What You Need to Know About Guess and Its Position on the Stock Market
Guess? Inc. is the stock symbol of the international fashion brand ‘Guess’. It distributes, markets, and licenses lifestyle collections that focus on fashion and accessories for children, men, and women. The parent company oversees several brands that carry the GUESS name, including MARCIANO and GUESS by MARCIANO.
The company was founded in 1981, with headquarters in Los Angeles. We’re taking a deep dive into the company, including its position on the stock market and its current CEO, Carlos E. Alberini.
About Guess? Inc
Guess operates with five segments to their organization – Asia, America’s Wholesale, America’s Retail, Europe, and Licensing. Its licensing includes the design and distribution of manufactured eyewear, fragrance, jewelry, and fashion accessories.
Guess? Inc. currently operates over 1,000 retail stores across America, Asia, and Europe at the start of 2021. Its distributor partners opera a further 500 retail stores. Their products are also available for sale across the brand’s retail websites and that of their official stockists.
How the Guess Brand began
The original Guess brand launched in 1981 as a book focusing on styles by Georges Marciano. It began as a family enterprise following the launch of their successful ‘MGA’ stores in France. Their best-selling product was unisex jeans, leading the brothers to decide to come to the United States with the hopes of repeating the MGA success in LA with Guess.
When Guess first launched, jeans were almost universally sold in indigo blue or with a bleached finish. Georges Marciano oversaw the design work for Guess.
His brother, Maurice, was brought on to help with product development. The pair’s other brothers, Armand and Paul, were put in charge of overseeing advertising and distributing. All of these departments operate in-house, with Georges Marciano overseeing the design aspect of the business.
These early designs encapsulated Guess’ signature aesthetic and style, focusing on soft and form-fitting denim that was lighter in color than most of their competitors. The original plan was to sell Guess designs within exclusive and high-market department stores, such as Bloomingdales in the United States.
The other Marciano brothers decided to take a broader strategy, including using outlet stores to offer their products at a discounted price. This rift and division over the direction of Guess as a luxury brand led to Georges Marciano selling his shares in the brand to the other Marciano brothers in 1993. His stake was sold for $214.2 million, with the three brothers borrowing $210 million to buy him out. It was this need for capital that led to Guess going public.
This move came after Guess had recently recovered from a legal battle with the apparel maker Jordache Enterprises Inc. In 1983, they had sold half of the company to Avi, Joe, and Ralph Nakash. It resulted in a legal battle that lasted six and a half years with federal investigations and lawsuits that are believed to have cost $80 million in legal expenses. The case ended in 1990 when the Marciano brothers regained full ownership.
The only remaining Marciano brother who remains working within the brand is Paul after Maurice retired and Armand left following a medical leave.
The popularity of the Guess brand
Guess launched their stonewashed denim jeans, with a signature ankle zipper, in 1981. Their logo was a red triangle with a ?. The brand was met with instant success, with sales hitting $6 million at their Beverly Hills store and in Bloomingdale’s department store within the first year.
Part of the popularity and allure of Guess comes from its successful advertising campaigns and close-knit relationship with some of the world’s most iconic supermodels. The likes of Anna Nicole Smith, Claudia Schiffer, and Gigi Hadid have all been ambassadors for the brand and featured heavily in their advertising campaigns.
Guess jeans jumped into the pop culture sphere in 1985 with Back to the Future, while the lead character was wearing Guess denim jeans that were designed for the movie.
The expansion of the Guess brand
The success of Guess has been founded in its origins as the original designer denim brand. In the beginning, they focused exclusively on womenswear before expanding to men’s denim jeans in 1983.
In 1984, Guess expanded beyond denim to introduce their watch line, which has grown to include several product lines. The same year saw the launch of one of Guess’ first sister brands, ‘Baby Guess’, which is now part of the ‘Guess Accessories’ label.
The 1990s saw Guess move beyond fashion for the first time with a new division, Guess Home. The ‘Guess Home’ brand launched with a focus on upscale bedding and towels. The success was short-lived and by the end of the 1990s, the ‘Guess Home’ division was discontinued. In 1999, Guess launched its e-commerce store at www.guess.com.
The early 2000s led to Guess developing its presence within outlet stores, creating special collections and pieces sold at a lower price. At the same time, ‘Marciano’ was released as an elevated womenswear clothing and accessory brand. It was during this decade that Guess developed and expanded its global presence, with distributors and licensees across Australia, the Middle East, and Asia.
Some of Guess’ biggest success is found within their ‘Guess Accessorise’, ‘Guess Denim’, and ‘Guess Kids’ brands.
Like other fashion brands – such as Chanel and Dior – Guess launched its first perfume in 2005. Their perfume brand caters to both men and women with several scents and special edition fragrances available.
In 2009, Gucci entered a counterfeiting and trademark infringement against Gucci for copying their recognizable logo and interlocking Gs after they appeared on Guess shoes. The legal case continued until 2012 when Guess paid Gucci $4.7 million in damages, significantly less than the original $221 million wanted by the Italian fashion house.
Although Guess is seen as an all-American brand, around 70% of their sales are being generated outside of the United States. Their primary competitors include The Gap Inc, Abercrombie & Fitch Co., and Ralph Lauren Corporation.
