Guess? Inc. (GES)
Interest coverage
| Feb 3, 2024 | Oct 28, 2023 | Jul 29, 2023 | Apr 29, 2023 | Jan 28, 2023 | Oct 29, 2022 | Jul 30, 2022 | Apr 30, 2022 | Jan 29, 2022 | Oct 30, 2021 | Jul 31, 2021 | May 1, 2021 | Jan 30, 2021 | Oct 31, 2020 | Aug 1, 2020 | May 2, 2020 | Feb 1, 2020 | Nov 2, 2019 | Aug 3, 2019 | May 4, 2019 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) (ttm) | US$ in thousands | 245,433 | 196,493 | 190,050 | 171,444 | 199,302 | 200,291 | 219,258 | 262,687 | 268,061 | 248,609 | 230,068 | 137,274 | -64,698 | -52,845 | -68,258 | -21,136 | 134,617 | 104,972 | 55,897 | 50,975 |
| Interest expense (ttm) | US$ in thousands | 21,816 | 19,332 | 16,862 | 14,315 | 13,190 | 15,274 | 17,371 | 20,185 | 23,018 | 23,142 | 23,401 | 23,333 | 22,869 | 22,185 | 21,322 | 20,332 | 16,129 | 12,177 | 8,015 | 3,927 |
| Interest coverage | 11.25 | 10.16 | 11.27 | 11.98 | 15.11 | 13.11 | 12.62 | 13.01 | 11.65 | 10.74 | 9.83 | 5.88 | -2.83 | -2.38 | -3.20 | -1.04 | 8.35 | 8.62 | 6.97 | 12.98 |
February 3, 2024 calculation
Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $245,433K ÷ $21,816K
= 11.25
The interest coverage ratio measures a company's ability to meet its interest payments on outstanding debt using its operating income. A higher ratio indicates a stronger ability to cover interest expenses.
From the data provided, the interest coverage ratio for Guess? Inc. has fluctuated over the past few quarters. The company maintained a healthy interest coverage ratio above 10 from Feb 3, 2024, to Jan 28, 2023, indicating a comfortable level of earnings relative to its interest expenses during that period.
Interestingly, there was a significant spike in the interest coverage ratio to 15.11 on Jan 28, 2023, suggesting a notable increase in the company's ability to cover its interest payments efficiently during that quarter.
However, the interest coverage ratio declined sharply on May 1, 2021, to -2.83, and further dropped to -3.20 on Aug 1, 2020, indicating that Guess? Inc. faced challenges in generating enough operating income to cover its interest expenses during these periods. Negative interest coverage ratios are concerning as they signal that the company's earnings were insufficient to cover its interest obligations.
It is essential for investors and stakeholders to closely monitor Guess? Inc.'s interest coverage ratio to assess its financial health and ability to meet debt obligations in the future. Overall, the company's ability to generate operating income to cover interest payments has varied over the quarters, highlighting the importance of maintaining a sustainable and stable financial position.