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Guess?'s (GES) Strategic Plan Aids Growth, Cost Pressures Ail
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Guess?, Inc. (GES - Free Report) is capitalizing on its strong global platform to drive business growth and expansion. GES’ expansive global footprint, broad channel capabilities, extensive supply chain, diverse category portfolio and strong management team underscore its growth story. Management is also committed to its six key strategies and has made remarkable progress against each of them. That being said, Guess? is not immune to a rising cost environment.
Let’s delve deeper.
Growth Drivers in Place
The Zacks Rank #3 (Hold) company is benefiting from robust brand momentum globally and strong customer response to its collections across various product categories. The company started the fiscal 2025 on a positive trajectory, with first-quarter net revenues rising year over year and surpassing the Zacks Consensus Estimate.
Guess? remains optimistic about the fiscal 2025, wherein it expects to surpass $3 billion in revenues for the first time, supported by an impressive growth plan for its core business. Management is optimistic about deriving benefits from the acquisition of the New York-based fashion brand rag & bone. For the fiscal 2025, management expects overall revenues to increase 10.7-12.7%, with projected growth of 9-11% for the fiscal second quarter.
Image Source: Zacks Investment Research
Strategic Plan Progressing Well
Guess? remains committed to its strategic business plan, which focuses on organization and culture, functional capacities, brand relevance with key consumer groups (heritage, Millennials, and Generation Z), customer focus, product excellence and international presence.
In first-quarter fiscal 2025, the company made significant progress by reducing the number of SKUs across its global apparel lines by 30% and streamlining retail store assortments to enhance productivity and service efficiency. The company is converting its U.S. distribution center operations to a third-party provider, which is expected to impact its cost structure positively.
GES is pursuing a brand-elevation strategy that aims to enhance product quality, improve visual merchandising and enrich the customer shopping experience in stores and online. Management is implementing various upgrades to its store and e-commerce infrastructure to facilitate easier shopping and boost customer conversion.
Will Hurdles be Countered?
Despite these upsides, Guess? faces significant threats from rising operating costs and persistent supply chain issues. In the first quarter of fiscal 2025, SG&A expenses, as a percentage of sales, increased to 45.1% from 40.6% year over year. Supply chain disruptions, particularly in the Red Sea, are affecting inbound freight costs and consumer spending is expected to remain unstable due to inflation.
The company is operating in a volatile shopping environment globally, stemming from inflationary headwinds and a high-interest rate environment. It is encountering difficulties in the Americas retail, marked by declines in foot traffic and conversion rates. These issues highlight the need for strategic adjustments to navigate the competitive and difficult market conditions.
GES’ shares have dropped 15.5% in the past three months compared with the industry’s decline of 7.7%.
Wolverine World Wide designs, manufactures and distributes of a wide variety of casual and active apparel and footwear. The company sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for WWW’s current financial-year sales indicates a decline of almost 23% from the year-ago reported figures.
Kontoor Brands is an apparel company. The stock currently has a Zacks Rank #2 (Buy).
The Zacks Consensus Estimate for KTB’s 2024 earnings and sales indicates growth of 12.7% and 0.1%, respectively, from the 2023 reported figures. KTB has a trailing four-quarter average earnings surprise of 12.3%.
Skechers designs, develops, markets and distributes footwear. The company has a Zacks Rank of 2 at present.
The consensus estimate for Skechers’ 2024 earnings and sales indicates growth of 19.2% and 11.8%, respectively, from the 2023 reported figures. SKX has a trailing four-quarter average earnings surprise of 11.2%.
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Guess?, Inc. (GES - Free Report) is capitalizing on its strong global platform to drive business growth and expansion. GES’ expansive global footprint, broad channel capabilities, extensive supply chain, diverse category portfolio and strong management team underscore its growth story. Management is also committed to its six key strategies and has made remarkable progress against each of them. That being said, Guess? is not immune to a rising cost environment.
Let’s delve deeper.
Growth Drivers in Place
The Zacks Rank #3 (Hold) company is benefiting from robust brand momentum globally and strong customer response to its collections across various product categories. The company started the fiscal 2025 on a positive trajectory, with first-quarter net revenues rising year over year and surpassing the Zacks Consensus Estimate.
Guess? remains optimistic about the fiscal 2025, wherein it expects to surpass $3 billion in revenues for the first time, supported by an impressive growth plan for its core business. Management is optimistic about deriving benefits from the acquisition of the New York-based fashion brand rag & bone. For the fiscal 2025, management expects overall revenues to increase 10.7-12.7%, with projected growth of 9-11% for the fiscal second quarter.
Image Source: Zacks Investment Research
Strategic Plan Progressing Well
Guess? remains committed to its strategic business plan, which focuses on organization and culture, functional capacities, brand relevance with key consumer groups (heritage, Millennials, and Generation Z), customer focus, product excellence and international presence.
In first-quarter fiscal 2025, the company made significant progress by reducing the number of SKUs across its global apparel lines by 30% and streamlining retail store assortments to enhance productivity and service efficiency. The company is converting its U.S. distribution center operations to a third-party provider, which is expected to impact its cost structure positively.
GES is pursuing a brand-elevation strategy that aims to enhance product quality, improve visual merchandising and enrich the customer shopping experience in stores and online. Management is implementing various upgrades to its store and e-commerce infrastructure to facilitate easier shopping and boost customer conversion.
Will Hurdles be Countered?
Despite these upsides, Guess? faces significant threats from rising operating costs and persistent supply chain issues. In the first quarter of fiscal 2025, SG&A expenses, as a percentage of sales, increased to 45.1% from 40.6% year over year. Supply chain disruptions, particularly in the Red Sea, are affecting inbound freight costs and consumer spending is expected to remain unstable due to inflation.
The company is operating in a volatile shopping environment globally, stemming from inflationary headwinds and a high-interest rate environment. It is encountering difficulties in the Americas retail, marked by declines in foot traffic and conversion rates. These issues highlight the need for strategic adjustments to navigate the competitive and difficult market conditions.
GES’ shares have dropped 15.5% in the past three months compared with the industry’s decline of 7.7%.
3 Promising Stocks
A few better-ranked stocks are Wolverine World Wide (WWW - Free Report) , Kontoor Brands Inc. (KTB - Free Report) and Skechers U.S.A., Inc. (SKX - Free Report) .
Wolverine World Wide designs, manufactures and distributes of a wide variety of casual and active apparel and footwear. The company sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for WWW’s current financial-year sales indicates a decline of almost 23% from the year-ago reported figures.
Kontoor Brands is an apparel company. The stock currently has a Zacks Rank #2 (Buy).
The Zacks Consensus Estimate for KTB’s 2024 earnings and sales indicates growth of 12.7% and 0.1%, respectively, from the 2023 reported figures. KTB has a trailing four-quarter average earnings surprise of 12.3%.
Skechers designs, develops, markets and distributes footwear. The company has a Zacks Rank of 2 at present.
The consensus estimate for Skechers’ 2024 earnings and sales indicates growth of 19.2% and 11.8%, respectively, from the 2023 reported figures. SKX has a trailing four-quarter average earnings surprise of 11.2%.