$125M CREDIT TO FUEL GUESS RETAIL GROWTH
Byline: Thomas Cunningham
NEW YORK — To help fund its retail expansion — including its first children’s stores — Guess Inc. has arranged a new $125 million revolving credit facility.
The facility, as yet unused by Guess, was arranged through a syndication led by Chase Manhattan Corp. and expires Oct. 31, 2002, the company said. The financing is not entirely unexpected, since Paul Marciano, Guess co-chairman, co-chief executive and president, told WWD in October that increasing its store base would be a big priority in the coming months.
Guess, which has 159 stores, plans to open 60 units in 2000 and 90 more the next year, said Brian L. Fleming, executive vice president and chief financial officer. One of the biggest growth areas is projected to be the Guess children’s stores. The first store is scheduled to open mid-2000, and Guess plans to have 10 such units by the end of 2000 and 40 by the end of 2001, Fleming said.
Next year, Guess also plans to add 35 full-price stores in several formats. They include units at top malls; street stores in shopping districts, like its store on the Third Street Promenade in Santa Monica, Calif., and flagship stores like the ones scheduled to open on Chicago’s Michigan Avenue and another planned for the Union Square area of San Francisco later next year, Fleming said.
Maurice Marciano, Guess co-chairman and co-chief executive, told WWD in October that his wish list included New York flagships for Third Avenue, Fifth Avenue and the Flatiron district and another store in SoHo. In 2000, Guess will also add 10 factory outlets to the 54 it now operates and add 15 stores to its 13-unit Canadian operation, according to Fleming.
Guess, which reported a 92.3 percent profit gain in its most recently completed quarter, plans to pay for the stores mainly with its own cash, Fleming said.
“The revolver will have borrowings on a seasonal basis and as we ramp up the construction efforts, but in the long run, we expect the new store investments to be funded through internally generated funds from operations,” he said.
Guess’s retail stores, which were a drag on the company’s results in prior years, have been much improved recently. For its second quarter ended in September, Guess’s same-store sales climbed 21 percent at its full-price stores, 21.8 percent at its outlets and 31 percent in Canada.
Guess also said Monday it bought back $12 million of its 9 1/2 percent subordinated notes as part of an ongoing plan to reduce its long-term debt. Guess, which issued $130 million of the notes in 1993, now has $79.6 million of the notes outstanding. The company will continue to buy back the notes from time to time, Fleming said.
Guess shares gained 3/16 to close at 17 5/16 on the New York Stock Exchange Monday.