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Guess to Close 100 Stores in North America and China

Store closures forced by the pandemic are giving cause for Guess Inc. to reevaluate the size of its fleet and the efforts put in place to strengthen its e-commerce business.

Based on sales data from stores that have re-opened since May 2, the company has seen first-quarter fiscal 2021 sales productivity of roughly 75 percent in the U.S. and Canada, and 70 percent in Europe compared to last year’s levels.

During an earnings call last week, Guess Inc. CEO Carlos Alberini said the company is planning to close approximately 100 stores globally over the next 18 months, primarily in North America and China. Numerous lease expirations, he said, are giving the company “flexibility” to downsize its physical retail footprint.

While competing denim brands like Levi’s and American Eagle Outfitters (AEO) have pivoted sales focus to e-commerce strategies—and in the case of AEO, saw a 17 percent increase in ec-ommerce sales during the pandemic—Guess, in large part, has historically relied on physical stores as its source of sales and consumer outreach.

“We think that there is no better way to represent the brand than with a great, well positioned and well merchandised store,” Alberini said. “And this has always been part of our big representation of the brand. And we also think that stores are the number-one customer acquisition vehicle that we have.”

The pandemic, however, shined a light on this weak spot.

E-commerce will be one way Guess plans to battle back from the coronavirus crisis, but Alberini admits it’s a game of catch up. Even when the business is healthy and growing, the exec said Guess doesn’t have the capabilities to capitalize on the changes that were forced by the pandemic. The company doesn’t have the right e-commerce tools in place, he added, especially in Europe.

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Guess’ e-commerce business in the U.S. is in better shape, but it is taking a while to gain traction.

“We are still having challenges with customer traffic,” he said. “But we have just looked at the product assortment and we’re seeing that there was a big opportunity with product and we are funding a lot more on the inventory side to be able to feed into that demand and we are very happy with the result.”

The heritage brand is counting on seeing some normalization of its business after Q2. Part of the rebound, Alberini said, will require a laser-sharp focus on essential product categories as well as fabric choice and quality.

Guess’ handbag segment, he said, is “incredibly well-positioned” and can continue to gain share. The outerwear category is an opportunity to gain market share as a high price point item. And activewear has greater potential with the change in lifestyles. Notably absent from his list of opportunities was dress, which is core to the Marciano brand.

Jeanswear, however, remains a focal point for the company.

“Denim as a category has always been a dominant piece of our assortment for us and brings the customer back and we think that this can be even a much bigger part of our key opportunities here,” Alberini said. “We have gained significant traction during the last few months on denim, and we think that there is more to come.”