Guess’s Q2 FY 2017 Results Show That The Company Has Started Recovering With The Implementation Of Its Revamped Strategies

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Guess’s Q2 FY2017 results were released on August 24th. The company is progressing well with the strategic initiatives proposed by its CEO, Victor Herrero. It displayed marked recovery in its performance over its previous quarter. As was discussed by its management, the first half of 2016 was a transitioning phase for Guess, and it expects to reap the benefits of its investments starting from Q3 FY2017 which will further accelerate in the fourth quarter. We believe Guess is well on its way to further improvement in performance with the implementation of its growth plans.

ges q2 fy2017 kasturi

  • Guess’s recovery strategies proposed by its CEO, Victor Herrero, seem to be progressing well.
    • The sales and merchandising operation had become tighter with knowledge passed seamlessly from the stores to its designers, merchants, and sourcing teams in a virtual cycle. The improved product assortment had already led to significant sales recovery in Europe.
    • Guess’s focus on Asia had resulted in greater investments in infrastructure. The company is on track in opening of 65 new directly operated stores in Asia by the end of 2016, with the majority being in Greater China. It has already opened 16 new stores in the second quarter.
    • The culture of accountability has resulted in daily, weekly, and monthly reviews of performances throughout the organization.
    • Its cost saving initiatives are on track with an expected $25 million annualized savings to be accrued by the end of this year.
    • The wholesale division is being transformed to follow the same principles that govern the retail business. This resulted in Europe, Guess’s largest wholesale market, to revive its growth, which is expected to continue over the rest of the year.

Guidance For Full Fiscal 2017:

  • Net revenues are expected to grow between 3.0% to 5.0% year-on-year.
  • The GAAP operating margin is expected to remain within 3.5% and 4.5%.
  • The GAAP diluted earnings per share are expected to be around $0.79 to $0.92.
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Have more questions about Guess? See the links below.

Notes:

1) The purpose of these analyses is to help readers focus on a few important things. We hope such lean communication sparks thinking, and encourages readers to comment and ask questions on the comment section, or email content@trefis.com
2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to our complete analysis for Guess

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