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Guess?, Inc. (GES) — this company's answers

The model's full reasoning — Q1 2017 call → NOWe need to determine if the dynamic described is present. The question asks about a recently emerged positive element of the business, probed by analysts, and management responds with unhesitating, granular operational command, answering follow-up questions with specific present-tense working detail, while conveying that the element's contribution is still early. We need to identify such an element in the transcript. The call is about Q1 2017 results. The positive element that emerged recently? Possibly the strong performance in Europe retail comps, which have been strong for almost a year? Or the G by GUESS format? Or the underwear store? Or the new store concept? Or the e-commerce growth? Or the wholesale order book improvement? Let's examine. The question says "recently emerged positive element of the business — something whose meaningful contribution began only within roughly the last few quarters." Management's own framing: In the call, Victor Herrero talks about Europe retail comps up mid-teens, and says "we have a three-year revenue growth target of $300 million. This quarter our retail comps were up in the mid-teens with positive comps in almost all markets in the region." That seems like a recent strength. Also, the wholesale order book for fall winter 2016 finished up 3% after being down 8% for spring/summer. That is a recent inflection. Analysts probe this? Let's see the Q&A. The first question from Erinn Murphy asks about store openings in the U.S., not Europe. Then Krista Zuber asks about licensing and cash flow. Then Janine Stichter asks about Europe: "Just hoping to get a little bit more color on what you think is driving the trends in Europe. It seems like you saw a nice acceleration there that’s held into 2Q. Do you think its product marketing or more just the environment? And then we are also interested specifically in what you think cause the inflection in the order book? And then lastly on Europe, could you just comment on the promotional environment there even though sales were better it just seem like you saw some additional promotions that you mentioned in the gross margin commentary, I am wondering if that is stabilizing going forward?" So this is a direct probe of the Europe strength, which is a recently emerged positive element (retail comps up mid-teens, order book inflection).

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