QUOTE AND NEWS
StreetInsider.com  10 hrs ago  Comment 
52-Week High: Regeneron Pharmaceuticals, Inc. (Nasdaq: REGN) $376.88. Regeneron Pharmaceuticals moving higher Friday after it announced that in the National Institutes of Health (NIH) sponsored, Diabetic Retinopathy Clinical Research Network...
Market Intelligence Center  Oct 16  Comment 
For a hedged play on Guess Inc. (GES) MarketIntelligenceCenter.com’s algorithms selected the Mar. '15 $21.00 covered call for a net debit in the $19.26 area. That is also the break-even stock price for the covered call. This trade will return...
SeekingAlpha  Oct 5  Comment 
By Jonathan Loewer: Guess? (NYSE:GES) fell to a new 52-week low since its last quarterly report on 27 August. The company earned $22mm, or $0.26 last quarter, which was below analyst expectations of $0.29. The stock fell more than 8% the next...
SeekingAlpha  Oct 3  Comment 
By David White: Guess Inc. (NYSE:GES) is an apparel retailer that makes stylish younger women's and men's clothing and accessories. One would normally think that such a retailer would do well. The young especially are slaves to fashion, and Guess'...
Market Intelligence Center  Oct 1  Comment 
The patented option trade-picking algorithms behind MarketIntelligenceCenter.com's Artificial Intelligence Center have selected a covered call trade on Guess Inc. (GES) that includes 9.33% downside protection. Sell one contract of the Jan. '15...
Market Intelligence Center  Sep 25  Comment 
The patented options-trade picking algorithms used by MarketIntelligenceCenter.com found a trading opportunity with Guess Inc. (GES) that should provide a 4.66% return in just 86 days. Sell one Dec. '14 call at the $22.00 level for each 100 shares...
Benzinga  Sep 19  Comment 
Analysts at Buckingham Research upgraded Guess? (NYSE: GES) from Underperform to Neutral. The target price for Guess? is set to $21. Guess shares have declined 23.88% over the past 52 weeks, while the S&P 500 index has surged 17.63% in the...
Market Intelligence Center  Sep 18  Comment 
After closing Wednesday at $22.97, Guess Inc. (GES) presents an attractive opportunity to get a 4.41% return in just 93 days, which is an annualized return of 17.32% (for comparison purposes only). To enter this trade, sell one Dec. '14 $22.00...
SeekingAlpha  Sep 6  Comment 
By Amal Singh: Apparel retailer Guess (NYSE:GES) has disappointed investors by losing 25% of its value this year, and there seems to be no respite going forward. The company reported weak second-quarter results, revealing a significant drop in its...
Benzinga  Sep 5  Comment 
Guess?, Inc. (NYSE: GES) shares spiked Friday after a company director reported acquiring 15,000 shares at $23.61 a piece. The director, 67-year-old Joseph R. Gromek was named to the Guess board in April. Gromek paid $354,000 in the stock...




 
TOP CONTRIBUTORS

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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