General

Unless the context indicates otherwise, when we refer to "we," "us", "our" or the "Company" in this Form 10-Q, we are referring to Guess?, Inc. ("GUESS?") and its subsidiaries on a consolidated basis.

Important Notice Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q, including documents incorporated by reference herein, contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements may also be contained in the Company's other reports filed under the Securities Exchange Act of 1934, as amended, in its press releases and in other documents. In addition, from time to time, the Company through its management may make oral forward-looking statements. These statements relate to analyses and other information based on forecasts of future results and estimates of amounts not yet determinable. These statements also relate to our goals, future prospects and proposed new products, services, developments or business strategies. These forward-looking statements are identified by their use of terms and phrases such as "anticipate," "believe," "continue," "could," "goal," "estimate," "expect," "intend," "may," "outlook," "pending," "plan," "predict," "project," "strategy," "will," "would," and other similar terms and phrases, including references to assumptions.

Although we believe that the expectations reflected in any of our forward-looking statements are reasonable, actual results could differ materially from those projected or assumed. These forward-looking statements may include, among other things, statements relating to our expected results of operations, the accuracy of data relating to, and anticipated levels of, future inventory and gross margins, anticipated cash requirements and sources, cost containment efforts, estimated charges, plans regarding store openings and closings, plans regarding business growth and international expansion, e-commerce, business seasonality, results of litigation, industry trends, consumer demands and preferences, competition, currency fluctuations, estimated tax rates, results of tax audits and other regulatory proceedings, raw material and other inflationary cost pressures, consumer confidence and general economic conditions. We do not intend, and undertake no obligation, to update our forward-looking statements to reflect future events or circumstances. Such statements involve risks and uncertainties, which may cause actual results to differ materially from those set forth in these statements. Important factors that could cause or contribute to such difference include those discussed under "Part I, Item 1A. Risk Factors" contained in the Company's most recent Annual Report on Form 10-K for the fiscal year ended January 28, 2012 and in our other filings made from time to time with the Securities and Exchange Commission ("SEC") after the date of this report.

Business Segments

The Company's businesses are grouped into five reportable segments for management and internal financial reporting purposes: Europe, North American Retail, Asia, North American Wholesale and Licensing. Information relating to these segments is summarized in Note 7 to the Condensed Consolidated Financial Statements. Management evaluates segment performance based primarily on revenues and earnings from operations. The Company believes this segment reporting reflects how its five business segments are managed and each segment's performance is evaluated. The Europe segment includes the Company's wholesale and retail operations in Europe and the Middle East. The North American Retail segment includes the Company's retail operations in North America. The Asia segment includes the Company's wholesale and retail operations in Asia. The North American Wholesale segment includes the Company's wholesale operations in North America and export sales to Central and South America. 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. These costs are presented separately and generally include, among other things, the following unallocated corporate costs: information technology, human resources, global advertising and marketing, accounting and finance, executive compensation, facilities and legal.

Products

We derive our net revenue from the sale of GUESS?, MARCIANO, GUESS Kids and G by GUESS men's and women's apparel and our licensees' products through our worldwide network of retail stores, wholesale customers and distributors, as well as our on-line sites. We also derive royalty revenue from worldwide licensing activities.

Recent Global Economic Developments

Economic and market conditions have continued to be volatile and uncertain in many markets around the world and consumer behavior remains cautious. In North America, the relatively weaker levels of consumer confidence and the highly promotional conditions among retailers may persist for some time. In Europe, sovereign debt and bank credit issues continue to affect the capital markets of various European countries and have resulted in reduced consumer confidence and discretionary spending in those countries. These circumstances have had, and are expected to continue to have, a negative impact on our business, particularly in the more

penetrated countries in Southern Europe. These conditions could have a greater impact in our multi-brand wholesale channel, particularly in Italy, where many customers are relatively small and are not well capitalized.

The Company experienced some inflationary pressures on raw materials, labor, freight and other commodities including oil, in fiscal 2012 and during the first half of fiscal 2013.

Foreign Currency Volatility

We also continue to experience significant volatility in the global currency markets. Since the majority of our international operations are conducted in currencies other than the U.S. dollar (primarily the euro, Canadian dollar and Korean won), currency fluctuations can have a significant impact on the translation of our international revenues and earnings into U.S. dollar amounts.