Guess? Inc. On the Stock Market
As of August 2021, Guess has experienced a 52-week change of 95.74% with a 52 week high of 31.12 and a 52-week low of 10.98. Their profit margin currently sits at 4.14%, with an operating margin of 6.03%. Their stock currently sits at around $22.98 with a market cap of $1.49 billion, paying a dividend of $0.11.
Guess? Inc. trades on the NYSE and the S&P SmallCap 600 Index. In 2018, Guess’ revenue sat at $2.4 billion. Carlos Alberini, the current CEO, is estimated to own more than 83,000 units of stock, valued at around $7.4 million. Additionally, he’s believed to have sold GES stock worth over $120 million within the last 18 years.
Paul Marciano, the last remaining Marciano brother still working within the company, served as CEO until 2015. Paul took up the role of Executive Chairman of the Board and Chief Creative Officer, a role he remains in today. It took Marciano over a year of working in partnership with his brother Maurice Marciano to find his successor.
He was succeeded by Victor Herrero the same year before he stepped down in 2019 after a short tenure. Herrero came to the role from outside the brand, having previously worked for Inditex, heading up their operations in Asia and Europe. Inditex is the parent company that owned fashion brands like Stradivarius and Zara.
Before the pandemic, Guess predicted their global retail sales would hit $5 billion. The temporary store closures brought on by the pandemic brought the figure to a humbler $4 billion. The company has 25 product categories, continuing operation in over 100 countries.
Meet Carlos E. Alberini – Guess’ CEO
Carlos E. Alberini oversees the Guess brand and its 11,000 full-time employees. He’s estimated to earn an annual pay of 3.4 million. Carlos took up his position as the company’s CEO in February 2019.
Alberini has kept a relatively low profile since taking up the post of CEO. Unlike his predecessor, Alberini was hired for the position of CEO from within the brand. He had previously served as President and Chief Operating Officer from 2000 to 2010 before becoming the Co-CEO and then a Director of Restoration Hardware after he departed from Guess. He has also served as the Chairman and CEO of Lucky Brand, another apparel label known for its denim. Alberini has also previously been Interim Chief Financial Officer at Guess during his tenure as Chief Operating Officer from May to July 2006.
Before his original tenure at Guess, Alberini was the Senior Vice President and Chief Financial Officer at Footstar Inc., serving from October 1996 to December 2000 when he moved to Guess. Before Footstar Inc., Alberini was Acting Chief Financial Officer and Vice President of Finance for the Melville Corporation.
He served in various roles – including Chief Financial Officer – for the department store operator, The Bon-Ton Stores, Inc. Alberini also held several positions at PricewaterhouseCoopers LLP, an auditing firm, before this.
Alberini continues to serve as Director of the board of Restoration Hardware. He joined the board due to his experience in the retail and merchandising industry, including his experience with financing and branded consumer goods.
During his original 10-years at Guess, Alberini was responsible for building the brand’s international presence in Asia and Europe.
Alberini is overseeing the challenge of bringing Guess into an age where denim has been replaced by yoga wear and athleisure. These niches were already experiencing substantial growth at the expense of denim before the pandemic turbocharged their success.
It’s easy to see that Guess is no longer in its heyday, as denim continues its losing battle against athleisure and as fashion trends become more minimalistic. During the virtual ICR conference in January 2021, Alberini is reported as having said that there is “a lot of white space for us to continue to grow”. Their 2020 target of $5 billion remains part of their long-term ambition and a focus for their post-pandemic growth.
Guess has responded to changes within the industry, particularly during the pandemic. They launched their first athleisure line, entering into the market for the first time. Their footwear has also taken a more comfort-focused approach, switching from stilettoes to sneakers.
When Alberini originally took up the reigns of Guess, he planned to increase the brand’s focus on denim. While it’s always been at the core of the brand, it’s out of tune with the current trends within the fashion industry.
Under Alberini’s leadership, Guess is planning to double their sourcing from China. As the trade war continues between China and the United States, resulting in tariffs and a political battle, Guess is an outlier in this field. Alberini has said that the brand will negotiate production costs with vendors who are willing to provide compelling pricing, despite the tariff increases.
Their pre-pandemic plans for 2020 involved expanding the China-sourced apparel products from 12% to 23%.
Throughout the pandemic, Guess has been focusing on its digital investments, now accelerating its pre-pandemic plans that were stuck in the pipeline during 2020. As a result, Guess has reduced the number of styles that they’re offering by 38% in their most recent collection. While it is seeing a reduction in styles, the brand is moving more of its products online.
Alberini has said that he doesn’t believe any of the setbacks caused by the pandemic are permanent and instead are temporary.
While the popularity of Guess peaked during the early 2000s with the rise of global supermodels and denim trends, it’s trying to tap into the athleisure industry. As a billion-dollar retailer with a global presence, Guess remains one of the most recognizable apparel brands in the world.
Their heritage as the original designer denim brand means that denim continues to be the focus of their products while expanding to differentiate and stay current with trends. If it can make a success of its athleisure niche, Guess may finally hit its $5 billion revenue target.