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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q

(MARK ONE)

ý Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

For the quarterly period ended September 28, 2002

OR

o Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

For the transition period from                              to                             

Commission File Number 1-11893

GUESS?, INC.
(Exact name of registrant as specified in its charter)

1444 South Alameda Street
Los Angeles, California, 90021
(Address of principal executive offices)

(213) 765-3100
(Registrant's telephone number, including area code)

        Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.

Yes ý    No o

        As of September 28, 2002, the registrant had 43,078,400 shares of Common Stock, $.01 par value per share, outstanding.

GUESS?, INC.
FORM 10-Q
TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION

ITEM 1. Financial Statements

GUESS?, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
(unaudited)

See accompanying notes to condensed consolidated financial statements.

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GUESS?, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)

See accompanying notes to condensed consolidated financial statements.

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GUESS?, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)

See accompanying notes to condensed consolidated financial statements.

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GUESS?, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 28, 2002
(in thousands, except per share amounts)
(unaudited)

(1)  Basis of Presentation

        In the opinion of management, the accompanying unaudited condensed consolidated financial statements of GUESS?, Inc. and its subsidiaries (the "Company") contain all adjustments, consisting of normal recurring adjustments, considered necessary for a fair presentation of the condensed consolidated balance sheets as of September 28, 2002 and December 31, 2001, the condensed consolidated statements of operations for the three and nine months ended September 28, 2002 and September 29, 2001, and the condensed consolidated statements of cash flows for the nine months ended September 28, 2002 and September 29, 2001. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with Rule 10-01 of Regulation S-X of the Securities and Exchange Commission ("SEC"). Accordingly, they have been condensed and do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. The results of operations for the three and nine months ended September 28, 2002 are not necessarily indicative of the results of operations for the full fiscal year. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company's annual report on Form 10-K for the year ended December 31, 2001.

        The Company's quarterly fiscal reporting period ends on the Saturday nearest the calendar quarter end. This did not have an impact for the third quarter of 2002 compared to 2001; however, this resulted in 271 days for the nine months ended September 28, 2002 compared to 272 days for the nine months ended September 29, 2001.

        Certain reclassifications have been made to the prior years' condensed consolidated financial statements to conform to classifications used in the current year. These reclassifications had no impact on previously reported results.

(2)  Summary of Significant Accounting Policies

Earnings (Loss) Per Share

        Basic earnings (loss) per share represent net earnings (loss) divided by the weighted-average number of common shares outstanding for the period. Diluted earnings per share represent net earnings (loss) divided by the weighted average number of shares outstanding, inclusive of the dilutive impact of common stock equivalents. For the quarter ended September 28, 2002 and for the three and nine-month periods ended September 29, 2001, the difference between basic and diluted earnings per share was due to the potential dilutive impact of options to purchase common stock. The diluted loss per share for the nine-months ended September 28, 2002 was computed using the basic weighted-average number of shares outstanding and excluded 2,647,555 dilutive shares, as their effect would be antidilutive when applied to losses. Options to purchase 2,629,291 shares of common stock at prices ranging from $5.58 to $27.31 during the third quarter of 2002 and options to purchase 792,967 shares of common stock at prices ranging from $7.75 to $27.31 per share during the third quarter of 2001 and options to purchase 1,088,053 shares of common stock at prices ranging from $6.45 to $27.31 during the nine months period ended September 29, 2001 were not included in the computation of diluted earnings per share because the exercise prices were greater than the average market price of the common stock and therefore such options would be antidilutive.

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Business Segment Reporting

        The business segments of the Company are retail, wholesale and licensing. Information relating to these segments is summarized in Note 5.

Comprehensive Income (Loss)

        Comprehensive income consists of net earnings (loss), unrealized gains (losses) on investments available for sale and foreign currency translation adjustments. A reconciliation of comprehensive income (loss) for the three and nine-month periods ended September 28, 2002 and September 29, 2001 is as follows (in thousands):

New Accounting Standards

        Effective January 1, 2002, the Company adopted Statement of Financial Accounting Standards No. 144 ("SFAS 144"), "Accounting for the Impairment or Disposal of Long-Lived Assets," which addresses financial accounting and reporting for the impairment or disposal of long-lived assets. While SFAS 144 supersedes Statement of Financial Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of," it retains many of the fundamental provisions of that statement. The adoption of this standard did not have a material impact on the Company's financial position or results from operations.