During the first nine months of fiscal 2013, the average U.S. dollar rate was stronger against these currencies versus the average rate in the comparable prior-year period. This had an overall negative impact on the translation of our international revenues and earnings for the nine months ended October 27, 2012 compared to the same prior-year period.

In addition, some of our transactions that occur in Europe, Canada and South Korea are denominated in U.S. dollars, Swiss francs and British pounds, exposing them to exchange rate fluctuations when converted to their functional currencies. Fluctuations in exchange rates can impact the operating margins of our foreign operations and reported earnings and are largely dependent on the transaction timing and magnitude during the period that the currency fluctuates. The euro weakened during the first nine months of fiscal 2013 compared to the prior-year period, increasing the cost of U.S. dollar denominated purchases of merchandise in our European operations. A weaker euro in the fourth quarter of fiscal 2013 could continue to unfavorably impact our product margins in Europe. The Company enters into derivative financial instruments to offset some but not all of the exchange risk on foreign currency transactions. For additional discussion regarding our exposure to foreign currency risk, forward contracts designated as cash flow hedges and forward contracts not designated as cash flow hedges, refer to "Part II, Item 3. Quantitative and Qualitative Disclosures About Market Risk."

Long-Term Growth Strategy

Despite the difficult economic conditions described above, our key long-term strategies remain unchanged. Global expansion continues to be the cornerstone of our long-term growth strategy. Our combined revenues outside of the U.S. and Canada represented half of the total Company's revenues for the nine months ended October 27, 2012, compared to one-fifth in fiscal 2005. We expect to continue to expand in both our existing European and Asian markets. At the same time, we plan to develop key markets like China, Brazil, Germany, Russia, Japan and India and expand our G by GUESS concept both domestically and internationally. Our goal is also to drive growth by enhancing the productivity of our existing operations.

Expanding our retail business across the globe is key to executing on our global growth strategy. We see opportunities to increase the number of GUESS? branded retail stores in Europe and Asia. In North America and South Korea, we also see store growth opportunities with our G by GUESS concept. We will continue to regularly assess and implement initiatives that we believe will build brand equity, grow our business and enhance long-term profitability in each region, including investing in advertising and marketing programs to build awareness and drive customer traffic to our stores and websites.

In Europe, over the long-term, we will continue to focus on developing new markets in Eastern and Northern Europe where our brand is well known but still under-penetrated and expand on our success in Western and Southern Europe. We plan to continue to develop important European markets such as Germany and Russia. We have flagship stores in key cities such as Paris, Barcelona, Dusseldorf, London and Milan. Together with our licensee partners, we opened 76 stores in the first nine months of fiscal 2013 and plan to continue our international expansion in Europe by opening approximately 100 retail stores in total during fiscal 2013, about one third of which will be operated directly by us. In addition, we also acquired 26 stores from one of our European licensees during the second quarter of fiscal 2013.

Our North American Retail growth strategy is to increase retail sales and profitability by improving the productivity and performance of existing stores and expanding our network of retail stores. We will continue to emphasize our newer G by GUESS store concept and our e-commerce channel. During the first nine months of fiscal 2013, we opened 24 retail stores in the U.S. and Canada and we currently plan to open approximately 32 retail stores in total across all concepts in these two countries during fiscal 2013, with the majority under the G by GUESS brand. In addition, we plan to remodel key existing locations as part of the roll-out of our new store designs.

We see significant market opportunities in Asia and we have dedicated capital and human resources to support the region's growth and development. We and our partners have opened flagship stores in key cities such as Seoul, Shanghai, Hong Kong, Macau and

Beijing and we have partnered with licensees to develop our business in the second tier cities in this region. During the third quarter of fiscal 2013, we also partnered with a new licensee in China, which will help us to accelerate our expansion efforts in the northern part of the country. During fiscal 2012, we launched our newer G by GUESS store concept in South Korea, where we had 66 locations as of October 27, 2012. Our strategy in South Korea, with a combined 341 stores and concessions at October 27, 2012, is to improve productivity and expand distribution for both our GUESS? and G by GUESS branded locations. We and our partners opened 62 stores and 90 concessions during the first nine months of fiscal 2013 across all of Asia and plan to open between 170 and 180 retail stores and concessions in total across all concepts in Asia during fiscal 2013.

