Guess Profits, Plans Growth

Carlos Alberini, president and COO, said during the company's conference call Thursday that the company, which opened 34 new stores in 2004, plans to open 36 new locations in 2005. The 36 new locations in 2005 will include 24 new Guess stores, which will be split between 11 full price retail and 13 factory stores. In addition, Guess plans to open seven of its Marciano stores and five Guess Accessory locations, both of which are new concepts for the chain that have met with good initial success, Albernini said. Besides the expansions, the company plans to remodel about 24 stores this year, to relocate five and to close about five.

"The Marciano brand is attracting a slightly older, more sophisticated customer, while the accessory stores are enabling us to build a more meaningful presence in that high-margin segment," Alberini said. Guess opened four new Marciano locations and Accessory stores in the fourth quarter, bringing the total of Marciano locations to five and the Accessory stores to six. The company is still in the testing and refining stages for both of the new formats, but it is "encouraged by the response we are seeing" at both of the new formats, the Guess president said.

Guess also sees potential for significant expansion in Europe, according to Albernini, who said that "one of the highlights" of the fourth quarter was the completion of negotiations for the purchase of the Guess European jeans wear licensee, a deal that closed in January. "This gives us a chance to significantly expand our European operations," Albernini said.

Commenting on the company's quarterly and yearly financial results, the Guess president said that although earnings per share increased for the quarter, the rate of earnings-per-share growth moderated somewhat during the quarter as a result of holiday season factors that included heightened promotional activity that reduced margins and caused a deceleration in comparable store sales from earlier in the year. Costs associated with the openings of the new Marciano and Guess Accessory stores during the quarter also slowed the earnings-per-share rate of growth. Based on business trends and the company's plans for this year, Guess expects comparable store sales percentage increases in the low to mid single digits in its retail stores this year, with a percentage increase in total retail sales projected to be in the mid to high teens. At Jan. 29, the company operated 286 retail stores in the US and Canada.