[3/17/17] Herrero and Guess CFO Sandeep Reddy outlined an aggressive strategy to jumpstart profits in the brand’s U.S. operations through a store rationalization approach involving rent re-negotiation and closures. The retailer isn’t being shy about its motives: Last year, Guess shuttered 19 stores even after obtaining more favorable rents on their leases.
It’s all a response to sweeping changes impacting retailers across the industry. “[W]e are seeing in the U.S. market a significant drop on traffic, which is leading us on the fourth quarter to a more promotional environment,” Herrero told analysts. “And at the same time, this is basically, as a consequence, declining our margins.”
It’s quite a different story for the brand outside of North America, however. This year, Guess will open 60 stores in Europe, where nearly half of its sales come from wholesale, and another 35 locations in Asia.