By  on October 30, 2006

LOS ANGELES — Guess has gone from sliding to skyrocketing.

In 2001, Guess's earnings and revenues were deteriorating, its wholesale division was unprofitable, and the brand had lost fashion relevance. Today, Guess has transformed itself into a retail-focused company with 706 directly owned and franchised stores worldwide, generating $58.8 million in net earnings and $936 million in revenues in 2005. The company is on track to achieve revenues in excess of $1.1 billion this year. The company will disclose third-quarter results Wednesday.

In the past three years, Guess has experienced numerous financial highlights, among them, 11 straight quarters of double-digit revenue gains; earnings that have risen at least 25 percent the last 12 quarters; 14 consecutive quarters of same-store sales growth, and net profits that nearly doubled last year after quadrupling the year before.

The brand that flew high in the Eighties and early Nineties on the back of a series of famously sexy "Guess Girls" now covers a multibrand portfolio that includes Guess, Guess by Marciano, Marciano, Guess Accessories and a brand-new retail format that will roll out in North America next year called G by Guess.

The first G by Guess store will debut in the first half of 2007. Prices will be between Guess stores and the factory outlets, and the new brand is targeted to compete with retailers such as Hollister, said Paul Marciano, co-chairman and co-chief executive officer of Guess Inc. He said it will be geared to "young, sexy women," ages 18 to 30. "It's not as edgy as Guess," added Maurice Marciano, co-chairman and co-chief executive officer. By the end of 2007, some 30 G by Guess stores are slated to open. Some will be in prime locations and others in "B" malls. G by Guess denim will retail between $44 and $69, whereas Guess denim goes for around $100.

These days, Guess has become a Wall Street darling. Guess shares hit a 52-week (and all-time) high of $57.20 on Oct. 13. Back in January 2003, the stock was trading between $3 and $4.

How did the 25-year-old company dramatically turn around its ailing fortunes?

The Marcianos, along with Carlos Alberini, president and chief operating officer, sat down with WWD at company headquarters here last week to talk about the company's transformation.

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