Yahoo Finance Guess? (GES) Benefits From Brand Momentum Amid Macro Headwinds
Guess? Inc. GES is committed to pursuing its six key strategies to achieve growth. The contemporary apparel and accessories company is reaping benefits from the ongoing momentum and impressive customer response to its brand. That being said, Guess? Is not immune to the rising cost environment.
Let’s discuss this in detail.
What’s Working in Guess?’s Favor
Guess? is benefiting from robust brand momentum globally and strong customer response to its collections across various product categories. Management is optimistic about its robust global platform, which will facilitate the growth and expansion of the company’s Guess and Marciano businesses, alongside rag & bone, which marks the company’s first acquisition.
GES is on track with its six key strategies and made remarkable progress against each of them. The core strategies include organization and culture, functional capacities, brand relevance with three main consumer groups (heritage, Millennials and Generation Z customers), customer focus, product brilliance and international footprint.
As part of its growth objective, Guess? Recently acquired rag & bone, to expand its product offering and customer base. The acquisition reinforces its long-term growth strategy to make a bigger and more powerful business and deliver the best products to its customers. To optimize its operations, management is on track to convert its distribution center operation in the United States to a third-party provider. The move is likely to have a positive impact on cost structure. As part of the Customer 360 project, management launched its CRM platform, which gives the company a 360 view of the customer and fuels improved personalization, marketing and promotional strategies.
In terms of brand elevation and category expansion, the company intends to utilize the strength of its Guess and Marciano brands. The company is enhancing the customer experience while implementing various upgrades to its store and e-commerce infrastructure to improve the ease of shopping and increase customer conversion. The company is on track with supply chain and inventory management to counter supply chain disruptions.
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Hurdles on the Way
Guess? Is operating in a volatile shopping environment globally, stemming from inflationary headwinds and a high-interest rate environment. Concurrently, the company is witnessing persistent weakness across its Americas retail business amid a dynamic macroeconomic environment. Rising operating costs and expenses are major threats to Guess?. During the second quarter of fiscal 2024, the company’s adjusted SG&A expense increased 8% to $275 million. Guess? continues to witness persistent supply chain issues, which is exerting pressure on its performance.
That being said, Guess? is encouraged about growth opportunities ahead. Management expects to surpass $3 billion in revenues for the first time in the fiscal 2025, supported by an impressive growth plan for its core business, the integration of rag & bone into its portfolio and the introduction of Guess Jeans to cater to the demand from Generation Z consumers.
The Zacks Rank #3 (Hold) company’s shares have gained 13.1% in the past three months against the industry’s decline of 16.5%.
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