LOS ANGELES - Guess (NYSE:GES) Inc, the well-known apparel brand, has settled a lawsuit alleging breaches of fiduciary duty by its board members, according to a recent 8-K filing with the Securities and Exchange Commission. The lawsuit, initiated by the Employees' Retirement System of Rhode Island on behalf of a class of stockholders, targeted the company's proposed amendment to its Restated Certificate of Incorporation concerning the rights and privileges of common stock.
The legal action, filed in the Court of Chancery of the State of Delaware, named each member of Guess's Board of Directors and Maurice Marciano as defendants. The complaint, dated May 8, 2024, was in response to the amendment presented in the proxy statement for Guess's 2024 annual meeting of stockholders.
In a move to address the concerns raised, Guess withdrew the contested amendment from stockholder consideration on May 16, 2024, and consequently, it was not put to a vote at the Annual Meeting. The company has consistently denied any wrongdoing related to the allegations.
Despite denying the allegations, Guess has agreed to a settlement to avoid further litigation costs and distractions. The settlement includes a payment of $250,000 in attorneys' fees and expenses, fully resolving any claims for fees and expenses related to the lawsuit.
The Court officially closed the case on July 23, 2024, with the condition that Guess file an affidavit confirming the filing of this report with the SEC as notice to the putative class under Rule 23 of the Court.
This settlement comes as the company seeks to put the dispute behind it and focus on its core business activities. The information is based on a press release statement.
In other recent news, Guess, Inc. has increased its European revolving credit facility from €250 million to €350 million, a move that reflects lender confidence and the strategic importance of the region. The company's sustainability performance will influence the facility's interest rate, with adjustments made annually based on the company's success in reducing greenhouse gas emissions, sourcing sustainable materials, and the prevalence of Guess ECO products.
In addition to financial maneuvers, Guess? has expanded its portfolio by acquiring a 50% stake in the intellectual property of fashion brand rag & bone, contributing to a 7% year-over-year increase in total revenue and significant earnings per share (EPS) growth in the first quarter. Despite the robust financial performance, Telsey Advisory Group and Jefferies have lowered their price targets for Guess due to moderated sales growth and anticipated softer consumer trends.
InvestingPro Insights
In light of Guess Inc's recent legal settlement, investors may find the following InvestingPro insights relevant to the company's financial health and future prospects. According to InvestingPro data, Guess boasts a market capitalization of $1.26 billion and is trading at an attractive P/E ratio of 5.63, suggesting a potentially undervalued stock. The company's revenue for the last twelve months as of Q1 2025 stands at $2.798 billion, with a growth rate of 5.07%, indicating steady business performance.
From the InvestingPro Tips, it's noteworthy that Guess has raised its dividend for four consecutive years and has maintained dividend payments for 18 consecutive years, which could be appealing to income-focused investors. The dividend yield as of 2024 stood at a generous 5.22%. Additionally, analysts predict that the company will remain profitable this year, which may reassure investors of Guess's financial stability despite the recent legal challenges.
For those interested in a more comprehensive analysis, InvestingPro offers additional insights and metrics. Currently, there are 11 more InvestingPro Tips available for Guess Inc, which can be accessed by visiting the InvestingPro platform. To enhance your investment research, use coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription.
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