You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. 
Text: including potential impacts from the coronavirus pandemic.
Comments will also reference certain non-GAAP or adjusted measures.
Before turning the call to Carlos, I would like to mention that we will be participating in the fireside chat at the Goldman Sachs Annual Global Retailing Conference on Friday, September 10 at 03:20 PM Eastern.
We hope to see you there.
We are very proud of our team and our accomplishments.
We just closed a great quarter and we plan to review what drove our performance in detail.
But most importantly, I want to share with you where we are today and how we see the future, both short and long-term.
Let me start with our results.
For the second quarter, we reported adjusted earnings from operations of $89 million.
This compares to adjusted operating earnings of $48 million for the LLY period exceeding our pre-pandemic performance by 85%.
This was well ahead of our expectations.
We reported revenues of $629 million, 58% over last year and 8% below the LLY period.
The entire decline to LLY was due to a timing shift of European wholesale shipments into Q3 and permanent store closures, which are accretive to operating profit.
This is in spite of being significantly less promotional during the period in all of our direct-to-consumer businesses.
For the quarter, we delivered that 14% adjusted operating margin.
We expanded our operating margin by over 700 basis points from 7% in the LLY period.
The star of this quarter was the North America Retail segment that reported an operating profit of $38 million versus $6 Million in the LLY period and almost 540% increase.
Our Wholesale and Licensing businesses also outperformed, and Europe and Asia delivered roughly flat operating performance to the LLY period.
Paul and I continue to be thrilled with our team's performance all over the world, adjusting and reacting seamlessly to the fluidity of the current environment.
We are happy to see demand recovering and stores reopened across the globe.
We still see the pandemic's impact on customer traffic and on the supply chain globally.
The labor market has also been impacted as companies are challenged to rehire workers leading to labor shortages and higher wages.
At Guess, we remain laser focused on what we can control.
As a global brand, we have adapted quickly to the changing levels of demand and restrictions across our markets.
We are sizing our inventory buys accordingly, adjusting prices to the perceived value of our products, strategically managing promotional activity and increasing labor rates to attract and retain top talent.
We continue to keep cost very tight by eliminating redundancies and increasing efficiencies.
We have been relentless in mitigating supply chain disruptions.
We are strategically partnering with our vendors to accelerate deliveries when feasible, changing countries of origin when appropriate to increase speed to market and investing in faster transportation modes when it makes sense.
Our strategy is working and our results reflect this.
I am proud to share with you that we published our latest sustainability report this summer, focused on our three pillars to operate with integrity, empower our people and protect the environment.
Some highlights include reaching gender pay parity, increasing our eco-smart Guess penetration to 20% and receiving approval in our ambitious science-based targets for greenhouse gas reductions.
We are confident in our actions here.
In fact, we successfully passed a reasonable assurance review by a big firm making Guess the first in fashion to subject our ESG data to such a high level operator.
We have increased our environmental quality score with the Independent shareholder services to a 1 out of 10, the highest rating possible, as a result of this work.
Let me now spend a few minutes talking about what's going on in the different regions and channels of our business.
In North America, traffic has improved sequentially each quarter, but remains well below historical levels and we continue to see higher conversion rates and higher average spend.
We are in the midst of back-to-school and we have solid demand for denim, activewear and knits.
In addition, we have seen sequential sales growth for our dresses category, which was positive to LLY for the first time since that pandemic began.
Both our Guess and Marciano brands are experiencing increases in sales of dressing, apparel and accessories as the customer is returning to social life.
We have also been successful with our handbags and wear-now products and our men's business has been particularly strong.
In Europe, we had a stronger start to the second quarter, which leveled off as the delta variant spread in many countries there.
Activewear continue to outperform in this region, both for women and men and we saw substantial pop in denim in Q2 as well as improved demand for dresses and outerwear.
We are encouraged by the progress that most countries in Europe have made with vaccination levels and we remain optimistic about the recovery of this region in the second half of the year.
In Asia, our customer traffic is the most challenged due to the virus and the trends remain relatively consistent in Q2 versus Q1.
The product categories that have performed better in this environment includes sweaters, denim and outerwear.
While we have made good progress in several areas of the operation, our challenges with topline performance remain.
We are reassessing our team and we are making leadership changes to reorganize the business today.
