Guess? (GES) Shares Up 18.3% YTD: What's Driving the Stock?
Shares of Guess? Inc. GES have rallied 18.3% so far this year. The company’s strength across its businesses in Europe & Asia, focus on strategic priorities, effective pricing actions and shareholder-friendly policies seem to have boosted sentiments for the stock.
The Los Angeles-based company belongs to the Zacks Textile - Apparel industry, which comes under the ambit of the Zacks Consumer Discretionary sector.
Guess? has a $1.3 billion market capitalization and currently sports a Zacks Rank #1 (Strong Buy).
Image Source: Zacks Investment Research
Year-to-date, the company’s shares have outperformed the industry’s growth of 2%. The S&P 500 has risen by 18.6%, while the sector increased by 10.8% during the same period.
Catalysts Behind the Share Price Increase
Guess? has been benefiting from its growing online business. The company is experiencing strength in its businesses across Europe and Asia, supported by strong demand in retail end markets. Of late, increased consumer activity in Korea has also been driving its Asia unit’s performance.
In second-quarter fiscal 2024, revenues from Guess?’s Europe segment increased by 9%, driven by solid retail store performance (including new stores). The apparel and accessories company’s Asia unit revenues also jumped 19% in the quarter. Driven by business strength, management expects revenues to increase by 2.5-4% in fiscal 2024. The company also anticipates fiscal 2024 adjusted earnings per share (EPS) of $2.88-$3.08 compared with $2.74 recorded in fiscal 2023.
GES remains committed to boosting its customers’ experiences by implementing upgrades to its store and e-commerce infrastructure to increase customer conversion. For instance, it upgraded its store infrastructure, including the implementation of mobile point-of-sale check-out, Salesforce Customer 360 and a real-time inventory and sales dashboard. Customer 360 is a solution developed by Salesforce for personalized marketing, customer data optimization and customer journey engagement, among other features.
Guess? remains committed to rewarding shareholders through dividend payouts and share repurchases. For instance, in the fiscal second quarter, it repurchased 2.2 million shares under its 2021 share repurchase program, amounting to $42.8 million. In May 2023, management approved a 33% hike in its quarterly dividend, from 22.5 cents per share to 30 cents.
Management is on track to streamline its cost structure to enhance its operating model and reduce SG&A expenses. These cost saving moves are likely to be reinvested in amplifying the company’s marketing and omnichannel capabilities.
Despite the positives, Guess? has been experiencing persistent softness in its retail and wholesale businesses. In second-quarter fiscal 2024, revenues from its Americas retail and wholesale segments declined 8% and 13%, respectively, year over year. The results were impacted by a soft consumer spending environment.
Other Stocks to Consider
Here we have highlighted three other top-ranked stocks from the same space.
Abercrombie & Fitch ANF, a specialty retailer, currently sports a Zacks Rank #1. ANF has a trailing four-quarter earnings surprise of 724.8%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Abercrombie & Fitch’s current financial-year sales suggests growth of 10.1% from the year-ago reported figure.
Crocs, Inc. CROX, a casual lifestyle footwear and accessories company, carries a Zacks Rank #2 (Buy) at present. CROX has a trailing four-quarter earnings surprise of 19.9%, on average.
The Zacks Consensus Estimate for Crocs’ current financial-year revenues suggests growth of 12.9% from the year-ago reported figure.
American Eagle Outfitters AEO, a retailer of casual apparel, accessories and footwear, currently carries a Zacks Rank #2. AEO delivered an average earnings surprise of 9.2% in the last four quarters.
The Zacks Consensus Estimate for American Eagle Outfitters’ current financial-year EPS indicates a jump of 8.3% from the year-ago reported figure.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Abercrombie & Fitch Company (ANF) : Free Stock Analysis Report
American Eagle Outfitters, Inc. (AEO) : Free Stock Analysis Report
Guess?, Inc. (GES) : Free Stock Analysis Report
Crocs, Inc. (CROX) : Free Stock Analysis Report
