NEW YORK — Guess Inc. is looking to the future, and with good reason.
With a stock price that has more than tripled over the last two years, the specialty retailer and wholesaler is moving forward with international expansion plans and the continued development of two fairly new retail concepts while also maintaining pace on a now five-year-old North American business repositioning.
The Los Angeles-based company is targeting an earnings increase in the double digits in the next three to five years. In addition, it anticipates having added 37 stores in the U.S. and Canada by the end of fiscal year 2005 and plans to open 40 retail stores in the U.S. and Canada in 2006. The moves are part of the company’s strategic repositioning, which began five years ago with the goal of making its operations in North America retail-focused; revenues in that region now total 80 percent from retail and 20 percent from wholesale businesses.
“The execution of [the] strategy over the last few years has positioned us at what we believe…is an inflection point for our brand,” Paul Marciano, co-chairman, co-chief executive officer and creative director of Guess, said on the company’s November earnings conference call.
Indeed, Guess shares are sitting near an all-time high, having risen to around $39 from a low of about $4 just three years ago. The shares closed Friday at $39.32, up 0.3 percent, in New York Stock Exchange trading.
Guess opened a new concept, a contemporary woman’s line called Marciano — named after the company’s founding family — in September 2004 and now has 13 locations with 13 more planned to open in the U.S. and Canada in 2006. In the next five years, the company thinks it can support about 120 to 160 Marciano stores.
According to Eric Beder, an analyst with Brean Murray, Carret & Co., the Marciano stores are “a standout growth vehicle” for Guess. Beder wrote in a Jan. 5 research report that the stores average about $600 per square foot, higher productivity than Guess store units. The analyst also thinks the chain has taken market share from competitors Bebe and Arden B. over the last year.
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In July 2004, Guess launched its first Guess accessory store in the U.S. Guess currently has 11 of these accessories stores and expects to open 67 accessory outlets — including those to be opened by licensees and distributors — worldwide by the end of fiscal 2005. Another 100 accessory stores are expected to open in the U.S. and internationally in the next two years.
Meanwhile, the company’s licensing business is also strong, with a productive jeanswear license in Europe and newer perfume and footwear licenses in the U.S.
As for its strategy overseas, the company continues to open Guess and Guess by Marciano stores in Europe and Asia, with new stores recently opened in Moscow, Istanbul and Prague, among other cities. It already has a wholesale office in Hong Kong, which opened early last year.
In the latest third quarter, Guess profits nearly doubled to $20.7 million, while net revenues increased 34 percent to $265.6 million. Fiscal year-to-date net sales have risen 31 percent to $659.4 million and profits totaled $33 million versus $14.7 million in fiscal 2004. Analysts expect sales to reach $921 million in fiscal 2005.
The company most recently had a successful holiday season, posting same-store sales that rose 17.5 percent in December, which followed a 15.8 percent increase in November.
Analysts are expecting the company to earn 48 cents a share in the fourth quarter and $1.21 a share in the year.