Guess Inc. saw its total revenue inch up during the fourth quarter of 2016, driven by big gains in Europe and Asia, but the brand still ended the year at a loss in the Americas where it continues to struggle.
Consolidated non-adjusted net revenue for the fourth quarter rose by 3 percent to $679.3 million, thanks to an 11 percent revenue increase in Europe and a 27 percent increase in Asia, where Guess has been busy expanding by opening new stores, mainly in China.
In the Americas however, Guess posted a $32 million loss for the quarter, stemming in large part from close to $21 million in charges related to store closures. Revenues dropped more than 6 percent in the region, to $289 million from about $309 in the fourth quarter of 2015.
Even including sales from e-commerce, comparable-store sales in the U.S. and Canada dropped by 7.4 percent at constant currency.
Guess chief executive officer Victor Herrero said the company is “encouraged” by the progress in Europe and Asia and “the majority of our capital investment” will continue to be in those two regions. As for the Americas, Herrero admitted that the “retail environment remains challenging,” leaving Guess to focus on profitability improvements.
Herrero added during a call with analysts that the Americas “underperformed significantly” during 2016 relative to the company’s expectations and cited declining traffic and weak holiday sales, mirroring recent comments by many other retail executives. Herrero also said earlier plans for Guess in the Americas “are no longer achievable” and the company plans to close at least 60 stores over the coming months.
Store closures are ongoing, as Guess shuttered 24 stores during the last fiscal year and closed 38 stores the year prior.
By reducing the Guess footprint in the U.S. and Canada, Herrera said he expects profitability in the region to improve.
For 2016 as a whole, net revenue remained flat at $2.2 billion, but Guess posted a $57 million loss from operations in the Americas, compared with earnings of more than $16 million in 2015.
Looking ahead to fiscal 2017, Guess expects consolidated net revenue to rise by between 2 and 4 percent, thanks to growth in Europe and Asia. Comp-store sales in the Americas will be down by the high- to midteens, as will net revenue.
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