The Company's investments in capital for the full fiscal year 2013 are planned between $105 million and $115 million (after deducting estimated lease incentives of approximately $10 million). The planned investments in capital are primarily for expansion of our retail businesses in North America and Europe and store remodeling programs in North America.

Other

The Company operates on a 52/53-week fiscal year calendar, which ends on the Saturday nearest to January 31 of each year. The three and nine months ended October 27, 2012 had the same number of days as the three and nine months ended October 29, 2011.

The Company reports National Retail Federation ("NRF") calendar comparable store sales on a quarterly basis for our stores in the U.S. and Canada. A store is considered comparable after it has been open for 13 full months. If a store remodel results in a square footage change of more than 15%, or involves a relocation or a change in store concept, the store is removed from the comparable store base until it has been opened at its new size, in its new location or under its new concept for 13 full months.

Executive Summary

The Company

Net earnings attributable to Guess?, Inc. decreased 44.7% to $36.6 million, or diluted earnings of $0.43 per common share, for the quarter ended October 27, 2012, compared to net earnings attributable to Guess?, Inc. of $66.3 million, or diluted earnings of $0.71 per common share, for the quarter ended October 29, 2011.

Highlights of the Company's performance for the quarter ended October 27, 2012 compared to the same prior-year period are presented below, followed by a more comprehensive discussion under "Results of Operations":

† Total net revenue decreased 2.2% to $628.8 million for the quarter ended October 27, 2012, from $642.8 million in the same prior-year period. In constant U.S. dollars, revenue increased by 1.2%.

† Gross margin (gross profit as a percentage of total net revenue) declined 350 basis points to 39.4% for the quarter ended October 27, 2012, compared to 42.9% in the same prior-year period, due to a higher occupancy rate and lower overall product margins.

† Selling, general and administrative ("SG&A") expenses increased 6.1% to $189.5 million for the quarter ended October 27, 2012, compared to $178.6 million in the same prior-year period. SG&A expense as a percentage of revenue ("SG&A rate") increased by 240 basis points to 30.2% for the quarter ended October 27, 2012, compared to 27.8% in the same prior-year period, driven primarily by increased global advertising and marketing investments, higher store selling expenses in Europe, given our retail expansion in the region, and deleveraging of fixed costs resulting from negative comparable store sales in North America.

† Earnings from operations declined 40.1% to $58.1 million for the quarter ended October 27, 2012, compared to $97.0 million in the same prior-year period. Operating margin declined 590 basis points to 9.2% for the quarter ended October 27, 2012, compared to 15.1% in the same prior-year period.

† Other expense, net, (including interest income and expense) totaled $0.7 million for the quarter ended October 27, 2012, compared to other income, net, of $1.8 million in the same prior-year period.

† The effective income tax rate increased 250 basis points to 34.8% for the quarter ended October 27, 2012, compared to 32.3% in the same prior-year period.

† The Company had $294.6 million in cash and cash equivalents and short-term investments as of October 27, 2012, down $136.2 million, compared to $430.8 million as of October 29, 2011. The Company invested $140.1 million to repurchase

approximately 5.0 million of its common shares during the second quarter of fiscal 2013. The Company also invested $92.0 million to repurchase approximately 3.2 million shares of its common stock during the fourth quarter of fiscal 2012.

† Accounts receivable, which relates primarily to the Company's wholesale business in Europe, and to a lesser extent, to its wholesale businesses in North America and Asia and its international licensing business, decreased by $44.1 million, or 11.7%, to $332.4 million at October 27 2012, compared to $376.5 million at October 29, 2011. On a constant U.S. dollar basis, accounts receivable decreased $24.5 million, or 6.5%.

† Inventory increased by $36.9 million, or 9.6%, to $422.3 million as of October 27, 2012, compared to $385.4 million as of October 29, 2011. When measured in terms of finished goods units, inventory volumes increased by 12.1% as of October 27, 2012, when compared to October 29, 2011.

Europe

In Europe, revenue decreased by $18.4 million, or 8.3%, to $202.6 million for the quarter ended October 27, 2012, compared to $221.0 million in the same prior-year period. In local currency, revenue increased by 1.7%. The increase in revenue from the expansion of our directly operated retail business (where comparable store sales were nearly flat) was more than offset by the unfavorable currency translation impact on revenue resulting from fluctuations in foreign currency rates and lower revenue from our European wholesale business. We grew our business in newer markets, including Russia, though this growth was more than offset by a decline in wholesale shipments, primarily in Italy. At October 27, 2012, we directly operated 234 stores in Europe compared to 171 stores at October 29, 2011, excluding concessions, which represents a 36.8% increase over the prior-period end.

