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Guess Bets on Denim-Loving Gen Z to Fuel Growth

Executives and investors alike reveled in Guess Inc.’s optimistic outlook for the next few years, citing opportunities to grow successful product categories and expand to new markets to meet its $2.8 billion revenue target by fiscal 2024.

Guess, Inc. CEO Carlos Alberini discussed the opportunities in depth at the virtual Goldman Sachs Global Retailing Conference on Friday, pointing to denim as a top area for growth.

“We have several categories where we feel that, even though we have a strong presence in the market, we don’t think that those categories are maximized,” he said. “A good example of that is denim, a category that is the biggest part of our DNA.”

Denim is starting a new cycle—one that many denim brand executives have celebrated in their meetings with investors—in which Guess can “play a significant role,” Alberini added. Some of the company’s latest collections, including surf-inspired men’s and women’s collection released earlier this year, are especially denim-heavy. In a new report, the company reflected its growing emphasis on denim and pledged to up its sustainability requirements so that 75 percent of its denim is made with certified sustainable materials and uses production methods with a lower environmental impact.

Other categories such as outerwear, accessories, dresses and leisure—the latter of which is a new category for the brand—show signs of a promising future. “We are truly a lifestyle brand, and I don’t think there are many brands in our space that can make that claim,” Alberini said. “We have many product categories across men’s and women’s, and we are meaningful and relevant in each of those categories. We see this as one of the pillars to increase sales productivity, both in our stores and through our e-commerce site.”

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The in-store experience is still a significant focus for the company, which recently announced plans to unveil updated brick-and-mortar features like enhanced WiFi networks, extended payment methods and mobile checkouts. Alberini pointed to a number of markets that would offer strategic geographic expansion, including Russia, Germany, France, the U.S., Canada and China, the latter of which he said “is probably the biggest opportunity there is.” The company currently has about 100 stores in the region.

Earlier this year, Guess announced it was putting together a team that would offer a more local, personal approach to its Chinese customers. It plans to launch collaborations with local artists and celebrities and call on its local e-commerce partnerships including Tmall, one of the region’s largest B2C retail platforms.

Beyond China, the company is focusing on improving engagement with its three key demographics: heritage customers, who have “been with the brand for a long time, and are very loyal,” millennials, and Gen Z. The youngest generation has a reported $143 billion in spending power and a penchant for denim, as retail analytics provider Edited says jeans make up 48 percent of all bottom arrivals at youth-oriented merchants.

To tap into the younger demographics, Guess works with its internal partnerships group to gather celebrities for Gen Z-centric collaborations and host in-person events. Last month, it invited VIPs, social influencers and skate enthusiasts to come together at Lot 5, the space outside of its Downtown Los Angeles headquarters, for the launch of the Guess U.S.A. x Babylon Skate Park Festival and their second capsule collection together.

“This is a different customer, and we feel that there is a big opportunity here to market to that customer with a completely new model,” Alberini said.