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Here's Why Guess? (GES) is up More Than 50% in Three Months

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Guess, Inc. (GES - Free Report) is undertaking initiatives to enhance the online business. Also, the company’s strategic endeavors to aid growth bode well. Moreover, cost-saving efforts amid several coronavirus-led woes like retail store closures are noteworthy.

What’s Aiding Guess?’s Growth?

Guess? has long been benefitting from its solid digital efforts. The company has been on track with its digital-first initiative and has been investing in brand building through social media platforms such as Facebook (FB - Free Report) , Twitter (TWTR - Free Report) , Instagram and YouTube. Further, Guess? is focusing on linking brick-and-mortar stores, e-commerce and mobile sales to improve online operations. This is likely to have enabled customers to reserve merchandise online and pick them up in stores.


Management is also planning to improve e-commerce operations by undertaking efforts such as better data capturing, improved customer profiling, personalized marketing and relationship management. Well, the company’s online business is operational amid the coronavirus outbreak. Although its e-commerce websites have witnessed reduced traffic, conversion rates look strong. In fact, management is optimistic about its e-commerce growth in the near-term.

Apart from this, Guess? is on track with boosting operating margin through cost saving efforts, enhancing operating efficiencies as well as gross margin improvement efforts. Moreover, the company’s focus on its customer centricity initiatives including global ecommerce strategy, sales force implementation as well as omnichannel experience redesign projects bodes well. Management believes that robust customer centric efforts will increase the company’s e-commerce business penetration by an additional five points over the coming three years.

Guess?, which shares space with Columbia Sportswear (COLM - Free Report) , is on track with global consolidation of its functional capabilities to capture new efficiencies, global consistency in performance as well as higher accountability. In this regard, Guess? plans to redesign its organizational structure globally.

Hurdles on the way

Guess?’s top-line plunged 51.5% year over year in first-quarter fiscal 2021. Sales in the quarter were affected by store closures and reduced productivity in stores that were operational amid the COVID-19 pandemic. Apart from this, escalated adjusted SG&A expenses and unfavorable foreign currency translations are concerns.

Nevertheless, the company has been undertaking a number of measures to strengthen its financial position amid the coronavirus outbreak. Among other moves, Guess? is undertaking tiered salary curtailments temporarily for all its U.S. corporate workers at the management level. Further, it is delaying annual merit raises and considerably reducing store occupancy costs, capital expenditures, inventory purchases and overall expenses. Also, the company is on track with reopening stores as restrictions to check the coronavirus outbreak are being lifted gradually.

We note that, shares of this Zacks Rank #3 (Hold) company have surged 56.6% in the past three months compared with the industry’s growth of 47%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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