Guess bet on the Chinese market, it may add 50 stores this year
During the two years when the CEO Victor Herrero is incumbent, after a series of weight-loss initiatives, the US apparel brand Guess performance is recovering.
By the end of 29th, July, Guess Group (NYSE: GES) sales rose by 5.3% to $ 573 million in the three month, surpassing $559 million excepted by Wall Street analysts, but net profit fell by 52.8% to $15.20 million.
Grounded by region:
Guess ;s retail sales in the US market, including e-commerce, fell by 11% to $ 201 million, while wholesale channels grew by 7% to $ 32.658 million, largely affected by the Group ;s North American stores closing program;
Benefit from the weak pound leading the UK tourism industry recovery and effective expansion strategy, the European region sales rose by 20% to $255 million, same-store sales increased by 5%;
Sales in Asia, including China, recorded an increase of 17% to $ 62.73 million;
Licensing sales were flat with $ 21.898 million for the same period last year.
By the end of the reporting period, Guess had 1644 stores all over the world, including 320 stores in the United States, reducing 12 stores compared with the first quarter, 108 stores in Canada, 94 stores in Central and South America, 646 stores in Europe and the Middle East, 480 stores in Asia.
In the first half of the 2018 fiscal year, Guess Group sales rose by 3.9% year on year to $1.032 billion, recorded a net loss of $6.074 million.
It is noteworthy that, Victor Herrero has joined Guess for two years, he stressed that the two years is a critical period of change for Guess, it is currently integrating the retail network stage. Victor Herrero said second-quarter net profit slumps were mainly related to operating costs such as group restructuring stores, while operating margins actually rose by 49% from last year, and the brand ;s market share in Europe and Asia are both increasing. In the second quarter, Guess added 9 stores respectively in Italy, Spain, the UK, the Netherlands, Switzerland, Russia and the Poland, and the brand is expected to add 40 to 50 stores in China this year.
Victor Herrero thinks that the North American retail market over-promotion has become normal condition, so it is inevitable that the appropriate closure of the North American stores, they will accelerate the closure of the excess stores in North America in the future, the total number of planned closure stores this year has risen from 60 to 70, there are Half of the lease contract is about to expire, Guess has great flexibility to carry out store cleaning at this time.
Victor Herrero pointed out that as consumers gradually lose their interest in the store ;s shopping, the brand, whether in traditional department stores or other stores will face more difficult challenges, so it is more important to open up the line of goods and services and layout full channel marketing Network for Guess future development.
Guess was founded in 1981 by Georges, Armand, Paul, Maurice Marciano, and started by tight Monroe” female jeans single product, and then continue to develop products including men and women fashion, children ;s wear, swimwear, shoes, watches, Accessories, handbags, eyes, perfume and many other categories of product brands.
In order to restore vitality to Guess, Paul Marciano broke the traditional family rule for the first time in 2015, appointing Victor Herrero who has fast fashion background to be the brand global CEO, which is the first time to hire the people who isn??t Guess founder of the executive management company.
Victor Herrero said that in the fashion company, it is the most important to find a balance, for him, the most attractive point of Guess is that it is a global company, open, full of vitality, everyone knows and like the brand. It is a lifestyle concept that is very similar to the Inditex Group(fast fashion ZARA parent company).
In the face of the challenges of the global geopolitical economy, fashion brands and retailers can not escape the traditional market mechanism, the survival of the fittest. customs, reorganization, bankruptcy become the most common keywords of the brand and retailers, the United States has become the hardest hit of physical retail. Except that Guess is closing the retail stores in the United States, the other US apparel brands are also facing the performance of declining, losses.
At the same time, the mounting debt US fast fashion brand J.Crew second quarter sales fell by 1.6% year on year to $560 million, the net loss expand from $8.16million to $20.6 million, the US youth apparel brand Express also reported a net loss of $ 11.8 million in the second quarter, compared with a net profit of $ 10.1 million for the same period last year and a decrease of 5.2% year on year to $ 478 million. American Eagle Outfitters grew by 2.7% to $ 844 million, net profit fell by 48.9% to $ 21.2 million.
According to LADYMAX statistics, only the first half of this year, there has been nearly 10 fashion brands or retailers submitting bankruptcy applications, including the New York designer brand Bibhu Mohapatra, women ;s retailers The Limited, Wet Seal and the latest submission of bankruptcy applications Rue21 etc. which is In the wake of the industry that fashion retail industry continues to be in winter.
For the 2018 fiscal year, the Group expects that the third-quarter sales growth will be about 4% to 6%, operating profit growth will be about 2.2% to 3%, annual sales are expected to rise by 6% to 7.5%. After the earnings report, Guess shares rose nearly 13% year on year to $14.1 US per share, the current market value is about $1.14 billion.