Guess? wants you to get in its jeans. Founded to make flattering designer jeans, the company manufactures trendy, upscale apparel and accessories for men, women, and children under brands GUESS, GUESS Kids, Baby GUESS, and GUESS by MARCIANO, among others. Its trademark sexy ads, featuring the likes of Claudia Schiffer, are designed in-house. Guess? operates a noteworthy 1,560 stores worldwide. It directly operates more than 750 stores and concessions in the US, Canada, Europe, the Middle East, and Asia. Another 800 stores and concessions are run by licensees in the same markets. To get more bang from its brand, Guess? licenses its name for eyewear, footwear, jewelry, and watches.
The company's retail operations in North America account for 43% of its revenue. Guess? is also a wholesaler to major department stores, including Macy's and Dillard's, specialty shops, and upscale boutiques. During 2011 Guess? tweaked its segment reporting, separating its North American wholesale and Asia segments, to better reflect how it manages its operations.
To diversify its operations, Guess? has been looking to make its business more global to reduce its risk in any one market. It's also considering raising prices for some of its products -- anticipating increased costs for raw materials, labor, freight, and commodities such as oil -- while it works to implement savings in its supply chain. To boost retail sales, Guess? is banking on its new G by GUESS store concept, which caters to cost-conscious consumers and is flexible enough at a typical 5,000 sq. ft. to be adapted to placement in mall locations. Scoffing at the economic downturn, Guess? in 2011 opened its world's largest flagship store (with more than 13,000 sq. ft.) in New York City. In Europe and Asia, its growth strategy is similar. Guess? is focused on developing new markets in Northern Europe and springboarding from its success in Western and Southern Europe. With its licensee partners, the company opened 120 retail stores in Europe during 2012 and plans to open 90 stores in 2013 (with plans to operate about a third of them). Its growth in Asia includes opening 70 retail stores across all concepts.
Mergers and Acquisitions
Guess? continues to focus on international expansion, particularly in Asia and Europe. To this end, the company acquired its licensee of children's apparel, BARN S.r.l.; a majority stake in Italy's Focus Europe; and Maco, one of its Italian licensees. As a result, the company's sales outside North America represent nearly half of its overall revenue, up from one-fifth in 2005. Guess? has also brought its kids and adult apparel businesses in Europe in-house.
Net revenue increased 8% in 2012 compared to 2011, driven by North America (42%), Europe (38%), and licensing (5%). Expanding its business overseas has come at a price, though. Guess? logged net income declines of 8% during the same period due to a 10% increase in selling, general, and administrative expenses in Europe, higher store selling expenses in Europe and Asia, and costlier global advertising. Having to pay a third party logistics service in Europe a settlement charge of $19.5 million didn't help the company's bottom line.
Each with a stake in Guess?, chairman Maurice Marciano (15%) and his brother Paul (13%) run the company founded by their father.
Sales and Marketing
The ads that have made Guess? iconic are designed in-house. – less
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