Skip to main content

Market Overview

'The Time Is Coming' For Investors To See A Path To Guess?'s Multiple Expansion

Share:
'The Time Is Coming' For Investors To See A Path To Guess?'s Multiple Expansion

Wunderlich’s Eric Beder believes Guess?, Inc. (NYSE: GES) is on “two separate paths, materially reducing the money-losing domestic store footprint while employing capital to drive upside in international markets.”

The analyst reiterated a Buy rating on the company, with a price target of $15.

Potential For Multiple Expansion

Although the international gains made by Guess? have been “overshadowed” by domestic weakness, the analyst believes that “the time is nearing where investors will be able to see the path to a business model predicated on higher margin expansion.”

Beder expects the company to be able to demonstrate the positives of its business model to investors in the coming months.

Europe

Although the performance in Europe has been offset by FX issues, the analyst mentioned that the European market has been a “key positive” for Guess?, driven by a robust fashion viewpoint, expansion into the Southern European markets, positive comps and the wholesale segment returning to growth.

“Given the retail structure in Europe (less stores & discounts), management believes it can grow margins going forward; historically Europe has been a key performer for GUESS?,” the analyst pointed out.

North America

However, the global initiatives that have led to expansion in Europe and Asia have had limited impact in North America, where Beder believes there are too many stores, discounters and fashion competitors that have led to an unsustainable model.

“With slightly over 450 doors in North America, the goal is to aggressively close stores to drive North America to break-even or better with 50% of leases due in the next 3 years and 60 stores closing in FY18, we expect a very aggressive focus by management,” the analyst went on to say.

Related Links:

Guess Investors Are Ignoring The Apparel Company's European, Asian Businesses

What A Flood Of Store Closings From Macy's And Others Means For Mall REITs
_________
Image Credit: By Eva Rinaldi from Sydney Australia (Gigi Hadid) [CC BY-SA 2.0 (http://creativecommons.org/licenses/by-sa/2.0)], via Wikimedia Commons

Latest Ratings for GES

DateFirmActionFromTo
Mar 2020B. Riley FBRMaintainsBuy
Mar 2020Cowen & Co.DowngradesOutperformMarket Perform
Mar 2020B. Riley FBRMaintainsBuy

View More Analyst Ratings for GES
View the Latest Analyst Ratings

 

Related Articles (GES)

View Comments and Join the Discussion!

Posted-In: Eric BederAnalyst Color Long Ideas News Reiteration Analyst Ratings Movers Trading Ideas Best of Benzinga

Latest Ratings

StockFirmActionPT
NIUDaiwa CapitalInitiates Coverage On41.5
QMCONorthland Capital MarketsInitiates Coverage On12.0
IBKRJefferiesInitiates Coverage On89.0
MRETFTD SecuritiesDowngrades18.5
SWKSGoldman SachsDowngrades135.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
SPAC
Everything you need to know about the latest SPAC news.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at vipaccounts@benzinga.com