Carlos Alberini Charts Guess Inc.’s Path Forward
Carlos Alberini remains optimistic about Guess’ future.
“We don’t think anything that has happened in the last few months during the pandemic is permanent,” the chief executive officer of the apparel, accessories and footwear company said during the 2021 virtual ICR Conference Monday. “In fact, we think it’s temporary.”
He’s talking about an approximately $600 million loss in company revenues over the last 12 months. But Alberini pointed out that there have been some tailwinds during the same period, too.
“We reach 100 countries now with our distribution and we believe that that is a pretty difficult and challenging thing to achieve for a brand in our space and we don’t think that there are that many brands that can make this claim,” he said. “We feel that we are really well developed in most countries and we think that there is — as I said — a lot of white space for us to continue to grow.”
That could partially explain why, despite the pandemic, Guess had a surprise $27.5 million profit in its most recent quarter, its first gain in three quarters.
Moving forward, Alberini said the key to keeping up the positive momentum will be expanding into categories that Guess is not traditionally known for, while updating the existing key pieces and enhancing the firm’s e-commerce capabilities.
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“We see big opportunities for those broad categories for Guess,” he said. “Also, because there have been some shifts in consumer behavior and shopping that we think we can capture by extending or investing in new product development. A good example of that is athleisure. This is a line that we did not have a year ago. And very recently we marketed the current line. And what we saw was that we went from having zero penetration in this category with a recent campaign, [to now] athleisure represents about 7 percent of our apparel sales orders for that particular season in Europe. So we think that we’re into something very, very meaningful and significant, relevant for the marketplace today.”
Other product opportunities include expanding the handbag line, adding more casual footwear and denim styles and updating outerwear looks with things such as fake fur.
“We’ve been able to adapt to where the customer is going,” Alberini said. “We believe that in our business a product is — and it has always been — king. It’s the number-one success factor. You can have a lot of things that are working well in the company and not having good product that is relevant for that consumer, I think that really does trump everything else.”
Meanwhile, Guess continues to enhance its digital capabilities. The company is working to soon implement Salesforce technology for data capture in North America and many parts of Europe. The software will allow Guess to offer more personalized marketing and customer engagement, while optimizing inventory levels.
Alberini added that the company is “thinking about the store fleet and trying to renegotiate terms or thinking about whether those stores still have a meaningful position within the portfolio.”
Guess has more than 1,600 stores in about 100 countries. Nearly 80 percent of company-owned stores have lease termination dates within the next three years.
“We are trying to eliminate losing stores by closing them and we are looking at renegotiating terms,” Alberini said. “We are thinking about ways to even reduce the risk for the leases that we do decide to renew. Or extend pursuing deals that are more than just a variable in terms of dependency on the sales as opposed to signing very fixed-rent type of leases.”
Shares of Guess, which closed down 1.10 percent Monday to $23.29, are up 3.1 percent year-over-year.
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