Morningstar Rating

Stock Research and Analysis

by Bridget Weishaar

Bulls Say

The company is closing underperforming stores and reorganizing, both of which should yield annual cost savings and profitability improvement.
Pockets of improvement have appeared including e-commerce and the Marciano line. A new CEO with experience at best-in-class Inditex could successfully drive positive sales growth.
Guess has an almost debt-free balance sheet, generates solid free cash flows, and pursues investor-friendly activities. From fiscal 2012 to 2014, the company repurchased roughly 10% of total shares outstanding. The dividend payout ratio was over 80% in fiscal 2015. Read more 

Bears Say

Guess faces high fashion risk and has no economic moat in providing a sexy, fashion-forward, youthful lifestyle brand, with significant exposure to the declining denim market.
The Marciano brothers may have difficulty giving up control and have friction with new CEO, Victor Herrero.
The U.S. and Southern European retail markets are relatively mature, making the company increasingly rely on emerging markets for growth. With 50% of revenue generated outside of North America, Guess is highly exposed to foreign-currency exchange rate fluctuations. Read more 

Management

Because of the board structure and consolidated shareholder ownership, we give Guess a Poor stewardship rating. Founder and Executive Chairman Paul Marciano and his brother Maurice Marciano collectively own about 28% of the outstanding common stock.  Read more 

Profile

Guess designs, markets, distributes, and licenses contemporary apparel and accessories that reflect European fashion sensibilities under brands including Guess, Marciano,  Read more 

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