The Business of Fashion
Agenda-setting intelligence, analysis and advice for the global fashion community.
Agenda-setting intelligence, analysis and advice for the global fashion community.
NEW YORK, United States — Guess? Inc. plans to close about 100 stores worldwide, or about 9 percent of its network, joining retailers across the world that are rethinking their store fleets as customers return to shops after the coronavirus shutdown.
The closures will be in North America and China over the next 18 months. Chief Executive Carlos Alberini said Wednesday that many of the retailer’s leases are set to expire soon, which gives management a chance to renegotiate terms.
“The recent stock performance and expected demand under our new-normal model made very clear that our store portfolios around the world could be optimised to increase profitability,” Alberini said on a conference call with analysts.
Guess shares fell as much as 24 percent to $9.71 on Wednesday, extending the stock’s year-to-date decline to about 52 percent. When excluding currency fluctuations, sales fell 50 percent in the company’s first-quarter that ended May 2, largely due to prolonged store shutdowns during the virus outbreak.
ADVERTISEMENT
Retailers are wrestling with their store footprints as the impact of the pandemic disrupts spending patterns and speeds the shift toward online shopping. Jared and Kay owner Signet Jewelers Ltd., J.C. Penney Co. and Victoria's Secret have all announced permanent store closures over the past month. As many as 25,000 stores are expected to shut this year, a record rate, according to Coresight Research.
Guess reduced expenses during the shutdown by furloughing all store workers and half its corporate workforce while laying off 150 employees at its Los Angeles headquarters. Management also cut some salaries by as much as 70 percent and cancelled all capital expenditures that aren’t “mission critical.”
The fashion retailer suspended rent payments in April and is now in negotiations with landlords. Chief Financial Officer Katie Anderson said Guess has “made progress” with multiple landlords and is optimistic about what can be done to cut rental costs. About 70 percent of the company’s leases globally are set to expire in the next three years.
In the US and Canada, one-third of Guess stores have their leases ending soon and 15 percent of its European shops will come up for renewal in the next year. Alberini said not all of these stores will be closed since there are some that are “very, very healthy.”
As of Feb. 1, the company operated 1,169 stores, with partners operating an additional 560, according to a company filing.
By Kim Bhasin
The company, under siege from Arkhouse Management Co. and Brigade Capital Management, doesn’t need the activists when it can be its own, writes Andrea Felsted.
As the German sportswear giant taps surging demand for its Samba and Gazelle sneakers, it’s also taking steps to spread its bets ahead of peak interest.
A profitable, multi-trillion dollar fashion industry populated with brands that generate minimal economic and environmental waste is within our reach, argues Lawrence Lenihan.
RFID technology has made self-checkout far more efficient than traditional scanning kiosks at retailers like Zara and Uniqlo, but the industry at large hesitates to fully embrace the innovation over concerns of theft and customer engagement.