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Guess Stores in the U.S. Make Major Improvements During the Second Quarter of Fiscal 2019
Victor Herrero, a Spaniard who had worked for Inditex for more than a decade, came on board three years ago as the new chief executive of Guess? Inc. to turn things around.
With the recently reported second-quarter results for fiscal 2019, he felt he was finally accomplishing his mission as same-store sales for Guess locations in the Americas as well as e-commerce increased 3 percent during the quarter and all business segments are expected to be profitable this year. “I see the Americas retail joining the turnaround in the company and a return to profitability after two consecutive years of losses,” he said during an Aug. 29 conference call reporting the company’s financial results.
The company has aggressively worked to reduce the rents for U.S. stores, closed unprofitable stores and uncluttered the merchandise inside the stores. “You can get into the store and see it all the way back,” said Chief Financial Officer Sandeep Reddy. “It is a simple and seamless shopping experience for the consumer, and that is making an impact. We are seeing the first positive comps in eight years.”
The Guess consumer continues to be the Gen Z or millennial consumer who wants a sexy, cool look.
Since Herrero came on board, Guess has embarked upon an aggressive campaign of hiring influencers and celebrities to publicize its product (think Jennifer Lopez) and has been quite active in social media, particularly on YouTube and Instagram.
The results for the second quarter showed that net earnings were up 68 percent to $25.5 million compared with $15.2 million during the same period last year and net revenue increased nearly 14 percent to $645.9 million compared with $568.3 million during the prior-year quarter.
Particularly strong was revenue growth in Asia and Europe, where Guess continues to expand by working with the Chinese e-commerce site Tmall, run by the Alibaba Group and opening a new 625,000-square-foot distribution center in the eastern part of the Netherlands.
While revenues in the Americas were up in single digits, they were booming in Asia and Europe. Europe revenues increased 22.2 percent in U.S. dollars while retail comp sales including e-commerce was up 5 percent. In Asia, revenues jumped 32 percent in U.S. dollars and retail comp sales including e-commerce expanded 17 percent in U.S. dollars.
Product consistency has been a boon for the company. Trends that are resonating in the stores, Reddy said, were print mixes that were bold and bright, feminine dressing, destroyed denim, embroidered denim as well as denim with special washes. For the upcoming season, the company is developing eco-friendly fabrics. While denim is very popular, activewear is a very important part of the trends.