        The Company also adopted Statement of Accounting Standards No. 141 ("SFAS 141"), "Business Combinations," and Statement of Accounting Standards No. 142 ("SFAS 142"), "Goodwill and Other Intangible Assets" on January 1, 2002. SFAS 141 requires that the purchase method be used for all business combinations initiated after June 30, 2001. SFAS 142 requires that goodwill no longer be amortized to earnings, but instead be reviewed for impairment. As a result of the adoption of this standard, the Company did not record approximately $353,000 and $962,000 of goodwill amortization during the three and nine-months ended September 28, 2002, respectively, while a comparable amount was recorded in the three and nine-months ended September 28, 2001.

        In November 2001, the Emerging Issues Task Force ("EITF") issued EITF 01-9, "Accounting for Consideration Given by a Vendor to a Customer," which became effective for the first quarter beginning after December 31, 2001. EITF 01-9 requires certain consideration given by and to vendors or a customer be presented as a reduction of revenue rather than as a cost or an expense. The adoption of EITF 01-9 did not have a material impact on the Company's financial position or results from operations.

        On July 30, 2002, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards No. 146 ("SFAS 146"), "Accounting for Costs Associated with Exit or Disposal Activities." SFAS 146 nullifies EITF Issue No. 94-3, "Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring)." It requires that a liability be recognized for those costs only when the liability is

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incurred, that is, when it meets the definition of a liability in the FASB's conceptual framework. SFAS No. 146 also establishes fair value as the objective for initial measurement of liabilities related to exit or disposal activities. SFAS 146 is effective for exit or disposal activities that are initiated after December 31, 2002. The Company does not expect that the adoption of SFAS 146 will have a material impact on its financial position or results from operations.

(3)  Inventories

        The components of inventories consist of the following (in thousands):

        As of September 28, 2002 and December 31, 2001, reserves to write-down inventories to the lower of cost or market totaled $6.9 million and $9.8 million, respectively.

        During the first quarter of 2001, the Company decided to license its existing children's business, then produced in-house, to its licensee for its Baby Guess product line. The agreement was finalized in the second quarter of 2001 and became effective in 2002. The Company recorded a write-down charge of approximately $562,000 which was included in cost of sales in the first quarter of 2001. The charge relates to lower of cost or market adjustments for inventories sold below cost as a result of the decision to license this product line.

(4)  Income taxes

        Income taxes (benefit) for the interim periods were computed using the effective tax rate estimated to be applicable for the full fiscal year, which is subject to ongoing review and evaluation by management.

(5)  Segment Information

        The Company's reportable business segments and respective accounting policies of the segments are the same as those described in Note 2. Management evaluates segment performance based primarily on revenue and earnings (loss) from operations. Interest income and expense are evaluated on a consolidated basis and are not allocated to the Company's business segments.

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        Net revenue and earnings (loss) from operations are summarized as follows for three and nine-month periods ended September 28, 2002 and September 29, 2001 (in thousands):

        Due to the seasonal nature of these business segments, the above net revenue and operating results for the three and nine months ended September 28, 2002 are not necessarily indicative of the results that may be expected for the full fiscal year.

(6)  Long-Term Debt

        On September 27, 2002, the Company entered into a new credit facility led by Wachovia Securities, Inc., as Arranger and Administrative Agent ("New Facility"), which replaces a previous credit agreement. The term of the New Facility is for a period of four years and provides for a maximum line of credit of $85 million, including a $47.5 million sub-limit for letters of credit and a $15 million sub-limit for borrowing by the Company's Canadian subsidiary (the "Canadian Sub-Line"). Borrowings available under the New Facility are subject to a borrowing base and outstanding borrowings are secured by inventory, accounts receivable and substantially all other personal property of the borrowers. For borrowings under the New Facility, the Company may elect an interest rate based on either the Prime Rate or a Eurodollar rate plus a margin, which fluctuates depending on availability under the New Facility and the Company's financial performance as measured by a cash flow test. This margin ranges from 0 to 75 basis points for Prime Rate loans and from 175 to 250 basis points for Eurodollar rate loans. Commitment fees for unused borrowings up to $60 million under the New Facility are 37.5 basis points per annum. The New Facility requires the Company to maintain a minimum tangible net worth if excess availability under the New Facility is less than $20 million. At September 28, 2002, the Company had $0.2 million outstanding borrowings under the New Facility, $24.9 million in outstanding standby letters of credit of which $19.6 million is for documentary letters of credit outstanding under a previous credit agreement, and approximately $54.5 million available for future borrowings. As of September 28, 2002, the Company was in compliance with all of its covenants under the New Facility.