Earnings from operations from our Europe segment decreased by $19.6 million, or 57.3%, to $14.6 million for the quarter ended October 27, 2012, compared to $34.2 million in the same prior-year period. Operating margin declined 830 basis points to 7.2% for the quarter ended October 27, 2012, compared to 15.5% for the same prior-year period. The decline in operating margin was driven by a higher SG&A rate and lower gross margins. The higher SG&A rate was driven mainly by higher store selling expenses due to retail expansion and increased investments in advertising and marketing. The lower gross margin was driven primarily by a higher occupancy rate due to retail expansion.

North American Retail

In our North American Retail segment, revenue decreased by $3.5 million, or 1.3%, to $262.1 million during the quarter ended October 27, 2012, compared to $265.6 million in the same prior-year period. The increase in revenue resulting from a larger store base and growth in our e-commerce business was more than offset by negative comparable store sales of 6.0% for our combined U.S. and Canadian stores.

North American Retail earnings from operations decreased by $18.5 million, or 67.5%, to $9.0 million for the quarter ended October 27, 2012, compared to $27.5 million in the same prior-year period. Operating margin decreased 700 basis points to 3.4% for the quarter ended October 27, 2012, compared to 10.4% for the same prior-year period. The decrease was driven by a higher SG&A rate and lower gross margins. The higher SG&A rate was driven mainly by an overall deleveraging of expenses resulting from the negative comparable store sales and increased investments in advertising and marketing. Gross margins were negatively impacted by a higher occupancy rate, given the negative comparable store sales, and higher markdowns as well as pricing changes in Canada.

In the third quarter of fiscal 2013, we opened five new stores in the U.S. and Canada and closed three stores. At October 27, 2012, we directly operated 513 stores in the U.S. and Canada, comprised of 191 full-priced GUESS? retail stores, 130 GUESS? factory outlet stores, 79 G by GUESS stores, 60 GUESS? Accessories stores and 53 MARCIANO stores. This compares to 495 stores as of October 29, 2011.

Asia

In Asia, revenue increased by $10.0 million, or 15.5%, to $74.8 million for the quarter ended October 27, 2012, compared to $64.8 million in the same prior-year period, driven by growth in our South Korea and Greater China businesses due primarily to retail expansion. We continued to expand our operations in the region, where we and our partners opened 21 stores and 45 concessions during the quarter ended October 27, 2012.

Earnings from operations from our Asia segment decreased by $0.4 million, or 5.4%, to $7.8 million for the quarter ended October 27, 2012, compared to $8.2 million for the same prior-year period. Operating margin decreased 230 basis points to 10.4% for the quarter ended October 27, 2012, compared to 12.7% for the same prior-year period. The decline in operating margin was driven primarily by

lower gross margins due to channel mix and higher promotions in South Korea and a higher occupancy rate driven by retail expansion in Greater China, partially offset by SG&A expense leverage.

North American Wholesale

Our North American Wholesale segment revenue increased by $0.6 million, or 1.0%, to $57.9 million for the quarter ended October 27, 2012, from $57.3 million in the same prior-year period, driven by our non-U.S. wholesale businesses.

North American Wholesale earnings from operations decreased by $1.1 million, or 7.0%, to $14.9 million for the quarter ended October 27, 2012, compared to $16.0 million in the same prior-year period. Operating margin decreased 220 basis points to 25.7% for the quarter ended October 27, 2012, compared to 27.9% for same prior-year period, due primarily to increased investments in advertising and marketing.

Licensing

Our Licensing royalty revenue decreased by $2.5 million, or 7.6%, to $31.5 million for the quarter ended October 27, 2012, compared to $34.0 million in the same prior-year period. The decrease was driven primarily by lower sales in our handbag, watch and outerwear categories.

Earnings from operations from our Licensing segment decreased by $3.6 million, or 11.7%, to $27.1 million for the quarter ended October 27, 2012, compared to $30.7 million in the same prior-year period. The decrease was driven by lower revenue and higher advertising and marketing expenses.

