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Guess? (GES) Looks Promising: Surges More Than 40% in 6 Months

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Guess?, Inc. GES looks solid, courtesy of impressive growth endeavors like focus on digital efforts and strategic plan. Notably, this Zacks Rank #1 (Strong Buy) stock has surged 44.8% in the past six months compared with the industry’s growth of 6.1%. The stock has comfortably outperformed the Zacks Consumer Discretionary sector’s increase of 1.4% during the same period.

Let’s discuss further.

Digital Business: A Key Driver

Guess? is benefiting from its solid digital business, which performed well in the first quarter of fiscal 2022. Notably, the company’s e-commerce business in North America and Europe soared 61% sequentially in the fiscal first quarter, following 38%, 19% and 9% improvements in the fourth, the third and the second quarter, respectively. Moreover, the company expects to see continued improvement in its global e-commerce business through fiscal 2022.

Markedly, Guess? is on track with its digital-first initiative and has been investing in brand building through social media platforms. Further, the company is focused on linking brick-and-mortar stores, e-commerce and mobile sales to improve online operations. Guess? is also improving e-commerce operations through better data capturing, improved customer profiling, personalized marketing and relationship management. These efforts are expected to help the company enhance customer base and enhance experience, which in turn is likely to drive sales.

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Zacks Investment Research

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Strategic Plan on Track

Guess? has been focused on its strategic business plan that was unveiled in December 2019. To this end, the company is committed to its six key strategies that include organization and culture, functional capacities, brand relevance with three main consumer groups (heritage, Millennials and Generation Z customers), customer focus, product brilliance and international footprint. Management, in its last earnings call, highlighted that it has made remarkable progress against each of them over the last 15 months, amid the pandemic

In connection with its salesforce and omnichannel capacity rollout, Guess? is focused on implementing Customer 360 — a solution developed by salesforce for personalized marketing, customer data optimization and customers’ journey engagement among other objectives. Moreover, the company has been rationalizing its store portfolio by shutting underperforming retail locations and renegotiating leases with favorable terms. As part of the strategic plan, the company is also 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 to enhance operating model and reduce SG&A expenses.

Management expects an expansion of 300 basis points in operating margin in fiscal 2022 from fiscal 2020 levels. Guess?, in its last earnings call, highlighted that it expects to achieve its operating margin target of 10% by fiscal 2024. Earlier, the company had anticipated to hit its target mark by fiscal 2025.

All said, we believe that the company’s solid digital endeavors and strategic plans will keep it well positioned.

More Solid Textile-Apparel Picks

Gildan Activewear, Inc. GIL, which sports a Zacks Rank #1, has a long-term earnings growth rate of 28.6%.You can see the complete list of today’s Zacks #1 Rank stocks here.

Crocs, Inc CROX, which sports a Zacks Rank #1, has a long-term earnings growth rate of 15%.

G-III Apparel Group, Ltd. GIII, which sports a Zacks Rank #1, has a long-term earnings growth rate of 11.6%.

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Guess, Inc. (GES) : Free Stock Analysis Report

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