        Guess? Canada Corporation, a wholly owned subsidiary of the Company, ("Guess Canada") has a $17.8 million ($27.0 million Canadian dollars) short-term line of credit available to fund local operations. The credit line bears interest at the Canadian prime rate plus 1.0% and is secured by certain assets of Guess Canada. At September 28, 2002, $5.6 million was outstanding under this line. Guess Canada also has a $1.3 million ($2.0 million Canadian dollars) revolving term loan that bears interest at 1.75% above the Canadian prime rate plus an amount equal to 0.5% per month of the average outstanding balance, payable on demand, but commencing January 1, 2001, by way of 24 equal

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consecutive minimum payments. At September 28, 2002, $0.4 million of the term loan was outstanding. Both the credit line and the revolving term loan will terminate on January 1, 2003, at which time the Company expects to replace them with the Canadian Sub-Line. The Company has a commitment from the lender for the Canadian Sub-Line which is subject to final documentation.

        The Company has outstanding 9.5% Senior Subordinated Notes due in August, 2003 ("Senior Subordinated Notes") which are redeemable at the option of the Company, in whole or in part, at any time at par value with accrued and unpaid interest. The Company did not repurchase any of its Senior Subordinated Notes during the three or nine-month periods ended September 28, 2002. The Company is evaluating alternative options to refinance the Senior Subordinated Notes and has agreed to have an alternative in place by February 28, 2003, pursuant to the terms of the New Facility.

(7)  Employee Stock Purchase Plan

        In January 2002, the Company established a qualified employee stock purchase plan ("ESPP"), the terms of which allow for qualified employees (as defined) to participate in the purchase of designated shares of the Company's common stock at a price equal to 85% of the lower of the closing price at the beginning or end of each quarterly stock purchase period. The ESPP is a straight purchase plan and is not subject to any holding period, however all Company employees are subject to the terms of the Company's securities trading policy which generally prohibits the purchase or sale of any Company securities during the two weeks before the end of each fiscal quarter through the public announcement by the Company of its earnings for that period. On January 23, 2002, the Company filed with the Securities and Exchange Commission a Registration Statement on Form S-8 registering 2,000,000 shares of common stock for the ESPP.

        During the nine months ended September 28, 2002, 47,404 shares of the Company's common stock were issued pursuant to the ESPP at an average price of $5.04 per share.

(8)  Share Repurchase Program

        In May 2001, the Company's Board of Directors authorized the Company to repurchase shares of its own stock in an amount of up to $15 million from time to time in open market transactions. During the third quarter of 2002, the Company purchased 606,000 shares at an aggregate cost of $3.2 million, or an average of $5.21 per share. Since the inception of the share repurchase program in May 2001, the Company has purchased 1,137,000 shares at an aggregated cost of $7.1 million, or an average of $6.26 per share.

(9)  Restructuring and Severance Charges

        During the first quarter ended March 30, 2002, the Company recorded $655,000 in additional costs for estimated rent to be paid and lease exit costs related to idle leased facilities identified as part of the restructuring charge recorded during the fourth quarter of 2000. These properties were sublet in the second quarter of 2002.

        During the first quarter ended March 31, 2001, the Company recorded a restructuring charge of $401,000 related to severance payments for 110 employees to reduce the workforce.

