Fashion retailer Guess plans to close around 20 underperforming stores across North America amid ongoing pressure on footfall and profitability.
The company is reassessing its retail strategy as it works to strengthen its financial performance and navigate operational challenges in key markets.
Carlos Alberini, CEO of Guess, acknowledged that ‘traffic declines into our retail stores have persisted’ as the brand posted a 30% drop in net earnings to $84 million for the holiday quarter.
While total revenue rose 4.6% year-on-year to $932.3 million, a stronger US dollar weighed on margins, with gross margin slipping from 45.4% to 44.1%.
However, the company’s recent acquisition of Rag & Bone has provided some uplift.
Guess invested $56.5 million in the brand last year as part of a joint deal with WHP Global, which has since submitted a $13 per share takeover offer for Guess.
Shares were trading around $11 at the time of the announcement.
A special board committee is reviewing the proposal, with Solomon Partners and Willkie Farr & Gallagher advising on the process.
Sales growth was supported by Rag & Bone as well as improved performance in the company’s European and American wholesale segments.
Alberini said the strategic changes underway, including the potential closure of stores and operational shifts in China, could yield $30 million in additional operating profit by fiscal 2027.
As part of this pivot, Guess is exploring a new partnership model in China.
“We have already met several potential candidates for consideration and we expect for this transition to be completed before the end of this fiscal year,” Alberini added.
Meanwhile, efforts to boost digital engagement are ongoing. With 80% of store visitors researching online before shopping, Guess has brought in agency General Idea to strengthen its social media presence, with the campaign set to roll out in July.
In leadership news, Alberto Toni of Flos B&B Italia Group will take over as Guess CFO in June, replacing interim chief Dennis Secor, who will stay on until September.
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