Our e-commerce business grew 11% in North America and Europe for the quarter versus last year.
Growth here was more moderate than prior quarters as we were a lot less promotional.
I'm pleased that we continue to significantly improve profitability in this channel.
In the back half of the year, we will be strategically investing more in marketing to support further growth in this business.
Our European wholesale business is performing well.
We are currently shipping our fall-winter season, which had orders up high-single digits.
As I mentioned, some of the products are delayed coming in.
So, they will ship in Q3 versus Q2.
The spring-summer season campaign is underway and we estimate that the order book will be higher than LLY with strong growth, particularly in our kids and footwear collections.
We're also very pleased with our Americas Wholesale business, which grew 19% in sales and 54% in operating profit versus LLY.
Denim had a great quarter and delivered strong performance at Macy's.
We're also having success in apparel for both men and women and accessories, particularly handbags.
Our global licensing business also recorded significant revenue growth of 18% versus the LLY period.
We have a big business here, primarily driven by handbags, eyewear, footwear and fragrances.
Regarding our strategic plan, I want to spend a few minutes updating you on our progress with our brand elevation and customer centricity initiatives.
I will start with our brand innovation strategy, which touches almost every aspect of our business.
Paul has been driving this very ambitious initiative with our product and creative teams.
His strong leadership and the work that the teams put into this to transform our model have been extraordinary and many major milestones have already been conquered.
We are focused on higher quality and sustainability across the board.
In addition, the new assortments have been priced based on the products perceived value.
Our visual merchandising on the images and photography in all the new marketing campaigns, catalogs and websites have been optimized to showcase our brand more effectively.
And our product development, marketing, visual merchandising and buying are integrated more closely than ever before.
We [Indecipherable] deep in these key styles to increase full price selling and maximize sales.
The last important step for elevating the brand is to improve the customer experience across the Guess ecosystem, including our stores, our websites, wholesale distribution and through our licensees.
We are mobilizing our field and business units to address this and we plan to upgrade our technology and tools to deliver superior service to our customers.
Some examples of these upgrades in store technology include enhanced WiFi networks, extended payment methods and mobile check outs.
These projects should be complete by the end of next year.
Regarding customer centricity, let me start with our customer base.
As you know, we resonate across three distinct customer groups: heritage, Millennials and Generation Z and we develop our product assortment to support the unique lifestyle needs of these customers.
With Gen Z, specifically, we have a separate strategy including differentiated product development, marketing and customer engagement.
This is our brand partnerships group led by Nicolai Marciano.
Product collaborations and events drive this business.
We had great success here pre-pandemic with key collaborations such as J Balvin.
But as you can imagine, the pandemic impacted our ability to execute this event-driven marketing campaign.
Now, we are able to restart these collaborations.
In fact, this past weekend, we had a successful event with Babylon and influential skate and streetwear label on our campus in LA where we hosted over 6,000 people over three days.
Regarding our digital business, we continue to make progress in optimizing our user online experience via the e-commerce platform that we implemented last year.
For example, in Europe, we are seeing improved conversion rates, especially from mobile, which represents over 80% of our traffic.
Our average web session duration increased over 20%, bounce rate decreased 10% and loading time versus our previous platform is 70% faster.
And during the quarter, we implemented some upgrades to the platform resulting in an increase in our add to basket sessions of over 30%.
We continue to work on implementing omnichannel capabilities in Europe as well as upgrade North America's current capabilities.
We plan to complete this project by mid-year next year.
The last pillar of our customer centricity strategy is related to customer data capture, segmentation and analytics.
We have built out a high-performance platform, but we're still operating on an extremely limited capacity to process and utilize our customer data.
We're now working on a platform, which includes powerful tools to fuel data collection, consumer insight analysis, personalized marketing and client telling.
We can use these tools to maximize sales from our existing customer base, as well as efficiently target new customers.
This implementation is underway and will be completed by next year.
This will be a game changer, allowing us to use our data to unlock a ton of value.
Now, let me talk about our outlook.
When I came back in early 2019, we identified several opportunities for value creation.
At that time, the most significant of these were in margin expansion.
We laid out a plan to increase operating margin by about 450 basis points to 10% in five years.
We used the pandemic as an accelerator to transform our business and not only are we expecting to reach our 10% target this year, but we are now increasing our operating margin target to 12% by fiscal year 2024, when we plan to deliver $2.8 billion in revenue.
