Guess Inc. Maps Out Strategy to Grow DTC, Cut Costs
Angela Velasquez
5 min read
As Guess Inc. considers buyout offer from brand management company WHP Global, the company is also exploring strategies to realign and support its operations.
“As we look to fiscal 2026 and the future, we are focused on key strategic initiatives to strengthening our organization, improve brand awareness and customer engagement, increase retail store and e-commerce productivity, build a more efficient infrastructure and optimize our business model to improve profitability and return on invested capital,” said Carlos E. Alberini, Guess Inc. CEO and director, during the company’s Q4 2025 earnings call last week.
Part of this plan includes finding a third party to run the Guess brand in Greater China, which is expected to lose approximately $20 million this year. Despite the challenging market, Alberini said there are opportunities for the Guess brand as brand awareness is high and the market is compelling. The company is also planning to downsize its fleet of stores in the U.S. and Canada by 20 stores by the end of the year. Alberini said these two initiatives are expected to unlock over $30 million in operating profit, starting with next fiscal year.
Guess Inc. reported that fourth-quarter revenues increased 5 percent to $932 million, driven by the acquisition of Rag & Bone and comparable growth in the core Guess business.
While Rag & Bone’s business outperformed the company’s revenue expectations, mainly driven by strong e-commerce performance, wholesale continues to be bright spot for Guess. In the Americas, Guess wholesale saw double-digit growth, driven by higher shipments to off-price accounts, as well as the direct operation of its outerwear business, which previously was operated by G3 as a licensed business.
In Europe, wholesale grew mid-single-digit despite the strong currency headwinds and one less shipping week versus last year. “The Guess brand continued its strong momentum among our thousands of wholesale customers in the region and we continue our optimism for this year with our order book for the Fall/Winter collection having closed with a 7 percent growth,” Alberini said.
Guess’ European DTC business delivered a constant currency comp increase of 5 percent as improved conversion, AUR and units per transaction more than offset a year-over-year decline in store traffic.
However, the brand’s DTC business in the Americas did not meet expectations for the quarter. Alberini said traffic headwinds, coupled with a declining conversion, resulted in an overall 14 percent constant currency comp decline in U.S. and Canadian Guess stores and e-commerce.
Guess Asia performed at the lower end of the company’s revenue expectations as well, with a revenue decline in the upper teens. Alberini said traffic to retail stores in South Korea and China remain challenging, though declines were partially offset by Guess’ expansion in India.
Accessory sales increased in Europe, led by strong handbag and fragrance sales. The exec said women’s apparel also grew with activewear, outerwear, knit tops and denim delivering the strongest increases. However, the brand saw declines in its men’s business and footwear.
In the Americas, both Guess’ women’s and men’s businesses were down, as were accessories and footwear. Alberini pointed out that women’s activewear, particularly woven pants and skirts, “performed relatively well.”
While wholesale is proving to be positive, Guess Inc. is taking steps to improve its DTC channel. In North America, Guess is working to improve customer engagement and traffic to its stores and online. The brand is testing new imagery and navigation on its websites and social media channels and focusing marketing efforts and resources at a more local level.
“We know that 80 percent of the customers visiting stores perform extensive research online prior to their visits. So, having a meaningful presence in social media is critical to influence customer choice and behavior,” Alberini said.
The brand is developing a new store concept with improved visual merchandising and proper space allocation based on category potential. To drive attention to its direct-to-consumer business, the brand plans to leverage a speed-to-market model to address current trends, introduce exclusive merchandise and replenish bestsellers more effectively.
As part of our efforts to optimize assortments per store, Alberini said Guess will work with a more “sophisticated store clustering model that will consider specific customer interests, price sensitivity, weather characteristics and casual versus dressy preferences.”
Regarding pricing, he said the brand has identified opportunities to expand its offering of products at entry price points in several categories. “We strongly believe that today’s customers are a lot more price sensitive and will respond well to quality products, offering strong value for the price,” Alberini said.
While some of these initiatives will be implemented as early as the second quarter, Guess expect to see the full impact of these initiatives in the second half of the year
For fiscal year 2026, Guess Inc. expects to achieve revenue growth in the range of 3.9 percent to 6.2 percent. While the guidance does not include the impact of President Donald Trump’s “Liberation Day” tariffs, Alberini said the company’s geographically diverse business is favorable.
“Roughly 75 percent of our business is conducted outside of the U.S. and therefore not subject to increased tariffs. Now, with respect to the remaining 25 percent, our estimate of the cost of the products that we directly produce and distribute in the U.S. is roughly $200 million,” he said.
Rag & Bone, which attracts a more affluent customer and gives Guess Inc. greater flexibility and pricing power accounts for one-third of this total. The remaining two-thirds relates to the Guess business in the U.S. where the brand has a substantial outlet business.
“Based on the nature of the products that we carry in our outlet assortment, we feel there are significant opportunities to counter-source these products in markets, especially in Latin America, where the tariffs announced tend to be more moderate,” Alberini said.
