Guess to close underperforming stores in North America

Dive Brief:

Alberto Toni, group managing director and chief financial officer at luxury conglomerate Flos B&B Italia Group, will replace Guess Interim CFO Dennis Secor as chief financial officer, the brand said Thursday. Toni will take the post in June after Guess files its Q1 earnings report, and Secor will remain as executive vice president through Sept. 12.
In North America, the company is working to shutter about 20 underperforming stores. “Traffic declines into our retail stores have persisted,” Guess CEO Carlos Alberini told analysts Thursday.
The strong U.S. dollar hit Q4 revenue and margins, with gross margin dropping to 44.1% from 45.4% last year, Alberini said. Profits plunged, with net earnings down 30% year over year to $84 million. Net revenue rose 4.6% to $932.3 million, with product sales up 4.2% to $899 million and royalties up 17.6% to $33.3 million.

Dive Insight:

Rag & Bone sales, plus Guess’ European and American wholesale businesses, drove growth in Q4, according to a statement from Alberini. Guess pitched in $56.5 million last year when it teamed up with WHP Global, now its would-be suitor, to buy Rag & Bone. The brand has since bolstered the company’s topline.

Guess also said that a special board committee has moved forward in its consideration of the acquisition offer from WHP Global by retaining Solomon Partners as financial adviser and Willkie Farr & Gallagher as legal adviser. WHP last month bid $13 per share in cash; at press time shares were trading at around $11.

While the company mulls an even closer tie-up with WHP, it is shaking up its operations to some extent. Guess has been running its business in China directly, but is now considering pairing up with “a local, highly experienced partner,” Alberini said. That plus the North America store closures will unlock some $30 million in operating profit in fiscal 2027, he said.

“We have already met several potential candidates for consideration and we expect for this transition to be completed before the end of this fiscal year,” he said.

In addition to closing unprofitable locations, Guess is working to boost customer engagement and traffic to stores and its website, Alberini told analysts, noting that 80% of store shoppers “perform extensive research online prior to their visits.” Guess has tapped creative agency General Idea to foster the brand’s social media presence, with implementation in July, he said.