BEVERLY HILLS, Calif. — Guess Inc. is rolling out a vertical retail concept called Marciano, and the first test store is set to open in September at The Grove shopping center in West Hollywood, Calif., said Paul and Maurice Marciano, co-chairmen and ceo’s of the company.

The new women’s contemporary concept will be more sophisticated and dressier than Guess and cost about 30 percent more, the Marcianos said during the company’s annual shareholders’ meeting Monday at the Beverly Hills Hotel, which was attended by 12 people. The idea to develop Marciano was born from the success of Guess Collection, the company’s contemporary line that has been testing in Guess stores to favorable results, they said. There was also a need to expand the store base, they added.

“We are addressing the consumer,” said Paul Marciano, noting that the Marciano collection will hit Guess stores on Aug. 1. “The line will be more sensual, feminine and sexy. But not conservative. No suiting.”

“The Guess line is more jeanswear; Marciano is more sportswear,” said Maurice Marciano. He declined to reveal more details about the collection or new store design , saying it will be “minimalist, very elegant and modern.”

About five Marciano stores will open by the end of the year, including one in Canada. “We think it has the potential to be a chain of 150 to 200 stores,” he said.

An analyst, who asked not to be identified, said sales per square feet might reach $500, in line with what Bebe is notching and higher than the Guess store average of $336.

As for the Guess business, 75 percent retail and 25 percent wholesale — an about-face from even 10 years ago, when the business was primarily a manufacturing operation — Maurice Marciano said Guess clothing is growing up. “It’s becoming more contemporary and less junior, more forward with a European flair,” he said. Guess has begun producing higher-quality pieces, and has boosted prices by $10 in most cases.

In 2003, Guess turned around a net loss of $11.3 million to post an income of $7.3 million on sales that rose 9.2 percent to $636.6 million. Comp-store sales for the year increased 9.3 percent at 265 stores in the U.S. and Canada, including 182 full-price stores, 10 kids’ stores, 73 factory outlets and two stores in Florence, Italy. Guess is set to open 26 stores this year, remodel about 10 and relocate four. Six unprofitable stores will close.In the second half of 2004, the company plans to close all 10 of the unprofitable Guess Kids stores, which registered a loss of $1.8 million on sales of $6.1 million last year. Carlos Alberini, president and chief operating officer, said Guess will continue tolicense a kids’ line. Licensing continues to be “a major part of business,” and the first Guess fragrance will be introduced in 2005, he said.

Cost reduction and managing inventory levels “very, very tightly” continues to be a top priority for Guess, concluded Alberini. “We are very optimistic about the following year,” he said. “We are very absolutely prudent in all decisions and watch every penny. And we feel the company has significant opportunities to grow.”

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