I'm excited to share with you that this would yield a return on invested capital of over 30%.
I'm confident in this outlook and this is why.
We see clear opportunities for revenue growth from category expansions in areas like denim, Marciano, handbags, dresses and outerwear to new store development to digital sales growth.
Our margin expansion has come from concrete changes to our business model, including IMU improvements, store portfolio optimization and cost reductions.
And while we are currently operating in what might be on abnormally low promotional period industry wide, this company will never go back to the levels of promotional activity that it had pre-pandemic.
Our balance sheet is in a very good position, which allows us to fund our business needs, as well as return value to shareholders.
We announced today that our Board has authorized a share repurchase program of $200 million.
In closing, when I was invited to come back to Guess, I came back with high expectations, I knew that the company had an amazing global brand with tremendous potential and I felt that I could contribute to realize that potential.
But like Steve Jobs said I couldn't connect the dots looking forward and I had to trust my gut.
When I look back at what happened in the last two and a half years, I couldn't be more proud of what we have accomplished in the face of a pandemic of my partnership with Paul and of the transformation of our business into a company with an elevated global brand and a strong business model.
This is a company that is poised to gain significant market share, a company ready to deliver high return on invested capital fueled by high margins and a capital-light model.
A company with an amazing team ready to take the business to the next level of growth and profitability.
Today, I am thrilled to connect the dots looking backward and I couldn't be happier I trusted my gut to come back to my home.
With that, let me pass it to Katie to review our financials in more detail.
I want to start with something you can't see in the numbers.
Of course, I'm thrilled that we almost doubled operating profit from pre-pandemic levels this quarter, even in the midst of a challenging environment.
But first I want to mention how proud I am to be part of this team at Guess.
It's a team that works hard and works smart to execute our strategy and achieve our goals.
Now, let me take you through the details on the quarter.
Second quarter revenues were $629 million, up 58% to last year in U.S. dollars and 51% in constant currency.
We were down 8% compared to LOI.
This was slightly short of our expectations, as a result of timing in our European wholesale business worth about 4% to LLY, where delays in product receipts moved some shipments a few weeks into the third quarter.
Overall, the 8% revenue decline to LLY was driven by the impact of permanent store closures worth roughly 5% of revenue and the shift in wholesale shipments in Europe.
I want to note that our promotions were well below pre-pandemic levels across all of our direct-to-consumer businesses, which is impacting our sales level versus LLY, significantly driving our profit.
Let me get into a bit more detail on sales performance by segment.
In Americas Retail, revenues were down 6% versus LLY, better than our expectations.
This decline was entirely driven by permanent store closures, which were worth about 8% of the sales to LLY.
Store comps in the U.S. and Canada were up 5% in constant currency.
Same-store sales were solid positive in the U.S., but the recovery in Canada is moving a bit more slowly.
Although traffic is still materially negative, from Q1 to Q2, we saw improved trends there.
Our conversion remains high and AUR increased substantially in Q2 with strategic price increases and more full price selling.
The gap between the performance of our tourist-centric stores and non-tourist-centric stores is still wide, but narrowed significantly in Q2 versus Q1.
This suggests that at least domestic travel is picking up, the total travel still remain significantly below historical levels.
In fact, our non-tourist stores in the U.S. and Canada had positive double-digit same-store sales growth this quarter.
The profitability that we have brought in the segment is super exciting and worth noting.
Operating margin in Q2 was 20% versus only 3% two years ago and operating profit is 6 times what it was in LLY even on lower sales.
This is an incredible base of which to grow in North America.
In Europe, revenues were down 5% versus LLY.
Our retail business continues to be pressured by pandemic-related traffic declines.
Store comps for Europe were down 20% in constant currency, impacted by negative traffic; however, this was partially offset by solid conversion rates and significant AUR increases.
Absent the shift in shipment timing, that we mentioned earlier, our European wholesale business continues to show healthy trends with an order book above pre-pandemic levels.
In Asia, revenue was down 43% to LLY, almost half of this decline was driven by permanent store closures.
Our store comps were down 30% in constant currency, with negative sales comps in South Korea and China, more moderate than other areas in the region like Japan, Taiwan and Hong Kong, Macau, where they're struggling more with the pandemic.
Our Americas Wholesale sales were up 19% to LLY.
