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Guess? (GES) Looking Strong Going into 2018: Here's Why

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Guess?, Inc. (GES - Free Report) has done exceedingly well and emerged as a strong contender to be an investment choice. This is quite evident from the stock’s performance in the bourses. In a year, shares of this Los Angeles, CA-based company have surged 52.5% compared with the industry’s growth of 11.1%.

We believe there is still momentum left in this Zacks Rank #2 (Buy) stock, which is reflected from its long-term impressive earnings growth rate of 17.5%. Stocks such as G-III Apparel Group, Ltd. (GIII - Free Report) , Gildan Activewear Inc. (GIL - Free Report) and Lululemon Athletica Inc. (LULU - Free Report) which belong to the same industry has witnessed a gain of 25%, 28.8% and 23.1% in a year, respectively. Let’s delve deeper and find out the reason that has kept Guess? ahead of its peers in 2017. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Europe & Asia Driving Growth

The company’s operations in Europe and Asia have been yielding profitable results lately, owing to store openings and comps growth. Comps in both the regions have also been benefiting from expanding e-commerce business. The company has steadily been expanding presence in these regions and foresees continued growth prospects.  During the third quarter, Guess? opened 22 directly operated stores in Europe, amongst which a greater proportion of stores were opened in Turkey and Russia. The company’s operations in Asia have also been advancing strongly. During the third quarter, the company opened 10 directly operated stores in China. The company’s partnership with Tmall is also growing at a rapid pace.

Cost Savings & E-commerce Initiatives

In an effort to augment profits, the company has implemented stringent cost control and margin-growth initiatives, especially for North American operations. Guess? is also executing supply chain initiatives by way of product cost improvements. In this respect, the company strives to develop long-term partnership with high-quality supplier in order to gain operating scale efficiencies.

Guess? has been focusing on linking the brick-and-mortar stores, e-commerce and mobile sales to augment its performance. This has enabled customers to reserve merchandise online and pick them up in stores. The company’s well chalked out e-commerce strategies have been aiding top-line growth.

Solid Earnings Surprise History

Recently, Guess?’ not only reported third successive quarter of earnings beat but also raised full-year guidance.

Adjusted earnings per share for fiscal 2018 are estimated in the range of 56-63 cents, up from the previous range of 52-60 cents. Notably, the top line has been showing constant improvement in the past five quarters. Higher revenues also triggered growth in gross profit and gross margin for the quarter.

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