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Guess? (GES) Poised on Digital Operations Amid Soft Traffic

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Zacks Equity Research
·4 min read
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Guess?, Inc. GES is benefiting from its impressive digital operations especially amid coronavirus-induced social distancing trends. Moreover, the company’s strategic endeavors to drive growth that include customer-centric initiatives among others bode well. That said, the company is battling pandemic-induced hurdles like reduced customer traffic in stores. Let’s delve deeper.

Digital Operations: A Key Driver

Guess? is benefitting from its solid digital efforts. Notably, the company’s e-commerce business in North America and Europe increased 19% in the third quarter of fiscal 2021. Prior to this, Guess?’s e-commerce business in these regions rose 9% in the fiscal second quarter. Moreover, management is optimistic about its online growth in fiscal fourth quarter.

Markedly, Guess? is on track with its digital-first initiative and investing in brand building through social media platforms. Further, the company is focused on integrating brick-and-mortar stores, e-commerce and mobile sales to improve online operations. These efforts have been helping customers reserve merchandise online and pick them up in stores. In order to augment its e-commerce operations, the company is resorting to data capturing, customer profiling and personalized marketing. Also, it is undertaking robust efforts to elevate its brand.


What Else is Driving Guess?’s Growth

Guess? is focused on enhancing operating margin through cost-saving efforts and operational efficiencies. Moreover, it is focusing on customer-centric initiatives that include global e-commerce strategy, salesforce implementation and omnichannel experience redesign projects. In its last earnings call, management stated that it has completed the implementation of the salesforce platform in the United States, Canada and Europe except Russia. It plans to implement the platform in Russia during February 2021. In fact, Guess? is impressed with the performance of the platform that enables better customer experience and improved conversion as well as engagement. Also, it expects to see solid online growth via these platforms.

Guess?, which shares space with Under Armour UAA, is progressing well with its customer 360 project to enhance personalization, customer data integration, journey engagement as well as results analysis. In fact, management expects to conclude the full implementation of the Customer 360 project by the end of 2021.

Wrapping Up

Guess?’s net revenues declined 7.6% year over year in the third quarter of fiscal 2021 thanks to lower demand due to the coronavirus outbreak. In fact, the company anticipates sales in the fiscal fourth quarter to decline in low to mid-twenties. Lower customer traffic in stores and temporary government-mandated store closures, especially in Europe and Canada, owing to the coronavirus outbreak are likely to affect sales in the quarter. Also, permanent store closures are expected to be a drag.

Nevertheless, the aforementioned upsides are likely to help this Zacks Rank #3 (Hold) company remain in investors’ good books. Shares of Guess? have surged 71.8% in the past three months compared with the industry’s growth of 14.1%.

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