Guess is targeting millennial and Gen Z consumers with a new brand in 2024.
Led by Nicolai Marciano, the new Guess? Jeans brand is the company’s way of addressing the business casual movement “head on,” said Carlos Alberini, Guess Inc. CEO, on the company’s Q3 earnings call Friday. “We expect to capture a wide audience with the Guess? Jeans offering, primarily the men’s customer.”
Alberini said the company “executed a significant elevation” of the Guess? brand during the last few years that resulted in a greater separation between sophisticated and dressy styles and more casual looks that align with Guess’ denim DNA. “We now see tremendous opportunity in this casual lifestyle space, and we plan to reclaim our denim legacy with the launch of the new brand in 2024, focused on product innovation, a present-day mindset centered around sustainable manufacturing, and supported by a robust celebrity marketing strategy, embodying the American West Coast denim brand,” he said.
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Alberini added that Guess? Jeans “is poised to establish a new benchmark in denim practices and innovation, reaffirming our dominance and our roots in the denim category.”
Offering “very competitive” prices, the brand will be distributed globally in the wholesale market and through Guess’ D2C channels. The plan also involves a new visual identity and a new retail concept.
Q3 Earnings
Guess posted Q3 earnings of $55.7 million, a 155 percent increase from $21.8 million for the same prior-year quarter.
Total net revenue for the third quarter of fiscal 2024 increased 3 percent to $651.2 million from $633.4 million in the same prior-year quarter. In constant currency, net revenue increased by 1 percent. The Los Angeles-based denim brand closed Q3 with inventories 2 percent lower than a year ago and in line with its plan to have to have inventories 10 percent below last year’s levels.
Guess, which topped the The Business Report’s “Top 25 Companies in Los Angeles List” in October, saw momentum outside the Americas. In Europe, revenues increased 6 percent and retail comparable sales increased 8 percent. Asia revenues increased 2 percent while retail comparable sales decreased 8 percent.
In the Americas, retail revenues decreased 7 percent and retail comparable sales, including e-commerce, decreased 5 percent. Americas wholesale revenue increased 4 percent. Despite contractions in women’s and men’s apparel in the Americas, Guess said several denim products performed well, driven by new fashion styles such as straight leg jeans, cargo silhouettes, jumpsuits and overalls.
With Y2K trends in full swing, licensing is proving to be a bright spot for Guess as well. Licensing revenues rose 19 percent in Q3. The best-performing product categories included fragrances, handbags, watches, eyewear and footwear.
The company is working to “internalize businesses that are being licensed” such as its partnership with G-III for the design, development, and distribution of dresses and outerwear in North America.
“These businesses represented $50 million per year at wholesale, and we are now in the process of transitioning them to our internal organization,” Alberini said. “Our teams have already developed the product for both categories and have presented the collections to our wholesale customers at market recently. While it is early in the cycle, customers reacted well to the assortments, and we are optimistic about the potential of this change to drive both top and bottom-line growth.”
Guess is taking a “more cautious view” for Q4, however. Based on “uncertain shopping environment in many parts of the world impacted by geopolitical issues and lower consumer confidence,” Alberini said the company has lowered its full year fiscal outlook and expects revenue growth between 1.8 percent and 2.4 percent.
“We are confident in our plans for the holiday season and have a strong inventory position to respond well to customer demand,” he said, adding, “We have identified many opportunities to grow our business and are working on our strategy to capture these opportunities and deliver strong value to our shareholders.”