Corporate Overhead

Corporate overhead expenses decreased by $4.5 million, or 22.8%, to $15.2 million for the quarter ended October 27, 2012, from $19.7 million in the same prior-year period. The decrease was driven primarily by lower professional fees and performance-based compensation costs, partially offset by increased investments in advertising and marketing.

Global Store Count

In the third quarter of fiscal 2013, together with our partners, we opened 53 new stores worldwide, consisting of 24 stores in Europe, 21 stores in Asia, five stores in the U.S. and Canada and three stores in Central America. Together with our partners, we closed 17 stores worldwide, consisting of 11 stores in Asia, three stores in Europe and three stores in the U.S. and Canada.

We ended the third quarter of fiscal 2013 with 1,662 stores worldwide, comprised as follows:

                                               Directly
Region                       Total Stores   Operated Stores   Licensee Stores
United States and Canada              513               513                 -
Europe and the Middle East            610               234               376
Asia                                  460                49               411
Central and South America              79                29                50
Total                               1,662               825               837

This store count does not include 403 concessions located primarily in South Korea and Greater China because of their smaller store size in relation to our standard international store size. Of the total 1,662 stores, 1,141 were GUESS? stores, 309 were GUESS? Accessories stores, 113 were G by GUESS stores and 99 were MARCIANO stores.

RESULTS OF OPERATIONS

Three months ended October 27, 2012 and October 29, 2011

NET REVENUE. Net revenue decreased by $14.0 million, or 2.2%, to $628.8 million for the quarter ended October 27, 2012, from $642.8 million for the quarter ended October 29, 2011. In constant U.S. dollars, revenue increased by 1.2% as currency translation fluctuations relating to our foreign operations unfavorably impacted net revenue by $21.7 million compared to the same prior-year period. The increases in revenue from expansion of our retail businesses in Europe and North America and growth in our Asian operations were offset by negative comparable store sales in North America and lower European wholesale shipments.

Net revenue from our Europe operations decreased by $18.4 million, or 8.3%, to $202.6 million for the quarter ended October 27, 2012, from $221.0 million in the same prior-year period. In local currency, revenue increased by 1.7% over the same comparable period. The increase in revenue from the expansion of our directly operated retail business (where comparable store sales were nearly flat) was more than offset by the unfavorable currency translation impact on revenue resulting from fluctuations in foreign currency rates and lower revenue from our European wholesale business. The decrease in our wholesale business was due mainly to lower apparel sales. We grew our business in newer markets, including Russia, though this growth was more than offset by a decline in wholesale shipments, primarily in Italy. At October 27, 2012, we directly operated 234 stores in Europe compared to 171 stores at October 29, 2011, excluding concessions, which represents a 36.8% increase over the prior-period end. Currency translation fluctuations relating to our Europe operations unfavorably impacted net revenue in our Europe segment by $22.3 million.

Net revenue from our North American Retail operations decreased by $3.5 million, or 1.3%, to $262.1 million for the quarter ended October 27, 2012, from $265.6 million in the same prior-year period. The increase in revenue resulting from a larger store base and growth in our e-commerce business was more than offset by negative comparable store sales of 6.0% for our combined U.S. and Canadian stores (negative 6.2% in local currency, which excludes the favorable translation impact of currency fluctuations relating to our Canadian retail stores). The store base increased by an average of 19 net additional stores during the quarter ended October 27, 2012 compared to the same prior-year period, resulting in a net 4.7% increase in average square footage.

Net revenue from our Asia operations increased by $10.0 million, or 15.5%, to $74.8 million for the quarter ended October 27, 2012, from $64.8 million in the same prior-year period. In constant U.S. dollars, net revenue increased 15.6% over the same comparable period, driven by growth in our South Korea and Greater China businesses due primarily to retail expansion. We continued to grow our Asia business, where we and our partners opened 21 stores and 45 concessions during the quarter ended October 27, 2012.

Net revenue from our North American Wholesale operations increased by $0.6 million, or 1.0%, to $57.9 million for the quarter ended October 27, 2012, from $57.3 million in the same prior-year period. In constant U.S. dollars, net revenue increased 0.8%, driven by our non-U.S. wholesale businesses.

Net royalty revenue from our Licensing operations decreased by $2.5 million, or 7.6%, to $31.5 million for the quarter ended October 27, 2012, from $34.0 million in the same prior-year period. The decrease was driven primarily by . . .