through January 2026 | $ 21,500,000.0 | 19,982,000 | 20,323,000 | ||
Debt amortization period (in years) | 25 years | ||||
Debt issuance costs | $ 100,000 | 100,000 | |||
Mortgage debt | Building | U.S. | LIBOR | |||||
Borrowings and capital lease obligations | |||||
Interest rate margin (as a percent) | 1.50% | ||||
Mortgage debt | Building | U.S. | Interest rate swap | |||||
Mortgage Debt | |||||
Fair value of cash flow hedge interest rate swap asset | $ 1,525,000 | 1,460,000 | |||
Mortgage debt | Building | U.S. | Interest rate swap | Derivatives designated as hedging instruments | Cash flow hedges | |||||
Borrowings and capital lease obligations | |||||
Fixed rate of interest rate swap derivative (as a percent) | 3.06% | 3.06% | |||
Capital lease | Equipment | Netherlands | |||||
Borrowings and capital lease obligations | |||||
Capital lease obligations | $ 15,400,000 | 17,300,000 | |||
Capital Lease | |||||
Capital lease obligations incurred | $ 17,000,000 | ||||
Effective interest rate on capital lease obligations | 6.00% | 6.00% | |||
Capital lease obligations | $ 15,400,000 | $ 17,300,000 | |||
Capital lease | Computer hardware and software | |||||
Borrowings and capital lease obligations | |||||
Capital lease obligations | 2,300,000 | 1,300,000 | |||
Capital Lease | |||||
Capital lease obligations | 2,300,000 | $ 1,300,000 | |||
Credit Facility | |||||
Credit Facilities | |||||
Credit Facility, outstanding amount | $ 0 | ||||
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 | |||||
Mortgage Debt | |||||
Debt maturity period (in years) | 5 years | ||||
Credit Facilities | |||||
Maximum borrowing capacity | $ 150,000,000 | $ 150,000,000 | |||
Current borrowing capacity | 104,000,000 | ||||
Credit Facility | Accordion feature | |||||
Credit Facilities | |||||
Maximum borrowing capacity | 150,000,000 | $ 150,000,000 | |||
Credit Facility | U.S. line of credit | Base rate | Minimum | |||||
Borrowings and capital lease obligations | |||||
Interest rate margin (as a percent) | 0.25% | ||||
Credit Facility | U.S. line of credit | Base rate | Maximum | |||||
Borrowings and capital lease obligations | |||||
Interest rate margin (as a percent) | 0.75% | ||||
Credit Facility | U.S. line of credit | LIBOR | |||||
Credit Facilities | |||||
Interest rate margin added to respective base rate | 1.00% | ||||
Credit Facility | U.S. line of credit | LIBOR | Minimum | |||||
Borrowings and capital lease obligations | |||||
Interest rate margin (as a percent) | 1.25% | ||||
Credit Facility | U.S. line of credit | LIBOR | Maximum | |||||
Borrowings and capital lease obligations | |||||
Interest rate margin (as a percent) | 1.75% | ||||
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 | $ 1,600,000 | ||||
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 | $ 50,000,000 | $ 50,000,000 | |||
Credit Facility | Canada | Foreign line of credit | Prime rate | Minimum | |||||
Borrowings and capital lease obligations | |||||
Interest rate margin (as a percent) | 0.25% | ||||
Credit Facility | Canada | Foreign line of credit | Prime rate | Maximum | |||||
Borrowings and capital lease obligations | |||||
Interest rate margin (as a percent) | 0.75% | ||||
Credit Facility | Canada | Foreign line of credit | Canadian BA rate | |||||
Credit Facilities | |||||
Interest rate margin added to respective base rate | 1.00% | ||||
Credit Facility | Canada | Foreign line of credit | Canadian BA rate | Minimum | |||||
Borrowings and capital lease obligations | |||||
Interest rate margin (as a percent) | 1.25% | ||||
Credit Facility | Canada | Foreign line of credit | Canadian BA rate | Maximum | |||||
Borrowings and capital lease obligations | |||||
Interest rate margin (as a percent) | 1.75% | ||||
Credit Facility | Canada | Foreign line of credit | Bank of Canada overnight rate | |||||
Credit Facilities | |||||
