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Fashion

Guess Inc. last in falling under Chinese spell

By

Aug 31, 2011

Guess has become the latest international brand to announce massive plans for expansion into mainland China as the company targets building a US$1 billion overall market in the region. "At any meaningful mall that you visit, you will find a Guess store

," Guess chief executive Paul Marciano told a conference call with Asian garment industry analysts. Guess currently has 113 retail outlets across China and has plans to open 40 more this year. But the overall goal is to have that number reaching 500 within five years, according to the company.

Strong demand in Asia and Europe has boosted revenue in recent quarters as Guess benefits from brand expansion in new markets such as France, Spain and the U.K. and builds an infrastructure in Hong Kong and Shanghai to support a retail and wholesale network in Asia.

The American fashion chain is targeting its "lifestyle collection" of denim garments, handbags, watches and footwear at China's ever-growing luxury goods market, one which industry insiders expect to be worth more than 84 billion yuan (13 billion dollars) this year - making it the second largest in the world after the United States.

Guess currently operates 490 retail stores in North America and 218 throughout Europe, Asia and Latin America combined. There are also 757 licensees and distributors operating under the Guess banner across the globe.

Guess says for the first six months of the year sales of its goods in Asia rose 27.1 percent - to US$115.4 million - on the back of the business it is doing in China and also in South Korea, specifically.

These data compare to Guess Inc.'s fiscal second-quarter profit fall of 9.1% on a settlement charge, though the apparel maker posted better-than-expected revenue on double-digit sales growth in Europe and Asia. However, the denim brand looks ahead with the firm conviction of seeing its third-quarter earnings of 71 cents to 74 cents a share on revenue of $650 million to $665 million, while analysts polled by Thomson Reuters expected 84 cents a share and $688 million, respectively.

For the full-year, the company lowered its full-year adjusted-earnings target to $3.25 to $3.35 a share and narrowed its revenue target to $2.74 billion to $2.78 billion from its earlier earnings view of $3.30 to $3.50 a share and revenue target of $2.74 billion to $2.8 billion.

Angela González-Rodríguez