Guess, the old American apparel company renowned for jeans and hard-pressing ad campaigns, reported that it’s closing around 20 under-performing stores. The move comes as part of a broader overhaul as the apparel maker seeks to lower costs, increase profits, and adapt to shifting consumer demands.
Why Is Guess Closing Stores?
Guess CEO Carlos Alberini revealed publicly that the brand has seen a steady decline in foot traffic, which amounted to a stunning 30% drop in net profits—to $84 million. The closure of stores is in response to this decline, as the company attempts to keep operational losses in check by shuttering under-performing stores.
These closures are predicted to be focused in the United States and other areas of North America. Although their locations have not been revealed, Guess has indicated that these poor-performing stores are largely at fault for the company’s recent downturn.
Predicted Gains and Strategy Changes
The firm anticipates shuttering those stores, among other strategic initiatives, will churn out an estimated $30 million in operating profits by 2027. In addition to store closing, Guess is also re-evaluating its operations in China. Although the company has maintained its operations in-country independently, it is now contemplating entering into an alliance with a local partner who understands the market.
Alberini indicated that multiple candidates are shortlisted to transition and the company is also seeking to ink the new alliance at the close of its latest fiscal year. The move indicates a reflection on the overall plan by Guess of streamlining global operations and focusing on efficiency.
Guess Brings On New CFO
Another major change is leadership. Guess announced Alberto Toni, now CEO and CFO of luxury design firm Flos B&B Italia, will join in June as new Chief Financial Officer. He will succeed interim CFO Dennis Secor, who will continue to serve as Executive Vice President through mid-September.
Toni’s appointment signals a new era for Guess, as the company prepares to announce its first-quarter results and align management with long-term growth strategies.
Improving Customer Engagement
Along with reducing expenses, Guess is wagering on customer participation. Alberini repeated that about 80% of in-store shoppers buy goods online after researching them initially, proving that an integrated retail experience is crucial. The company now focuses on optimizing its e-commerce site while maintaining a lean physical footprint.
This internet push, coupled with improved store operation, is part of a broader repositioning initiative to maintain the brand new in a highly competitive fashion marketplace.
A Look Back at Guess’s Legacy
Founded by the Marciano brothers in 1981, Guess has become synonymous with young, sexy style and risqué advertising. From humble roots in Bloomingdale’s to becoming a global brand with over 80 countries selling it, Guess has consistently redefined style and denim. With sub-brands Marciano and G by Guess, the company has had a firm grip on premium as well as casual fashion segments.
While closing down the stores may be the end of an era for some, Guess is certainly going towards a more sustainable and digitally focused future.