Interest rate margin added to respective base rate | 0.50% |
Share-Based Compensation (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 6 Months Ended | ||||||
---|---|---|---|---|---|---|---|---|
Jun. 25, 2018 |
Mar. 30, 2018 |
Apr. 28, 2017 |
Mar. 29, 2017 |
Aug. 04, 2018 |
Jul. 29, 2017 |
Aug. 04, 2018 |
Jul. 29, 2017 |
|
Disclosure of share-based compensation information under stock plans | ||||||||
Share-based compensation expense | $ 4,031 | $ 4,187 | $ 7,989 | $ 8,150 | ||||
Share-Based Compensation, Additional Disclosures | ||||||||
Unrecognized compensation cost related to nonvested stock options | 4,800 | $ 4,800 | ||||||
Weighted average fair values of stock options granted during the period (in dollars per share) | $ 5.89 | $ 1.57 | ||||||
Granted (in shares) | 431,371 | 1,283,175 | ||||||
Employee Stock Purchase Plan | ||||||||
Disclosure of share-based compensation information under stock plans | ||||||||
Share-based compensation expense | 67 | 43 | $ 160 | $ 79 | ||||
Stock options | ||||||||
Disclosure of share-based compensation information under stock plans | ||||||||
Share-based compensation expense | $ 672 | 581 | $ 1,367 | 1,190 | ||||
Share-Based Compensation, Additional Disclosures | ||||||||
Weighted average period for recognition of unrecognized compensation cost (in years/months/days) | 1 year 8 months 10 days | 1 year 8 months 10 days | ||||||
Stock awards or units | ||||||||
Disclosure of share-based compensation information under stock plans | ||||||||
Share-based compensation expense | $ 3,292 | $ 3,563 | $ 6,462 | $ 6,881 | ||||
Share-Based Compensation, Additional Disclosures | ||||||||
Unrecognized compensation cost related to nonvested stock awards/units | $ 44,500 | $ 44,500 | ||||||
Weighted average period for recognition of unrecognized compensation cost (in years/months/days) | 1 year 8 months 10 days | 1 year 8 months 10 days | ||||||
Number of Units | ||||||||
Granted (in shares) | 490,528 | 707,675 | ||||||
Performance-based or market-based units | ||||||||
Number of Units | ||||||||
Granted (in shares) | 619,578.000 | 1,056,042 | ||||||
Performance-based units | ||||||||
Number of Units | ||||||||
Nonvested at the beginning of the period (in shares) | 1,300,921 | |||||||
Granted (in shares) | 489,646 | |||||||
Vested (in shares) | (141,625) | |||||||
Forfeited (in shares) | (27,441) | |||||||
Nonvested at the end of the period (in shares) | 1,621,501 | 1,621,501 | ||||||
Weighted Average Grant Date Fair Value | ||||||||
Nonvested at the beginning of the period (in dollars per share) | $ 14.01 | |||||||
Granted (in dollars per share) | 21.83 | |||||||
Vested (in dollars per share) | 15.07 | |||||||
Forfeited (in dollars per share) | 11.16 | |||||||
Nonvested at the end of the period (in dollars per share) | $ 16.33 | $ 16.33 | ||||||
Performance units | Vesting, Tranche One | ||||||||
Share-Based Compensation, Additional Disclosures | ||||||||
Vesting period (in years) | 1 year | |||||||
Performance units | Vesting, annual vesting periods after initial vesting period | Minimum | ||||||||
Share-Based Compensation, Additional Disclosures | ||||||||
Vesting period (in years) | 2 years | |||||||
Performance units | Vesting, annual vesting periods after initial vesting period | Maximum | ||||||||
Share-Based Compensation, Additional Disclosures | ||||||||
Vesting period (in years) | 3 years | |||||||
Target performance units | ||||||||
Share-Based Compensation, Additional Disclosures | ||||||||
Vesting period (in years) | 3 years | |||||||
Target performance units | Minimum | ||||||||
Share-Based Compensation, Additional Disclosures | ||||||||
Vesting rights based on the satisfaction of certain performance or market-based criteria (as a percentage) | 0.00% | |||||||
Target performance units | Maximum | ||||||||
Share-Based Compensation, Additional Disclosures | ||||||||