        During the third quarter ended September 29, 2001, the Company recorded restructuring, impairment and severance charges of $4.4 million ($2.6 million after tax or $0.06 per diluted share). Based on the current real estate market following the events on September 11, 2001, the Company recorded $2.2 million in additional costs for rent paid, estimated rent to be paid and lease exit costs related to idle leased facilities identified as part of the restructuring charge recorded during the fourth quarter of 2000. In addition, $1.3 million of the charges represented the write-down of the value of certain impaired assets, including fixed assets related to unprofitable stores. The remaining $0.9 million of the charge was related to severance costs for the reduction in the Company's workforce, which was part of its continuing efforts to reduce costs, improve productivity, streamline its corporate structure and consolidate operations.

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ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

IMPORTANT NOTICE REGARDING FORWARD-LOOKING STATEMENTS

        This Form 10-Q contains certain forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934 (the "Exchange Act"). Forward-looking statements may also be contained in the Company's other reports filed under the Exchange Act, 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.

        Forward-looking statements generally relate to future events or future financial performance, and include statements dealing with current plans, intentions, objectives, beliefs and expectations. Some forward-looking statements can be identified by terminology such as "may," "will," "should," "expects," "plans," "intends," "anticipates," "believes," "estimates," "predicts," "potential," "optimistic," "aims," or "continues" or the negative of such terms or other comparable terminology. Certain statements in this Form 10-Q, including but not limited to those relating to the Company's expected results, the accuracy of data relating to, and anticipated levels of, its future inventory and gross margins, its anticipated cash requirements and sources, and its business seasonality, are forward-looking statements.

        Forward-looking statements are only expectations, and involve known and unknown risks and uncertainties, which may cause actual results in future periods and other future events to differ materially from what is currently anticipated. Factors which may cause actual results in future periods to differ from current expectations include, among other things, the continued availability of sufficient working capital, the successful integration of new stores into existing operations, the continued desirability and customer acceptance of existing and future product lines, possible cancellations of wholesale orders, the success of competitive products, and the availability of adequate sources of capital. In addition to these factors, the economic and other factors identified in the Company's most recent annual report on Form 10-K for the fiscal year ended December 31, 2001, including but not limited to the risk factors discussed therein, could affect the forward-looking statements contained herein and in the Company's other public documents.

OVERVIEW

        We derive our net revenue from the sale of GUESS? men's and women's apparel and our licensees' products through our network of retail and factory outlet stores located primarily in the United States; from the sale of GUESS? men's and women's apparel worldwide to wholesale customers and distributors; from net royalties from worldwide licensing activities; from the sale of GUESS? apparel through retail and wholesale channels of our wholly owned Canadian subsidiary, Guess Canada Corporation ("Guess Canada"); and from the sale of GUESS? men's and women's apparel and our licensee products through our on-line store at www.guess.com.

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

        The Company's quarterly fiscal reporting period ends on the Saturday nearest the calendar quarter end. This did not have an impact for the third quarter of 2002 compared to 2001; however, this resulted in 271 days for the nine months ended September 28, 2002 compared to 272 days for the nine months ended September 29, 2001.

RESULTS OF OPERATIONS

        Three and Nine Months Ended September 28, 2002 and September 29, 2001.

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        NET REVENUE.    Net revenue for the three months ended September 28, 2002 decreased $14.6 million, or 8.5%, to $157.8 million from $172.4 million in the three months ended September 29, 2001.

        For the third quarter of 2002, net revenue from retail operations slightly decreased 0.7% to $94.8 million from $95.5 million in the third quarter of 2001. The difficult retail environment resulted in a 5.4% decrease in comparable store sales and more than offset sales from 18 net new stores. However, the Canadian stores continued to perform well during the quarter with positive comparable store sales.

        Net revenue from wholesale operations declined $16.0 million, or 24.0%, to $50.7 million in the third quarter ended September 28, 2002 from $66.7 million in the third quarter ended September 29, 2001. The third quarter of 2001 included $6.6 million of kids business, which was licensed out beginning in the first quarter of 2002. $6.0 million of this amount was sold to domestic wholesale customers and $0.6 million of this amount was sold to international wholesale customers. Excluding the kids business from the prior year quarterly results, wholesale revenue declined by $9.4 million or 15.6%. Excluding the kids business, domestic wholesale net revenue decreased in the third quarter of 2002 by $11.8 million, or 27.1%, to $31.7 million. The decrease in the current year third quarter domestic wholesale revenue is attributable to continued cautious purchasing by department store buyers in response to lower consumer traffic and spending, higher allowances and increased off-price sales. Excluding the kids business, international wholesale net revenue increased by $2.4 million, or 14.5%, to $19.0 million for the third quarter of 2002. International wholesale revenue increased due to improvements in the international markets, particularly in Europe.

