Guess Inc. is launching a new brand, while Nordstrom Inc. needs to get a handle on its designer inventory.
Here’s the briefing for this week’s West Coast corporate earnings roll call.
Guess Inc.
This one seemed to get missed by the financial press earlier this week: Los Angeles-based Guess Inc. is launching Guess Jeans as a new brand next year.
Nicolai Marciano, son of Guess co-founder Paul Marciano, will lead the casual brand’s expansion as the business looks to aggressively pursue the Gen Z consumer.
Guess has worked hard at elevating its namesake through dressy designs and full-price selling. Now, it’s eyeing a bigger piece of the casual market.
“We now see tremendous opportunity in this casual lifestyle space and we plan to reclaim our denim legacy with the launch of a new brand,” CEO Carlos Alberini told analysts this week.
A review of the quarter ended Oct. 28 showed the Americas retail business as the misfit of the bunch for Guess Inc.
The region was down 7 percent and all categories slumped on shrinking traffic.
“We believe that consumers will be looking for value in the offers and have been sensitive to this with our product assortment plan and our promotional cadence and calendar,” Alberini noted on the upcoming holiday selling season.
That coupled with geopolitical concerns and what Guess has seen with traffic and sales trends so far in the current quarter, the company adjusted its full-year outlook to a net revenue increase of 1.8 percent to 2.4 percent. That’s down from previous guidance of up between 2.5 percent to 4 percent. Adjusted diluted earnings per share were pared back to $2.67 to $2.74, compared to a previous forecast of $2.88 to $3.08.
The Numbers: Revenue for the quarter ended Oct. 28 was up 1 percent in constant currency to $651.2 million. Net earnings increased 9.1 percent to $59.3 million.
Nordstrom Inc.
The namesake Nordstrom business is still working its way through inventory. In particular, that would be designer labels, which face far more restrictions on markdowns than further down market.
Seattle-based Nordstrom Inc. President Pete Nordstrom said the company’s spent some quality time on a “real return to the merchant stuff.” That would be boots on the ground, visiting Nordstrom stores and the doors of their competitors. One learning: the advanced contemporary brand assortment is in need of an edit.
The other learning: Women’s overall needs help and company-owned labels are likely to increase in importance next year to help drive the business.
“When we get that right, that’s going to have a lot to do with the overall health of our women’s business,” Nordstrom said of women’s private label.
The Numbers: Net sales fell 6.8 percent to $3.2 billion in the quarter ended Oct. 28. Net earnings swung back into the black to total $67 million in the quarter, compared to a loss of $20 million in the year-earlier period.
The Nordstrom brand led the decline, off 9.4 percent to $2.1 billion. Nordstrom Rack sales slipped 1.8 percent to $1.1 billion.
Urban Outfitters Inc.
One more for the road. Philadelphia-based Urban Outfitters Inc., while not a West Coast business, had a few nuggets to glean on industry trends from its earnings call Tuesday.
The big story: the company’s rental subscription service Nuuly took some big steps in the quarter reaching nearly 200,000 subscribers. Not only that, the company turned its first quarterly operating profit. And, as if that’s not enough, Urban Outfitters Inc. CEO Dick Hayne’s belief is Nuuly, along with sister brand Free People Movement, each have the potential to surpass $1 billion in sales at some point.
No word on when, but it would happen a lot faster than the timeframe it took the company’s other brands, according to Hayne. The trajectory underscores the consumer appetite for apparel rentals and the continued activewear trend.
What’s not trending is the Urban Outfitters nameplate.
The chain’s been struggling with a turnaround and has lost its way with its target Gen Z consumer.
“In terms of marketing, I think that is and was a miss [at Urban Outfitters] and that we didn’t move along with the customer and appear where the customer was residing in areas like TikTok,” Hayne said.
A push to get the right brands in stores and get onto relevant social media platforms is the go-forward plan, along with filling the empty brand president position.
The Numbers: Net sales for the quarter ended Oct. 31 rose 9 percent to $1.3 billion. Net income also grew to $83 million from $37.2 million a year ago.
Be First to Comment