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Guess Cuts Style Count by 38%

COVID-19 recovery is on the horizon but the pandemic's impact on sustainability, retail, product development and consumer buying patterns means the denim industry must evolve. Join Rivet on April 20th at 11 am ET for the COVID, One Year Later roundtable.

Guess might already be a global brand, CEO Carlos Alberini believes the denim-centric company still has considerable runway for additional expansion.

“We are really well developed in most countries,” Alberini said Monday at the virtual ICR Conference, adding that he sees “a lot of white space for us to continue to grow.”

Before the coronavirus pandemic upended plans, Guess expected global retail sales to hit $5 billion, but temporary store closures tempered that figure to $4 billion. Working with 25 product categories and operations in 100 countries, Guess generates about $2.1 billion in annual volume, with 75 of its revenue stemming from outside the U.S., Alberini said.

2020’s sales decline wasn’t permanent, but simply the result of shuttering stores at the government’s order and pruning supply in line with demand. “We believe that number and opportunity is still quite alive for us,” Alberini said of the $5 billion target. At a future date, Guess plans to reveal its “strategic business planning options going forward.”

Design and manufacturing for Guess’ core business in denim and knitwear apparel for men and women are operated through the company, while adjacent product categories like watches, footwear and eyewear are licensed out.

Alberini addressed how Guess can quickly react to changing market dynamics, like launching athleisure, where it had zero penetration pre-Covid. The category now represents 7 percent of apparel sales, he noted, describing it as “very meaningful and significant” and relevant for the marketplace today. And with quarantined consumers choosing comfort-driven apparel, the brand has also tweaked its footwear offerings to include more athletic options.

Alberini rejoined the company as CEO last year, after previously serving as president and chief operating officer. He said one of the decisions he made when he became CEO was to really go after and invest in the denim category, both in how the product is developed and how it is marketed. So far, Guess is “pleased with the trends,” he said.

While Covid remains a challenge, Guess has forged ahead with digital investments and will accelerate some of the projects that were in the pipeline prior to the pandemic. The denim company has leverage inventory management technology to improve stock levels, which should improve margins going forward, Alberini said. In addition to reviewing leases that will expire over the next three years, whether to optimize its store portfolio or renegotiate terms, Guess is also exploring ways to consolidate redundant global functions.

“In our business, product always has been king,” Alberini said. “It’s the number one successful factor.” Guess has taken pains to elevate its product assortment by enhancing quality, he added.

It has also decided to introduce one global line across all categories, a move that could catalyze significant market share gains in the future, both through margins and cost controls. The move is reminiscent of the company’s successful product and brand strategy from 2010. And this time around, Guess has also reduced the number of styles it is developing, with a 38 percent reduction in the most recent season. At the same time, it is making more products available online.

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