        Net royalty revenue increased $2.1 million, or 20.6%, to $12.3 million in the third quarter of 2002 from $10.2 million in the third quarter of 2001. The increase is attributable to improved performance by the international licensees. The 2002 third quarter also included royalty adjustments from licensee audits of approximately $1.0 million.

        Net revenue for the nine-month period ended September 28, 2002 decreased $78.4 million, or 15.9%, to $415.8 million from $494.2 million in the nine-month period ended September 29, 2001, primarily due to the decline in the wholesale segment.

        Net revenue from retail operations decreased $4.5 million, or 1.7% to $253.5 million for the first nine months of 2002 from $258.0 million for the first nine months of 2001. The increase in sales from new stores was offset by a comparable store sales decrease of 5.7% for the nine-month period ended September 28, 2002, reflecting the continued weak retail environment.

        Net wholesale revenue declined $74.5 million, or 35.9%, to $133.3 million in the nine months ended September 28, 2002 compared to $207.8 million in the same prior year period. The first nine months of 2001 included $22.8 million of kids business, which was licensed out beginning in the first quarter of 2002. Excluding the kids business, wholesale revenue declined by $51.7 million or 27.9%. During the nine months ended September 28, 2002, domestic wholesale net revenue decreased $73.2 million, or 44.8%, to $90.2 million. Excluding the kids business, domestic wholesale net revenue decreased $52.6 million, or 36.8%, to $90.2 million. Lower shipments to department stores and specialty stores and higher markdown allowances adversely impacted net domestic wholesale revenue in the current year nine-month period, reflecting conservative inventory positions taken by wholesale customers. International wholesale net revenue declined $1.3 million, or 2.9%, to $43.1 million during the nine months ended September 28, 2002, from $44.4 million in the same period a year ago. Excluding the kids business, international wholesale net revenue increased $0.9 million, or 2.1%, to $43.1 million from the same period a year ago. International wholesale revenue increased mainly due to improved sales in Europe.

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        Net royalty revenue for the nine-month period ended September 28, 2002 increased $0.6 million, or 2.1%, to $29.0 million compared to $28.4 million during the same period in 2001.

        GROSS PROFIT.    Gross profit decreased $2.2 million, or 3.7%, to $56.8 million in the three months ended September 28, 2002 from $59.0 million in the comparable 2001 period. However, as a percentage of net revenue, gross profit margins increased to 36.0% in the third quarter of 2002 from 34.3% in the third quarter of 2001. Gross profit margins improved slightly in the retail segment in the third quarter of 2002 compared to the third quarter of 2001, while gross profit margins in the wholesale segment were flat with the prior year third quarter. The improvement in the overall gross profit margin was due to higher licensing revenue and improved gross margins in the retail segment, partially offset by higher occupancy costs due to lower sales productivity.

        Gross profit declined $27.2 million, or 16.0%, to $142.3 million for the nine months ended September 28, 2002 from $169.5 million for the nine months ended September 29, 2001. As a percentage of net revenue, gross profit margins decreased slightly to 34.2% in the first nine months of 2002 from 34.3% in the same period in 2001. In the retail segment, gross profit margins improved, however, gross profit margins in the wholesale segment declined from the 2002 year-to-date period. Lower retail markdowns, partially offset by increased retail occupancy costs, were offset by higher allowances and increased losses on off-price sales in the wholesale segment.

        SELLING, GENERAL AND ADMINISTRATIVE EXPENSES.    Selling, general and administrative ("SG&A") expenses increased $2.5 million, or 5.1%, to $51.7 million in the third quarter of 2002 compared to $49.2 million in the third quarter of 2001. As a percentage of net revenue, SG&A expenses increased to 32.8% in the third quarter of 2002 from 28.5% in the third quarter of 2001 due to lower sales productivity in the current year. The increase was primarily attributable to high