Vesting rights based on the satisfaction of certain performance or market-based criteria (as a percentage) | 200.00% | |||||||
Market-based units | ||||||||
Share-Based Compensation, Additional Disclosures | ||||||||
Vesting period (in years) | 3 years | |||||||
Period which award is subject to a market condition (in years) | 3 years | |||||||
Number of Units | ||||||||
Nonvested at the beginning of the period (in shares) | 388,477 | |||||||
Granted (in shares) | 129,932 | |||||||
Vested (in shares) | 0 | |||||||
Forfeited (in shares) | 0 | |||||||
Nonvested at the end of the period (in shares) | 518,409 | 518,409 | ||||||
Weighted Average Grant Date Fair Value | ||||||||
Nonvested at the beginning of the period (in dollars per share) | $ 12.28 | |||||||
Granted (in dollars per share) | 20.28 | |||||||
Vested (in dollars per share) | 0.00 | |||||||
Forfeited (in dollars per share) | 0.00 | |||||||
Nonvested at the end of the period (in dollars per share) | $ 14.28 | $ 14.28 | ||||||
Market-based units | Minimum | ||||||||
Share-Based Compensation, Additional Disclosures | ||||||||
Vesting rights based on the satisfaction of certain performance or market-based criteria (as a percentage) | 0.00% | |||||||
Market-based units | Maximum | ||||||||
Share-Based Compensation, Additional Disclosures | ||||||||
Vesting rights based on the satisfaction of certain performance or market-based criteria (as a percentage) | 150.00% |
Related Party Transactions (Details) $ in Millions |
6 Months Ended | |
---|---|---|
Aug. 04, 2018
USD ($)
lease
|
Jul. 29, 2017
USD ($)
|
|
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 | $ 2.5 | $ 2.5 |
MPM Financial LLC | Payments for aircraft charter | ||
Related Party Transactions | ||
Payments under related party agreement | $ 0.8 | $ 0.4 |
Commitments and Contingencies (Details) |
6 Months Ended |
---|---|
Aug. 04, 2018 | |
Retail store leases | Minimum | |
Leases | |
Percentage of annual sales volume used for incremental rent on certain retail location leases | 4.00% |
Retail store leases | Maximum | |
Leases | |
Percentage of annual sales volume used for incremental rent on certain retail location leases | 20.00% |
Retail concession leases | Average | |
Leases | |
Percentage of annual sales volume used for incremental rent on certain retail location leases | 35.00% |
Commitments and Contingencies (Details 2) - Aug. 04, 2018 € in Millions, $ in Millions |
USD ($) |
EUR (€) |
---|---|---|
Private equity fund | ||
Investment commitments | ||
Unfunded commitment to invest in private equity fund | $ 4.2 | € 3.6 |
Commitments and Contingencies (Details 3) $ in Thousands, € in Millions |
1 Months Ended | 6 Months Ended | 12 Months Ended | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Nov. 08, 2013
USD ($)
|
Jul. 19, 2012
USD ($)
|
Jul. 31, 2018
USD ($)
|
Jul. 31, 2018
EUR (€)
|
Apr. 30, 2018
USD ($)
|
Apr. 30, 2018
EUR (€)
|
May 31, 2015
USD ($)
|
May 31, 2015
EUR (€)
|
Aug. 04, 2018
USD ($)
subsidiary
|
Jan. 28, 2017
USD ($)
|
Jan. 28, 2017
EUR (€)
|
Aug. 04, 2018
EUR (€)
|
Jan. 30, 2015
trademark
|
May 02, 2013
trademark
|
|
Judicial ruling | U.S. | Gucci America, Inc. | ||||||||||||||
Loss contingency | ||||||||||||||
Damages sought in litigation case | $ 26,000 | |||||||||||||
Accounting profits sought by plaintiff as compensation | 99,000 | |||||||||||||
Monetary damages awarded by court | 2,300 | |||||||||||||
Monetary damages awarded by court to be paid by the Company's licensees | $ 2,300 | |||||||||||||
Settled litigation | Italy | Gucci America, Inc. | ||||||||||||||
Loss contingency | ||||||||||||||
Number of Italian trademark registrations to be cancelled by plaintiff | trademark | 3 | |||||||||||||
Number of European Community trademark registrations to be cancelled by plaintiff | trademark | 4 | |||||||||||||
Settled litigation | China | Gucci America, Inc. | ||||||||||||||
Loss contingency | ||||||||||||||
