Guess?'s (GES) New Buyback Plan to Boost Shareholder Wealth

Shares of Guess?, Inc. GES rose 6.1% on Apr 1, 2024, following news related to a share repurchase program. The apparel and accessories company authorized a new share buyback plan of up to $200 million of its common stock. The company also unveiled that it will repurchase 326,429 shares worth $10.3 million through a convertible bond exchange transaction as part of its new program. The latest announcement underscores its financial health and commitment to shareholder value.

The newly-unveiled buyback plan follows its recently announced special dividend of $2.25 per share, reflecting its commitment to shareholders. The special dividend will be paid on May 3, 2024. The company has a dividend payout of 38%, a dividend yield of 3.8% and a free cash flow yield of 11.4%. With an annual free cash flow return on investment of 9.2%, the dividend payment is likely to be sustainable.

Management is committed to enhancing shareholder returns, as evident from these initiatives. Guess?’s solid capital structure, impressive cash flow generation and diversified business model are likely to keep supporting its growth endeavors.

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What Else Should You Know?

Guess? is benefiting from robust brand momentum globally and strong customer response to its collections across various product categories. Management is optimistic about its robust global platform, which will facilitate the growth and expansion of the company’s Guess and Marciano businesses, alongside rag & bone, which will mark the company’s first acquisition. These factors aided the company’s recently released fourth-quarter fiscal 2024 results, with the top and the bottom line increasing year over year and beating the Zacks Consensus Estimate.

Management remains optimistic about fiscal 2025, wherein it expects to surpass $3 billion in revenues for the first time, supported by an impressive growth plan for its core business, the integration of rag & bone into its portfolio and the introduction of Guess Jeans to cater to the demand from Generation Z consumers. Impressively, Guess? anticipates revenues to increase in the range of 11.5-13.5% in fiscal 2025. For the fiscal first quarter, management expects revenue growth of 1-2%.

The Zacks Rank #3 (Hold) company’s shares have surged 43.7% in the past three months against the industry’s decline of 5.2%.

Top 3 Picks

Ralph Lauren RL, which designs, markets and distributes lifestyle products, currently sports a Zacks Rank #1 (Strong Buy). RL has a trailing four-quarter earnings surprise of 18.7%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Ralph Lauren’s current fiscal-year sales and earnings indicates growth of 2.7% and 22.7%, respectively, from the year-ago reported number.

Crocs CROX, which designs, develops, manufactures, markets, distributes and sells casual lifestyle footwear and accessories, currently carries a Zacks Rank #2 (Buy).

The Zacks Consensus Estimate for Crocs’ current fiscal-year sales and earnings suggests growth of 3.9% and 2.9%, respectively, from the year-ago reported numbers. CROX has a trailing four-quarter earnings surprise of 14.2%, on average.

PVH Corp. PVH carries a Zacks Rank #2 at present. PVH, which operates as an apparel company, has a trailing four-quarter earnings surprise of 18.9%, on average.

The Zacks Consensus Estimate for PVH Corp.’s current fiscal-year sales and EPS suggests growth of 1.3% and 16.8%, respectively, from the year-ago reported figure.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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