Denim Retailer Guess Sees Sales And Earnings Doubling By 2025

After closing the books on what it called “a challenging but rewarding year,” Los Angeles-based apparel designer and retailer Guess reiterated its long-term strategic plan in its earnings report on Wednesday (March 31) and said it still expects to nearly double its sales and earnings over the next five years.

Although the company refused to provide guidance for where it expected to be in the next three or 12 months due to ongoing pandemic-related store closures and other economic uncertainties, it was, however, comfortable projecting where it would be in 2025.

“We are committed to delivering net revenues of $2.9 billion by fiscal year 2025 [versus $1.9 billion today],” CEO Carlos Alberini told investors in the company’s earnings call. “I am confident that we have an opportunity to more than double our earnings per share to $3.00 [in FY 2025] from $1.33 [today],” he added.

For the quarter and year ahead, Guess said its first-quarter revenues that run through April would be down in the “high-single digits” versus a year ago as pandemic-related shutdowns and foot traffic declines are being offset by continued momentum in its global eCommerce business, which rose 38 percent last quarter.

For the full fiscal year, Alberini said as long as there are no more COVID-related shutdowns after the first quarter, he expected revenues to be down in the high single digits.

77 Percent Of Stores Are Open

The optimistic outlook comes after the operator or more than 1,100 worldwide stores said that for the three months ending Jan 30, its total revenues decreased 23 percent to $648 million, while tight cost management saw its Q4 earnings slide about 6 percent to an adjusted $1.18 per share. On a net income basis, Guess lost about $11 million in Q4 and $81 million for the year.

“With this performance, we conclude a challenging but rewarding year for [Guess],” Alberini said. “During the year, we made great progress executing our strategic plan and were able to accelerate the implementation of several key initiatives, including those related to customer centricity, elevating our brand, improving the quality of our product and developing one global product line.”

According to CFO Katie Anderson,  the company’s 4 percentage point reduction in operating expenses and other efficiencies will “flow evenly over the next four years,” including this year.

“So the underlying expense savings will be present in fiscal ‘22. However, because the revenue is going to take some time to get back up to the levels that we saw pre-pandemic, some of that will be offset by de-leveraging sales,” Anderson said on the call.

12-Month Performance

Despite the COVID-era challenges that Guess — and most retailers —  faced, the past 12 months have seen the company’s share price more than triple, from $7 at the start of the pandemic shut down a year ago, to $25 in recent days, a rally that has lifted its market value to more than $1.5 billion.

“This past year was truly a year of crisis, but like Winston Churchill said, we didn’t let the crisis go to waste, Alberini said. “During the year we made great progress executing our strategic plan, and we’re able to accelerate the implementation of our several key objectives,” including capital management, eCommerce and omnichannel capabilities, store rationalization and rent renegotiation, and streamlining the business to add new categories and eliminate redundancies.