Damages sought in litigation case | $ 80 | |||||||||||||
Settled litigation | France | Gucci America, Inc. | ||||||||||||||
Loss contingency | ||||||||||||||
Number of European Community trademark registrations to be cancelled by plaintiff | trademark | 2 | |||||||||||||
Number of international trademark registrations to be cancelled by plaintiff | trademark | 1 | |||||||||||||
Pending litigation | Italy | Europe | Customs tax audit and appeals | ||||||||||||||
Loss contingency | ||||||||||||||
Monetary damages awarded by court | $ 1,400 | € 1.2 | ||||||||||||
Number of subsidiaries under audit by the Italian Customs Agency | subsidiary | 1 | |||||||||||||
Customs tax assessments including potential penalties and interest | $ 11,400 | € 9.8 | ||||||||||||
Canceled customs tax appeals | $ 3,400 | € 3.0 | ||||||||||||
Pending litigation | Italy | First set of appeals | Europe | Customs tax audit and appeals | ||||||||||||||
Loss contingency | ||||||||||||||
Canceled customs tax assessments | $ 2,000 | € 1.7 | ||||||||||||
Pending litigation | Italy | Second through seventh set of appeals | Europe | Customs tax audit and appeals | ||||||||||||||
Loss contingency | ||||||||||||||
Canceled customs tax assessments | $ 9,400 | € 8.1 |
Defined Benefit Plans (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Aug. 04, 2018 |
Jul. 29, 2017 |
Aug. 04, 2018 |
Jul. 29, 2017 |
Feb. 03, 2018 |
|
Defined Benefit Plans | |||||
Selling, general and administrative expenses | $ 204,569 | $ 173,007 | $ 402,788 | $ 339,862 | |
Other income (expense), net | 1,360 | (2,169) | (1,254) | (281) | |
SERP | |||||
Defined Benefit Plans | |||||
SERP benefit payments | 400 | 400 | 800 | 800 | |
Components of net periodic defined benefit pension cost | |||||
Service cost | 0 | 0 | 0 | 0 | |
Interest cost | 472 | 460 | 944 | 921 | |
Expected return on plan assets | 0 | 0 | 0 | 0 | |
Net amortization of unrecognized prior service credit | 0 | 0 | 0 | 0 | |
Net amortization of actuarial losses | 46 | 38 | 93 | 76 | |
Net periodic defined benefit pension cost | 518 | 498 | 1,037 | 997 | |
SERP | Other income | |||||
Defined Benefit Plans | |||||
Gains as a result of changes in value of the insurance policy investments, included in other income | 1,700 | 1,900 | 700 | 3,800 | |
Pension | |||||
Components of net periodic defined benefit pension cost | |||||
Service cost | 754 | 606 | 1,494 | 1,232 | |
Interest cost | 527 | 480 | 1,054 | 963 | |
Expected return on plan assets | (75) | (46) | (149) | (95) | |
Net amortization of unrecognized prior service credit | (7) | (6) | (14) | (13) | |
Net amortization of actuarial losses | 151 | 111 | 303 | 228 | |
Net periodic defined benefit pension cost | 1,350 | 1,145 | 2,688 | 2,315 | |
Pension | Foreign Plan | |||||
Defined Benefit Plans | |||||
Projected benefit obligation | 27,500 | 27,500 | $ 26,400 | ||
Plan assets at fair value | 22,200 | 22,200 | 21,400 | ||
Components of net periodic defined benefit pension cost | |||||
Service cost | 754 | 606 | 1,494 | 1,232 | |
Interest cost | 55 | 20 | 110 | 42 | |
Expected return on plan assets | (75) | (46) | (149) | (95) | |
Net amortization of unrecognized prior service credit | (7) | (6) | (14) | (13) | |
Net amortization of actuarial losses | 105 | 73 | 210 | 152 | |
Net periodic defined benefit pension cost | 832 | 647 | 1,651 | 1,318 | |
Other assets | SERP | |||||
Defined Benefit Plans | |||||
Cash surrender values of the insurance policies held in a rabbi trust | 64,300 | 64,300 | 64,500 | ||
Accrued expenses and other long-term liabilities | SERP | |||||
Defined Benefit Plans | |||||
Projected benefit obligation | 54,900 | 54,900 | 54,800 | ||
Other long-term liabilities | Pension | Foreign Plan | |||||
Defined Benefit Plans | |||||
Net liability | $ 5,300 | $ 5,300 | $ 5,000 | ||
Accounting Standards Update 2017-07 | |||||
