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Guess? (GES) Benefits from Sturdy Demand, E-commerce Wing

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Retailers such as Guess?, Inc. GES are gaining from consumers’ resumption of apparel shopping trends as they return to outdoor activities, now that pandemic-led restrictions have been relaxed. Guess? has been gaining from sales growth across most regions, as demand conditions improve across stores. Such upsides aided the company’s top-line during second-quarter fiscal 2022. The company is also gaining from growth in digital sales. Its efforts to boost brands and customers’ shopping experience are yielding.

Shares of this well-known apparel and accessories company surged 89.6% in a year compared with the industry’s rise of 35.6%. Let’s take a closer look at the factors acting as aces for this Zacks Rank #1 (Strong Buy) company.

Favorable Demand Conditions Aid

With socializing picking up pace, consumers are looking to revamp their wardrobes and are splurging on apparel products. Guess? is witnessing demand recovery across product categories as stores reopen. During the second quarter, net revenues of $628.6 million went up 57.7% from $398.5 million reported in the year-ago quarter. On a constant-currency (cc) basis, net revenues surged 51.1% year over year. The upside can be attributed to sales momentum across most market regions. Revenues from products sales as well as royalties reflected growth. The company is optimistic regarding its ability to boost revenues in the forthcoming periods and reach $2.8-billion revenue target by fiscal 2024.

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Sturdy Digital Wing

Guess? has been benefitting from growth in its digital operations. The company has been on track with its digital-first initiative and has been investing in brand building through social media platforms such as Facebook, Twitter, Instagram and YouTube. The company has been focusing on linking brick-and-mortar stores, e-commerce and mobile sales to improve its online operations. Guess? has also been improving e-commerce operations by undertaking efforts such as better data capturing, improved customer profiling, personalized marketing and relationship management.

Guess?' digital business performed well in the second quarter of fiscal 2022. The company’s e-commerce business in North America and Europe increased 11% year on year. It expects to see continued improvement in its global e-commerce business through fiscal 2022, as it invests more in strategic marketing. The company’s continued efforts to boost online capabilities are expected to help enhance customer base and enrich their experience, which in turn is likely to drive sales.

Other Notable Strategic Efforts

Guess?’ core growth strategies include improving functional capacities, brand relevance with three main consumer groups (heritage, Millennials and Generation Z customers), customer focus, product brilliance and international footprint. In connection with its customer-centricity initiative, the company completed the implementation of Customer 360 — a solution developed by salesforce. The solution boosts personalized marketing, customer data optimization and customer engagement among other objectives.

The company is also focusing on brand-elevation, which includes enhancing product quality, visual merchandising and boosting customers’ shopping experience across stores and online. It has also been rationalizing its store portfolio by shutting underperforming retail locations and renegotiating leases. The company is focused on building a better retail business with higher number of full price selling coupled with reduced promotional activity. Further, management is on track to streamline its cost structure.

Wrapping up, improving market trends coupled with a strong brand image and well-chalked moves to boost business are likely to keep Guess? well placed in the times ahead. All said, we expect the company to maintain its prominence in the apparel products industry.

3 Picks You Can’t Miss Out On

Delta Apparel, Inc. DLA, flaunting a Zacks Rank #1 (Strong Buy), delivered an earnings surprise of 102.2% in the last four quarters, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.

Hanesbrands Inc. HBI, also with a Zacks Rank #1, has a long-term earnings growth rate of 8.5%.

Foot Locker, Inc. FL, sporting a Zacks Rank #1, has a long-term earnings growth rate of 4%.


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