We are happy with our momentum in this business.
Operating margin expanded almost 600 basis points to LLY here, resulting in a lift of over 50% for operating profit in this segment.
Licensing revenues also outperformed and were up 18% to LLY in Q2 to provide strong performance in our perfume and footwear.
And as you know, this is an extremely high margin business, which delivered a 92% operating margin this quarter.
Total company gross margin for the quarter was 46.8%, almost 800 basis points higher than two years ago.
Our product margin increased 370 basis points this quarter versus LLY, primarily as a result of lower promotions and higher IMU.
Occupancy rate decreased 420 basis points.
This quarter we booked over $7 million in rent credits for fully negotiated rent release deals, mostly in Europe.
The remainder of the decrease is attributable to lower rent and permanently closed stores.
Adjusted SG&A for the quarter was $206 million, compared to $218 million two years ago, a decrease of $12 million or 6%.
We continue to benefit from changes to our expense structure and a decrease in expenses related to permanent store closures versus LLY.
In addition, there was a one-time benefit of about $4 million from government subsidies, namely in Europe, which was partially offset by higher variable expenses related to the growth of our e-commerce business.
Adjusted operating profit for the second quarter was $89 million versus $48 million in Q2 two years ago.
Our balance sheet continues to strengthen.
I will take you through some details comparing now to last year, not LLY.
We ended the second quarter with $459 million in cash a $131 million higher than last year's balance at the end of Q2.
Inventories were $430 million, up 3% in U.S. dollars and 1% in constant currency versus last year.
Inventory management has been a key capability for us and we continue to act swiftly and strategically here.
We feel good about our inventory position and believe we have the right assortment to satisfy customer demand.
Year-to-date capital expenditures were $22 million, up from $10 million in the prior year, but significantly below pre-pandemic levels.
We generated $18 million of free cash flow in the first half of the year.
Our ability to generate cash gives us the runway to invest in our business, as well as return value to shareholders.
We announced today that our Board of Directors has authorized a new $200 million share repurchase program.
This new program includes the $48 million remaining under the Company's previously authorized repurchase program and we will use it opportunistically.
So, now let's talk about our go-forward expectations.
The current environment is still uncertain.
So, we will not provide formal guidance, but I will walk you through how we're thinking about both for short and longer term future.
Again, I'm going to anchor our commentary to LLY.
We are maintaining our revenue expectations for the full year at down mid-single digits.
We expect the third quarter to be slightly negative to flat with help from shifted wholesale shipments from Q2.
In terms of profit, adjusted operating margin for the third quarter is expected to be about 250 basis points better than LLY.
Gross margin is expected to expand by around 600 basis points to LLY, driven primarily by lower occupancy costs, lower promotions and improved IMU.
We anticipate that the adjusted SG&A rate will be at 350 basis points as cost savings are offset by business mix and reinvestments in business expansion initiatives including marketing.
And with the rest of the industry, we are seeing some cost pressures, particularly in freight and labor, which are built into these numbers.
For the full fiscal year 2022, we are raising our expectations for operating margin and profit.
We now expect operating margins to reach approximately 10% for the year versus adjusted operating margin of 5.6% in LLY.
This represents margin expansion of roughly 450 basis points to our pre-pandemic business despite a lower revenue base and we are confident in our ability to sustain these profitability levels, as well as deliver top line growth.
As a result, we are raising our operating margin target and our long-term plan to reach 12% by fiscal year 2024 with revenues in that year expected to hit $2.8 billion dollars, consistent with our previous call.
This implies an operating income of $335 million in fiscal year 2024, $185 million more than adjusted operating profit in fiscal year 2020.
Adjusted earnings per share is expected to be around $3.50 per share, versus a $1.45 in fiscal year 2020.
This would be a record level of adjusted earnings per share for the Company.
Our team is motivated and I'm proud to say that we are running this company for the future, not just for now.

user
increases share repurchase authorization to $200 million.
increasing long-term operating margin goal to 12% and adjusted earnings per share to $3.50 by fiscal 2024.
guess inc - expect revenues in q3 of fiscal 2022 to be slightly negative to flat versus q3 of fiscal 2020.
for fy fiscal 2022, assuming no additional covid-related shutdowns past q2, expect revenues to be down mid-single digits versus fiscal 2020.

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