Motley Fool  Oct 12  Comment 
The clothing retailer has effectively given back its post-earnings gains.
newratings.com  Aug 26  Comment 
WASHINGTON (dpa-AFX) - Fashion retailer Guess Inc. (GES) has teamed up with record label Republic Records to co-create Guess Music. The first Guess Music project will launch on Sunday, August 28th with a 24 hour premiere on Guess.com of Republic...
Forbes  Aug 26  Comment 
In recent trading, shares of GUESS ?, Inc. (NYSE: GES) have crossed above the average analyst 12-month target price of $17.88, changing hands for $18.20/share. When a stock reaches the target an analyst has set, the analyst logically has two ways...
Motley Fool  Aug 25  Comment 
The clothing retailer announced a solid quarter and increased its full-year earnings outlook.
Motley Fool  Aug 25  Comment 
The jeans maker had a better quarter than many feared and gave a favorable outlook.
newratings.com  Aug 24  Comment 
WASHINGTON (dpa-AFX) - Apparel retailer Guess? Inc. (GES) on Wednesday reported an increase in profit for the second quarter, despite lower-than-expected revenues reflecting a one-time gain. Earnings for the quarter easily trumped Wall Street...
newratings.com  Aug 2  Comment 
WASHINGTON (dpa-AFX) - Guess? Inc. (GES) released a profit for second quarter that fell from last year. The company said its earnings declined to $11.96 million, or $0.14 per share. This was down from $18.29 million, or $0.21 per share, in last...
Benzinga  Jul 8  Comment 
Viad Corp (NYSE: VVI)'s GES disclosed that Middle East event organizer F&E, a Tarsus Group company, has hired it as an official supplier in an agreement that would be in force until the end of 2019. According to the company, the deal included...
TechCrunch  Jun 24  Comment 
 Obama encouraged companies to continue hiring workers from diverse backgrounds, citing tech companies’ diversity reports as a step in the right direction. The president also discussed censorship of the internet in Egypt and said international...


A pioneer in the designer jeans industry, Guess? (NYSE: GES). makes a variety of fashion-conscious men's and women's clothing. You can find Guess? in over 350 retail stores through out the U.S. and Europe, not to mention popular department stores like Macy's and Bloomingdale's. The company also distributes its clothing through its website.

Guess? was one of the most popular denim brands of the 1980s. The company ran into a few issues, however, during the 1990s: namely pricing pressure from department stores and a trend towards baggier jeans. The latter is decidedly at odds with Guess' more European style. As Guess? struggled to adjust to changing market conditions, competing brands like, Polo Ralph Lauren, Tommy Hilfiger, and Calvin Klein were poised to capitalize on the company's weakness.

In an effort to turn around its flagging fortunes, the company has begun a major push into Europe. The company's presence on the continent continues to grow rapidly; its European revenues which increased by a factor of 9 from 2003 through 2006 [1] and it expects to increase its number of European retail stores by more than 33% by the end of 2007. Guess? is also focusing on improving its margins by shifting its jeanswear business towards retail and concentrating on trendier(read higher-priced) offerings.

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Trends and Forces

Dependency on Department Stores

Department stores in the United States have undergone significant changes in recent years. In response to declining margins, stores have implemented tighter inventory controls and have scaled back the quantities of merchandise that they purchase and/or license from companies like Guess?. As a means of increasing market share, companies have also sought to differentiate themselves from the competition by demanding exclusive contracts and store-specific private labels (e.g. Ralph Lauren's "American Living" line for J.C. Penney). [2] Such dealings could weaken the control Guess? has over its brand's image.

In addition, a series of mergers and acquisitions in the industry (e.g. Federated Department Stores' 2005 takeover of Marshall Field's) give the businesses that remain potentially greater power to negotiate lower prices with Guess?, thereby lowering profit margins. For example by 2002, department stores had forced brands like Guess? to slash their prices, reducing the average price of a pair of jeans by over 50%.[3] However, Guess? may be less vulnerable to such changes as it has increased its retail operations and is now less dependent on wholesale business.

Volatility of Fashion Trends

Trends in the fashion world tend to change very quickly. Consumer tastes can vary widely from one season to the next, leading to large swings in a company's profits. As Guess? seeks to increase earnings by producing cutting-edge styles, it opens itself up to the significant risk that comes with following trends. Guess? has already experienced this firsthand, when its extremely popular jeanswear failed to transition from the skinny denim silhouette of the eighties to the baggy, urban fit of the nineties.

U.S. Economic Conditions

As over two-thirds of Guess? revenue comes from its North American operations, its bottom line is susceptible to shifts in the region's economy, especially in the United States. As rocky economic forecasts tend to damper consumer spending, the company's recent rapid growth could decline. However, as Guess? seeks to expand its growth abroad, the brand's significant international business may serve as a hedge against decreases in domestic consumer spending. With the dollar at record-low levels against the euro, the company's strong European earnings may look even attractive on its U.S. balance sheets for some time to come.

==Competilike Gap base their business on providing wardrobe basics. Brands like Polo Ralph Lauren supply consumers with a fuller range of both wardrobe staples and trendier apparel.

Within the denim business, Guess? faces fierce competition from very popular brands like Seven For All Mankind, True Religion, and Diesel. Guess? is increasingly following the industry trend towards higher-end jeanswear as it increases both the quality and the price of its denim.

Guess? vs. Competitors(2006)[4]
Guess? Gap Polo Ralph Lauren Levi Strauss & Co. [5]
Revenue (ttm) $1.47B $16.03B $4.54B $4.19B
Net income (ttm) $157.71M $759.00M $387.30M $239.00B
Quarterly revenue growth (yoy) 48.20% -0.10% 11.30% -
Gross margin (ttm) 44.82% 35.33% 54.12% 47.00%
Operating margin (ttm) 16.78% 7.57% 14.22% 15.00%
Change in same-store sales [6] 16.2%[7] 0%[8] 7.9% [9] -

  1. Guess? 2005 10K (released March 13, 2006) p. 7 and Guess? 2006 10K (released March 1, 2007) p. 7
  2. "Top fashion designers go down-market", USA Today (published September 25, 2007)
  3. How Guess Got Its Groove Back, BusinessWeek' (December 18, 2006)
  4. Unless otherwise noted, these figures were taken from Yahoo! Finance.
  5. Data from the company's 2006 10-K(released February 13, 2007)
  6. Figures compare Q2 2007 sales to Q2 2006 sales.
  7. Guess? press release: "GUESS?, INC. REPORTS RECORD SECOND QUARTER 2008 REVENUES", (released September 4, 2007)
  8. Gap press release: "GAP INC. REPORTS SECOND QUARTER EARNINGS PER SHARE OF $0.19", (released August 23, 2007)
  9. Polo Ralph Lauren Wikinvest article

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