Guess Goes Upscale With Marciano
Guess? Inc. wants to get into the upscale retail business.
Guess, started in 1981 by designer Georges Marciano, plans to open a high-end store called Marciano this September at The Grove shopping center in Los Angeles. At the same time, the Los Angeles apparel company plans to change the name of its Guess Collection line to Marciano.
The name change and new stores are an attempt by the company—which makes trendy apparel for men, women and children and operates hundreds of retail stores—to emphasize its expensive Guess Collection.
“The new assortment commands higher price points, and it targets a more upscale, contemporary customer,” the company said in its most recent quarterly filings with the U.S. Securities and Exchange Commission. “We plan to open a few test stores in the fall of 2004.”
Guess announced it will close its 10 Guess Kids stores, which are not performing as well as the company would like. “As a result, management made a decision in the fourth quarter of 2003 to exit the kids store business,” financial papers said.
The company plans to close its children’s stores in the second half of 2004, taking a $1 million charge to terminate various leases. Already, the Guess Kids store on Beverly Drive in Beverly Hills has closed.
Company officials did not return calls to comment on the new plans.
Guess has had a bumpy ride. The company’s earnings started declining steadily in 1999 but began improving in 2003.
During the first quarter of 2004, the company had net earnings of $800,000 on $153.3 million in revenue, compared with a net loss of $5.8 million on $139.6 million in revenue for the same period in 2003.
Entering the upscale apparel and retail market could prove to be a boon for the everchanging company, now run by Georges Marciano’s brothers, Maurice and Paul Marciano. Industry observers noted that moving to an upscale market makes sense.
“The high-end retail has done very, very well in the slowdown,” said retail expert Richard Giss of Deloitte & Touche. “It’s the better part of the market to be in.”
Luxury goods and high-end retailers weathered the downturn in the economy last year better than department stores and run-of-the-mill specialty stores.
High-end stores are still doing well. In May, same-store sales were up 8.5 percent for The Neiman Marcus Group Inc. and up 9.4 percent for Saks Inc. During the same month, same-store sales for Federated Department Stores Inc. were up only 2.9 percent.
Guess, which operates 265 retail stores and 73 factory outlet stores in the United States and Canada, saw its same-store sales increase 14.6 percent in May. —Deborah Belgum
