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Competitive climate, not weather, is what ails Guess?


Guess? may be a global brand, but worldwide diversification wasn’t enough to help the company avoid a fourth quarter sales decline and weakness at North American retail locations.

Unlike other retailers, Guess? made no mention of horrible winter weather when it reported a decline in fourth quarter sales and profits that were especially evident in North America.

"We delivered fourth quarter results consistent with our expectations from an operations perspective. In North America, the traffic into our stores as well as the overall promotional environment remains challenging, but we are excited by the momentum that we have gained in our e-commerce business,” said Guess? CEO Paul Marciano. “In Europe, we are encouraged by the trends we are seeing in our own property stores where same store sales were positive for the fourth quarter, although our European wholesale business is still under pressure in Southern Europe. Overall, we stayed focused on what we can control, like inventory where trends continued to improve quarter over quarter, and expenses which declined again in the fourth quarter versus last year."

Looking ahead, Marciano said the company expects sales in its more developed businesses to remain under pressure, especially in stores in North America and the European wholesale channel.

“We will continue to invest in new markets like Japan and Brazil as well as fully execute our omni-channel strategy. We will also keep on investing in marketing. While I recognize that there are many challenges ahead of us, I am very confident in the strength of the Guess brand and with the senior leadership team we have in place to move us forward,” Marciano said.

In the fourth quarter ended February 1, the company said total revenues declined 5.7% to $768.4 million when compared to revenues of $815 million during the fourth quarter the prior year which included the benefit of an extra week in the reporting period.

The 494 store North American retail operation experienced a 4.4% same store sales decline when measured in U.S. dollars, while total sales fell 6% to $329 million compared to $350 million the prior year when the company operated 512 stores. Full year sales for the retail division fell 3.7% to $1.1 billion and same store sales fell 5.3%.

Total company revenues including a European division nearly as large as the U.S. decreased 3.3% to $2.57 billion for the full year.

Profits in the quarter also fell on an adjusted basis by 12.6% to $71.1 million, or 83 cents, from $81.4 million, or 95 cents the prior year. For the year, adjusted profits fell 13.4% to $162.5 million, or $1.91 a share, from $187.5 million, or $2.15 a share.

Guess? brand products are sold at the company’s 494 stores in the U.S. and Canada, better department and specialty stores around the world and through an additional 868 retail locations outside of North America operated by licensees and distributors.

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