Defined Benefit Plans | |||||
Selling, general and administrative expenses | (500) | (1,100) | |||
Other income (expense), net | $ (500) | $ (1,100) |
Fair Value Measurements (Details) $ in Thousands, € in Millions |
6 Months Ended | 12 Months Ended | ||||
---|---|---|---|---|---|---|
Aug. 04, 2018
USD ($)
|
Aug. 04, 2018
EUR (€)
|
Feb. 03, 2018
USD ($)
|
Feb. 03, 2018
EUR (€)
|
Aug. 04, 2018
EUR (€)
|
Feb. 03, 2018
EUR (€)
|
|
Private equity fund | ||||||
Investment in private equity fund | ||||||
Payments to acquire investment in private equity fund | $ 1,100 | € 0.9 | $ 500 | € 0.5 | ||
Unfunded commitment to invest in private equity fund | 4,200 | € 3.6 | ||||
Private equity fund | Other assets | ||||||
Investment in private equity fund | ||||||
Investment in private equity fund | 1,400 | 600 | € 1.2 | € 0.5 | ||
Private equity fund | Other expense | ||||||
Investment in private equity fund | ||||||
Unrealized loss on investment in private equity fund | (200) | € (0.1) | ||||
Assets and liabilities measured at fair value on a recurring basis | ||||||
Assets: | ||||||
Foreign exchange currency contracts, Assets | 5,950 | 51 | ||||
Interest rate swap | 1,525 | 1,460 | ||||
Total Assets | 7,475 | 1,511 | ||||
Liabilities: | ||||||
Foreign exchange currency contracts, Liabilities | 1,011 | 18,089 | ||||
Deferred compensation obligations | 14,484 | 13,476 | ||||
Total Liabilities | 15,495 | 31,565 | ||||
Assets and liabilities measured at fair value on a recurring basis | Level 1 | ||||||
Assets: | ||||||
Foreign exchange currency contracts, Assets | 0 | 0 | ||||
Interest rate swap | 0 | 0 | ||||
Total Assets | 0 | 0 | ||||
Liabilities: | ||||||
Foreign exchange currency contracts, Liabilities | 0 | 0 | ||||
Deferred compensation obligations | 0 | 0 | ||||
Total Liabilities | 0 | 0 | ||||
Assets and liabilities measured at fair value on a recurring basis | Level 2 | ||||||
Assets: | ||||||
Foreign exchange currency contracts, Assets | 5,950 | 51 | ||||
Interest rate swap | 1,525 | 1,460 | ||||
Total Assets | 7,475 | 1,511 | ||||
Liabilities: | ||||||
Foreign exchange currency contracts, Liabilities | 1,011 | 18,089 | ||||
Deferred compensation obligations | 14,484 | 13,476 | ||||
Total Liabilities | 15,495 | 31,565 | ||||
Assets and liabilities measured at fair value on a recurring basis | Level 3 | ||||||
Assets: | ||||||
Foreign exchange currency contracts, Assets | 0 | 0 | ||||
Interest rate swap | 0 | 0 | ||||
Total Assets | 0 | 0 | ||||
Liabilities: | ||||||
Foreign exchange currency contracts, Liabilities | 0 | 0 | ||||
Deferred compensation obligations | 0 | 0 | ||||
Total Liabilities | $ 0 | $ 0 |
Fair Value Measurements (Details 2) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Aug. 04, 2018 |
Jul. 29, 2017 |
Aug. 04, 2018 |
Jul. 29, 2017 |
|
Asset impairment charge | ||||
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 | $ 2,981 | $ 1,233 | $ 3,740 | $ 3,995 |
North America and Europe | Retail locations | ||||
Asset impairment charge | ||||
Asset impairment charges | $ 2,981 | $ 1,233 | $ 3,740 | $ 3,995 |
Derivative Financial Instruments (Details) - USD ($) $ in Thousands |
Aug. 04, 2018 |
Feb. 03, 2018 |
---|---|---|
ASSETS: | ||
Derivatives, assets | $ 7,475 | $ 1,511 |
LIABILITIES: | ||
Derivatives, liabilities | 1,011 | 18,089 |
Derivatives designated as hedging instruments | Cash flow hedges | ||
ASSETS: | ||
Derivatives, assets | 5,749 | 1,501 |
Derivatives designated as hedging instruments | Foreign exchange currency contracts | Other current assets/Other assets | Cash flow hedges | ||
ASSETS: | ||
Derivatives, assets | 4,224 | 41 |
Derivatives designated as hedging instruments | Foreign exchange currency contracts | Accrued expenses/Other long-term liabilities | Cash flow hedges | ||
LIABILITIES: | ||
Derivatives, liabilities | 528 | 13,789 |
