We design, market, distribute and license one of the world’s leading
lifestyle collections of contemporary apparel and accessories for men, women
and children that reflect the American lifestyle and European fashion sensibilities.
Our apparel is marketed under numerous trademarks including GUESS, GUESS', GUESS
U.S.A., GUESS Jeans, GUESS' and Triangle Design, MARCIANO, Question Mark and
Triangle Design, a stylized G and a stylized M, GUESS Kids, Baby GUESS, YES,
G by GUESS, GUESS by MARCIANO and Gc. The lines include full collections of
clothing, including jeans, pants, skirts, dresses, shorts, blouses, shirts,
jackets, knitwear and intimate apparel. We also selectively grant licenses to
manufacture and distribute a broad range of products that complement our apparel
lines, including eyewear, watches, handbags, footwear, kids’ and infants’
apparel, outerwear, swimwear, fragrance, jewelry and other fashion accessories.
Our products are sold through direct-to-consumer, wholesale and licensing distribution
channels. Our core customer is a style-conscious consumer primarily between
the ages of 20 and 35. These consumers are part of a highly desirable demographic
group that we believe, historically, has had significant disposable income.
We also appeal to customers outside this group through specialty product lines
that include MARCIANO, a more sophisticated fashion line targeted to women and
men, and GUESS Kids, targeted to boys and girls ages 6 to 12.
We were founded in 1981 and currently operate as a Delaware corporation.
Brand Equity. The GUESS' brand is an integral part of our business, a significant
strategic asset and a primary source of sustainable competitive advantage. The
GUESS' brand communicates a distinctive image that is fun, fashionable and sexy.
We have developed and maintained this image worldwide through our consistent
emphasis on innovative and distinctive product designs and through our award-winning
advertising, under the creative leadership and vision of Paul Marciano, our
Executive Chairman of the Board and Chief Creative Officer. Brand loyalty, name
awareness, perceived quality, strong brand images, public relations, publicity,
promotional events and trademarks all contribute to the reputation and integrity
of the GUESS' brand.
Global Diversification. The global success of the GUESS' brand has reduced our
reliance on any particular geographic region. This geographic diversification
provides broad opportunities for growth, even during regional economic slowdowns.
The Company’s licensees and distributors operated 804 additional retail
stores worldwide. The Company and its licensees and distributors operated in
97 countries worldwide. We continue to evaluate the different businesses in
our global portfolio, directing capital investments to those with more profit
potential. For instance, we plan to allocate sufficient resources to fuel future
growth in Asia, particularly in mainland China, where we see significant opportunities.
In addition, we plan to resume expansion of our G by GUESS concept in the Americas
and will target overall growth in other markets such as Russia and Turkey where
we believe the GUESS' brand is underpenetrated.
Multiple Store Concepts. We and our network of licensee partners sell our products
around the world primarily through six different store concepts, namely our
GUESS' full-price retail stores, our GUESS' factory outlet stores, our GUESS'
Accessories stores, our G by GUESS stores, our MARCIANO stores and our GUESS'
Kids stores. We also have a small number of underwear, Gc watch and footwear
concept stores. This allows us to target the various demographics in each region
through dedicated store concepts that market each brand or concept specifically
to the desired customer population. Having multiple store concepts also allows
us to target our newer brands and concepts in different markets than our flagship
GUESS' store concept. For instance, we have mall locations for G by GUESS stores
where we would not ordinarily operate any of our full-price GUESS' stores.
The Company’s businesses are grouped into five reportable segments for
management and internal financial reporting purposes: Americas Retail, Europe,
Asia, Americas Wholesale and Licensing. In fiscal 2016, the Company changed
the names of its “North American Retail” and “North American
Wholesale” segments to “Americas Retail” and “Americas
Wholesale” to better reflect that these segments are inclusive of its
operations in North America as well as Central and South America. There have
been no changes to the underlying reporting in either segment. The Company’s
operating segments are the same as its reportable segments. Management evaluates
segment performance based primarily on revenues and earnings (loss) from operations
before restructuring charges, if any. The Company believes this segment reporting
reflects how its five business segments are managed and how each segment’s
performance is evaluated by the Company’s chief operating decision maker
to assess performance and make resource allocation decisions. The Americas Retail
segment includes the Company’s retail and e-commerce operations in North
and Central America and its retail operations in South America. The Europe segment
includes the Company’s wholesale, retail and e-commerce operations in
Europe and the Middle East. The Asia segment includes the Company’s retail,
e-commerce and wholesale operations in Asia. The Americas Wholesale segment
includes the Company’s wholesale operations in the Americas. The Licensing
segment includes the worldwide licensing operations of the Company. The business
segment operating results exclude corporate overhead costs, which consist of
shared costs of the organization, and restructuring charges. These costs are
presented separately and generally include, among other things, the following
unallocated corporate costs: accounting and finance, executive compensation,
facilities, global advertising and marketing, human resources, information technology
and legal.
We utilize distribution centers at strategically located sites. The Company’s
U.S. distribution center is based in Louisville, Kentucky. At this 506,000 square-foot
facility, we use fully integrated and automated distribution systems. The bar
code scanning of merchandise and distribution cartons, together with radio frequency
communications, provide timely, controlled, accurate and instantaneous updates
to the distribution information systems. Distribution of our products in Canada
is handled primarily from a Company operated distribution center in Montreal,
Quebec. Distribution of our products in Europe is handled primarily through
a third party distribution center in Piacenza, Italy. Additionally, we utilize
several third party operated distribution warehouses in Hong Kong, South Korea
and China that service the Asia region.
We believe that high levels of automation and technology are essential to maintain
our competitive position and support our strategic objectives and we continue
to invest in and update computer hardware, system applications and networks.
Our computer information systems consist of a full range of financial, distribution,
merchandising, point-of-sales, customer relationship management, supply chain
and other systems.
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