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Will Guess?'s Growth Strategies Help Push the Stock Higher?

Guess?, Inc. GES seems to be on a roll driven by its strategic initiatives, solid international presence and e-commerce business. This Zacks Rank #1 (Strong Buy) stock boasts a Momentum Score of ‘B’, along with an impressive long-term earnings growth rate of 17.5%.

Let’s Delve Deep

Guess? has been benefiting from its strategic endeavors such as improving merchandising channel, generating higher sales, revitalizing the wholesale operations, enhancement of footprint outside the U.S., along with store closures in the U.S. and Canada, where the company is facing macroeconomic challenges. Consequently, the company witnessed sturdy revenue growth at the Europe and Asia segments during the first-quarter fiscal 2018.

Further, the company seems to be well on track with the execution of its supply chain initiatives by the way of product cost improvement, and expects cost saving of $24 million in fiscal 2018. Management intends to focus on those regions that have a strong growth potential and positive longer-term outlook. In this regard, the company will continue to allocate majority of its capital investments in Europe and Asia, where it believes the momentum will continue further.

Meanwhile, Guess? remains committed toward strengthening its brands by being flexible to the changing environment and catering to the needs of its customers more efficiently. In addition, the company is taking measures to expand its digital footprint by upgrading its website and developing omni-channel capabilities, alongside improving customer experience and loyalty programs to attract customers. Going forward, management remains optimistic about the growth of its e-commerce business.

Notably, the company’s earnings estimates have moved north in the last seven days. The Zacks Consensus Estimate for fiscal 2018 and fiscal 2019 has increased 2.6% and 5.3% to 40 cents and 60 cents, respectively.

Moreover, the cumulative effect of Guess?’s strategic initiatives is clearly visible in its stock performance. Shares of Guess? have advanced 7.8% in the last three months, outperforming the Zacks categorized Textile – Apparel Manufacturing industry’s growth of 4.7%. Currently, the industry is placed at top 48% of the Zacks Classified industries (124 out of 256). Meanwhile, the broader Zacks categorized Consumer Discretionary sector gained 3% and is currently placed at bottom 25% of the Zacks Classified sectors (12 out of 16).

Bottom Line

Owing to Guess?’s strong international presence, it remains exposed to the unfavorable currency fluctuations. But, we believe the company will efficiently overcome this headwind on the back of its robust strategies that will also drive its shares higher in the future.

As of now, you may consider some other top-ranked stocks in the same industry, which include G-III Apparel Group, Ltd. GIII, PVH Corp. PVH and Tailored Brands, Inc. TLRD.

G-III Apparel, with a long-term earnings growth rate of 15% has delivered positive earnings surprise of 51.4% in the lastly reported quarter. The stock sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

PVH Corp. carries a Zacks Rank #2 (Buy) and has a long-term earnings growth rate of 11.2%. Also, it has pulled off an average positive earnings surprise of 6.5% in the trailing four quarters.

Tailored Brands, a Zacks Rank #2 stock has a long-term earnings growth rate of 16.5%.

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Guess?, Inc. (GES): Free Stock Analysis Report
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