Derivatives designated as hedging instruments | Interest rate swap | Other assets | Cash flow hedges | ||
ASSETS: | ||
Derivatives, assets | 1,525 | 1,460 |
Derivatives not designated as hedging instruments | Foreign exchange currency contracts | Other current assets | ||
ASSETS: | ||
Derivatives, assets | 1,726 | 10 |
Derivatives not designated as hedging instruments | Foreign exchange currency contracts | Accrued expenses | ||
LIABILITIES: | ||
Derivatives, liabilities | $ 483 | $ 4,300 |
Derivative Financial Instruments (Details 2) - USD ($) |
6 Months Ended | 12 Months Ended | ||||
---|---|---|---|---|---|---|
Aug. 04, 2018 |
Jan. 28, 2017 |
May 05, 2018 |
Feb. 03, 2018 |
Jul. 29, 2017 |
Apr. 29, 2017 |
|
Forward contracts designated as hedging instruments | ||||||
Net unrealized gain (loss) in accumulated other comprehensive income (loss) related to cash flow hedges | $ (142,000) | $ 5,400,000 | $ (6,285,000) | $ (14,369,000) | $ (8,751,000) | $ 4,948,000 |
Foreign exchange currency cash flow hedge unrealized gain to be recognized in cost of product sales over the following 12 months | (2,500,000) | |||||
Interest rate swap cash flow hedge unrealized gain to be recognized in interest expense after the following 12 months | $ 1,200,000 | |||||
Cash flow hedges | Europe | Derivatives designated as hedging instruments | ||||||
Forward contracts designated as hedging instruments | ||||||
U.S. dollar forward contracts outstanding, maximum remaining maturity period (in months) | 12 months | |||||
Cash flow hedges | Canada | Derivatives designated as hedging instruments | ||||||
Forward contracts designated as hedging instruments | ||||||
U.S. dollar forward contracts outstanding, maximum remaining maturity period (in months) | 12 months | |||||
Foreign exchange currency contracts | ||||||
Forward contracts designated as hedging instruments | ||||||
Net unrealized gain (loss) in accumulated other comprehensive income (loss) related to cash flow hedges | $ (1,300,000) | |||||
Foreign exchange currency contracts | Cash flow hedges | Europe | Derivatives designated as hedging instruments | ||||||
Forward contracts designated as hedging instruments | ||||||
Total notional amount of derivatives purchased | 21,600,000 | |||||
Notional amount of derivative outstanding | 103,700,000 | 145,800,000 | ||||
Foreign exchange currency contracts | Cash flow hedges | Canada | Derivatives designated as hedging instruments | ||||||
Forward contracts designated as hedging instruments | ||||||
Notional amount of derivative outstanding | 17,400,000 | $ 38,700,000 | ||||
Interest rate swap | ||||||
Forward contracts designated as hedging instruments | ||||||
Net unrealized gain (loss) in accumulated other comprehensive income (loss) related to cash flow hedges | $ 1,200,000 | |||||
Interest rate swap | Cash flow hedges | Derivatives designated as hedging instruments | ||||||
Forward contracts designated as hedging instruments | ||||||
Total notional amount of derivatives purchased | 21,500,000 | |||||
Notional amount of derivative outstanding | $ 21,500,000 | |||||
Fixed rate of interest rate swap designated as a cash flow hedge (as a percent) | 3.06% |
Derivative Financial Instruments (Details 3) - USD ($) |
3 Months Ended | 6 Months Ended | |||||
---|---|---|---|---|---|---|---|
Aug. 04, 2018 |
Jul. 29, 2017 |
Aug. 04, 2018 |
Jul. 29, 2017 |
||||
Gains (losses) before taxes recognized on the derivative instruments designated as cash flow hedges in OCI and net earnings (loss) | |||||||
Amount of ineffectiveness recognized in net earnings (loss) on interest rate swap | $ 0 | $ 0 | $ 0 | $ 0 | |||
Net after-tax derivative activity recorded in accumulated other comprehensive income (loss) | |||||||
Beginning balance gain (loss) | (6,285,000) | 4,948,000 | (14,369,000) | 5,400,000 | |||
Net gains (losses) from changes in cash flow hedges | 4,111,000 | (13,093,000) | 10,579,000 | (12,969,000) | |||
