Case Study on Guess Inc.

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Moreover, Guess’s weakness in the online space, which is growing at a rapid pace, is also responsible for its market share decline. U.S. buyers in numbers have been switching from store to web shopping, which has propelled online growth and at the same time, resulted in an industry-wide decline in food traffic. Since Guess earns an insignificant portion of its revenues from online sales, it has lost more due to a decline in foot traffic than it has gained from incremental online sales.

Given that the future of retailing in the U.S. is e-commerce, it is unlikely that retailers such as Guess will expand their store networks in the country. In fact, several of them including Guess are actually consolidating their respective networks. In August last year, in an effort to improve its margins, the company announced that it will close 50 of its underperforming stores world-wide within 18months. Guess shut four such locations in the U.S. in the third quarter, and is likely to close some more going forward and expand at a slower than historic pace. Therefore, its revenue growth in the region is extremely difficult, as robust growth in comparable store sales in unlikely given the small size of its online channel.

It is almost evident that the company will have a tough time in improving its market share from the current level. Guess is employing several Omni-channel strategies to enhance its store sales by leveraging buyers’ online shopping interest. It is also working hard on its merchandise design and prices to position them in line with customer preferences. White the retailer’s efforts may eventually help it improve its revenues, fast-fashion retailers and online players will grow at a faster pace in the meantime.

Guess has been recovering significantly post its persistent slump after the appointment of its new CEO, Victor Herrero, in July of last year. As per Guess’s three year plan, around two thirds of its revenue and profit growth is expected to come from outside the U.S. G=[‘uess is in the process of opening new stores in Russia, Turkey, Ireland, Finland, Sweden, and Denmark. It will expand stores in Italy, France, Spain, Portugal, United Kingdom, Belgium, Netherlands, Germany, and Poland. The company has three year revenue growth target of $200 million in Asia and $300 million in the Americas.

“Guess’s quarter 2 fiscal year 2017 results indicated that the company is progressing well with the strategic initiatives proposed by our team. It displayed marked recovery in its performance over its previous quarter” (Forbes, 2016). 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 quarter 3 fiscal year 2017 which will further accelerate in the fourth quarter. Our team believe Guess is well on its way to further improvement in performance with the implementation of our growth plans.

We are purposing a 5 pronged strategy to revive Guess which includes a reformed set of sales and merchandising strategy, digital marketing strategy, store strategy, maintenance of a yearly retail calendar, and increased stock keeping units in stores.

Some of the top initiatives that Guess would undertake include a periodic review of product pricing, focus on the Asia Market to increase its contribution to Guess’s total revenue from the current 10% to around 25%, and a flat organizational structure.

Work Cited

“Is There Any Hope For Guess’s Dwindling Market.” www.forbes.com. The Little Black Book

of Billionaire Secrets, February 3, 2015. Web. February, 27, 2017.

“Guess? (GES).” www.trefis.com. Base Case: Trefis, November 28, 2016. Web. February 15,

2017.

“Guess plans dramatic growth by 2019.” www,chainstoreage.com. Chain Store Age Channels,

Commerce, Customers. March 17, 2016. Web. February 1, 2017.