Guess Inc.’s first-quarter income grew 34.5 percent partly because of several global factors, including European and Asian tourists who shopped in the U.S. to reap benefits from the falling dollar.
This story first appeared in the June 4, 2008 issue of WWD. Subscribe Today.
“At tourist destinations, where our stores are in coastal cities, we saw significant increases in our business,” Carlos Alberini, president and chief operating officer, said in an interview. “This is one of the benefits of having a truly global brand. Those tourists are coming to us because they recognize the brand from their own markets, but they know that due to strong currencies [overseas] they are getting better value here.”
For the three months ended May 3, income was $47.8 million, or 51 cents a diluted share, versus $35.5 million, or 38 cents, in the year-ago quarter. Total revenues rose 29.4 percent to $489.2 million from $377.9 million. Included in revenues was a 30.2 percent spike in sales to $465.7 million from $357.6 million, with the balance from royalties.
Alberini said comparable-store sales were up 7 percent in the quarter, after a 13 percent gain in last year’s quarter. He attributed the business gains to strong product and the company’s focus on training store associates, customer retention and improving turnover rates.
“It’s not all about margins,” he said. “While we care a great deal about our margins, at the same time [we have to] provide the level of service that our customers are expecting.”
Paul Marciano, vice chairman and chief executive officer, said in an interview that the firm now has showrooms in Barcelona, London, Paris, Düsseldorf, Milan and Florence. Another is to open in the next six to eight months in Lugano, Switzerland. Revenues in Europe, which surpassed $700 million, rose 50 percent in the quarter, and contributed to 68 percent of the firm’s operating earnings growth, the ceo said.
Marciano said the firm is two years ahead of its store count plans for Europe. “The plan was supposed to be 250 stores in Europe in 2010, and we are already close to 150. We will be at 220 stores by next year,” he said.
In addition, the company plans to triple its e-commerce business over the next three years. It expects to launch e-commerce sites on June 1, 2009, in Italy, Spain, France and the U.K. Currently its site is operational only in the U.S. and Canada.