After nearly 30 years trading on the New York Stock Exchange, Guess Inc.’s go-private deal to sell a controlling stake of its intellectual property aims to fight back against headwinds for apparel and retail brands in the public markets.
Authentic Brands Group is set to buy a 51 percent stake in Guess Inc.’s IP to take the business private. The remainder of the IP will be owned by a management group that includes co-founder Paul Marciano and CEO Carlos Alberini. That same management group will wholly own the operating company, which includes the stores and inventory.
Guess attempted to quell any employee concerns and further explain the deal in an FAQ, according to a Monday filing with the Securities & Exchange Commission.
“Over the past several years, the landscape for public companies in our sector has shifted significantly,” the employee note explained. “Public valuations have been compressed, driven by reduced analyst coverage and diminished investor focus on our industry. At the same time, with the increasing regulatory burden for public companies our costs have escalated, and we risk diverting management’s attention away from what matters most: our business, our products and our customers.”
Public valuations are key in a company’s ability to raise capital or obtain more favorable loan terms. A high valuation also helps in acquiring other businesses. That’s something management has expressed interest in following its first-ever purchase in Rag & Bone last year and the launch of Guess Jeans.
“Our new partnership with ABG will allow us to expand our businesses through acquisitions of other brands, just like we did with Rag & Bone, to leverage our global infrastructure and ABG’s vast network of licenses, investors and great business development capabilities,” the company said.
Why Authentic Brands
The reason Authentic Brands made sense for Guess, the company said, is the scale of the ABG business.
The brand management firm has a portfolio of over 50 brands, including RVCA, Quiksilver, Billabong, Juicy Couture, Reebok, Sports Illustrated and Lucky Brand.
Authentic works with licensees that produce and handle distribution for these brands, leaving ABG with an asset light business model that has a steady stream of royalties from third-party companies.
Guess management cited Authentic Brands as “top-tier operators” that will help the company “grow and scale globally.”
“Together with Authentic and as a privately held company, Guess will have additional resources and enhanced flexibility to navigate today’s complex operating environment and execute on a more targeted, long-term strategy, enabling us to even better serve our customers around the world,” the employee FAQ said.
Business as Usual at Guess
Guess management assured employees nothing changes, while the deal with Authentic Brands remains pending. Post-closing the company said it expects the “majority of our operations to remain consistent with our current businesses.”
The company also reiterated to employees that Marciano and Alberini will continue to manage the business after the deal closes, which is expected in the fourth quarter of Guess’ fiscal year 2026.
It’s a different business structure that Guess will come out of with the go-private deal in comparison to Authentic’s other more recent deal locally with the September 2023 acquisition of Boardriders for $1.3 billion.
Boardriders was the umbrella company for RVCA, Roxy, DC Shoes, Quiksilver, Billabong, Element, VonZipper and Honolua.
In that deal, Authentic purchased the entire business – IP and operations – from private equity firm Oaktree Capital Management. Several rounds of layoffs occurred across the company’s warehouses, C-suite, marketing, design and other areas that became redundant with the shift to licensing models. That’s different from Guess, which already employs that model for categories such as fragrances and accessories.
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