Net (gains) losses reclassified into earnings (loss) | 2,032,000 | (606,000) | 3,648,000 | (1,182,000) | |||
Ending balance loss | (142,000) | (8,751,000) | (142,000) | (8,751,000) | |||
Cost of product sales | |||||||
Gains (losses) before taxes recognized on the derivative instruments designated as cash flow hedges in OCI and net earnings (loss) | |||||||
Gain (loss) recognized in OCI on foreign exchange currency contracts | 4,638,000 | (14,673,000) | 12,060,000 | (13,816,000) | |||
Gain (loss) reclassified from accumulated OCI into earnings (loss) on foreign exchange currency contracts | [1] | (2,342,000) | 661,000 | (4,028,000) | 1,279,000 | ||
Other income/expense | |||||||
Gains (losses) before taxes recognized on the derivative instruments designated as cash flow hedges in OCI and net earnings (loss) | |||||||
Gain (loss) recognized in OCI on foreign exchange currency contracts | 0 | (785,000) | 2,000 | (996,000) | |||
Gain (loss) reclassified from accumulated OCI into earnings (loss) on foreign exchange currency contracts | [1] | 0 | 14,000 | (201,000) | 93,000 | ||
Interest expense | |||||||
Gains (losses) before taxes recognized on the derivative instruments designated as cash flow hedges in OCI and net earnings (loss) | |||||||
Gain (loss) recognized in OCI on interest rate swap | 37,000 | (77,000) | 105,000 | (277,000) | |||
Gain (loss) reclassified from accumulated OCI into earnings (loss) on interest rate swap | [1] | 31,000 | (26,000) | 39,000 | (62,000) | ||
Interest income | |||||||
Gains (losses) before taxes recognized on the derivative instruments designated as cash flow hedges in OCI and net earnings (loss) | |||||||
Amount of ineffectiveness recognized in net earnings (loss) on foreign exchange currency contracts | $ 800,000 | $ 900,000 | $ 1,400,000 | $ 1,500,000 | |||
|
Derivative Financial Instruments (Details 4) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Aug. 04, 2018 |
Jul. 29, 2017 |
Aug. 04, 2018 |
Jul. 29, 2017 |
Feb. 03, 2018 |
|
Derivatives not designated as hedging instruments | Euro | |||||
Derivative instruments not designated as hedging instruments | |||||
U.S. dollar forward contracts outstanding, maximum remaining maturity period (in months) | 9 months | ||||
Derivatives not designated as hedging instruments | Canadian dollar | |||||
Derivative instruments not designated as hedging instruments | |||||
U.S. dollar forward contracts outstanding, maximum remaining maturity period (in months) | 5 months | ||||
Foreign exchange currency contracts | Other income/expense | |||||
Derivative instruments not designated as hedging instruments | |||||
Gain (loss) on derivatives not designated as hedging instruments recognized in earnings (loss) before taxes | $ 2,216 | $ (6,540) | $ 5,906 | $ (7,333) | |
Foreign exchange currency contracts | Derivatives not designated as hedging instruments | Euro | |||||
Derivative instruments not designated as hedging instruments | |||||
Notional amount of derivative outstanding | 38,000 | 38,000 | $ 68,200 | ||
Foreign exchange currency contracts | Derivatives not designated as hedging instruments | Canadian dollar | |||||
Derivative instruments not designated as hedging instruments | |||||
Notional amount of derivative outstanding | $ 7,700 | $ 7,700 | $ 17,600 |
Subsequent Events (Details) - $ / shares |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Aug. 29, 2018 |
Aug. 04, 2018 |
Jul. 29, 2017 |
Aug. 04, 2018 |
Jul. 29, 2017 |
|
Dividends | |||||
Cash dividend announced on common stock (in dollars per share) | $ 0.225 | $ 0.225 | $ 0.45 | $ 0.45 | |
Subsequent Events | |||||
Dividends | |||||
Cash dividend announced on common stock (in dollars per share) | $ 0.225 | ||||
Payment date of cash dividend | Sep. 28, 2018 | ||||
Record date of cash dividend | Sep. 12, 2018 |
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