Americas Retail Segment
In our Americas Retail segment, we sell our products through a network of directly
operated retail and factory outlet stores in the Americas and through our online
stores. Americas Retail segment accounted for approximately 44.5% of our revenue
and 13.3% of our earnings from operations. Our Americas Retail stores build
brand awareness and contribute to market penetration and the growth of our brand,
which also drives e-commerce and licensee sales. This segment benefits from
the strength of our brand, the quality of our product assortment, the development
of a motivated team of sales professionals to service our customers and provide
a favorable shopping experience, quality real estate in high-traffic shopping
centers and a diversified mix of store concepts.
GUESS' Retail Stores. Our full-price U.S. and Canada GUESS' retail stores carry
a full assortment of men’s and women’s GUESS' merchandise (and women’s
MARCIANO merchandise in select locations), including most of our licensed product
categories. As of January 30, 2016, these stores occupied approximately 785,000
square feet and ranged in size from approximately 1,500 to 13,500 square feet,
with most stores between 4,000 and 5,500 square feet.
GUESS' Retail Accessories Stores. Our U.S. and Canada GUESS' retail accessories
stores sell GUESS' and MARCIANO labeled accessory products. This concept enables
us to utilize a smaller store floor space, dedicated to our full range of accessory
products, that can co-exist in the same malls as our other concepts.
GUESS' Factory Outlet Stores. Our U.S. and Canada GUESS' factory outlet stores
are located primarily in outlet malls generally operating outside the shopping
radius of our wholesale customers and our full-price retail stores. These stores
sell selected styles of men’s and women’s GUESS' apparel and accessories
at lower price points in addition to certain G by GUESS merchandise in select
locations.
GUESS' Factory Accessories Stores. Our U.S. and Canada GUESS' factory accessories
stores sell GUESS' and MARCIANO labeled accessory products and are located primarily
in outlet malls. Our G by GUESS store concept targets a market demographic that
shops price points below our GUESS' retail stores and carries apparel for both
men and women and a full line of accessories and footwear. G by GUESS stores
have a fresh feel, directed toward a full customer experience, with fashion-forward
merchandise.
MARCIANO Stores. Our MARCIANO stores in the U.S. and Canada offer a fashion-forward
women’s collection designed for the stylish, trend-setting woman. These
stores have higher price points than our traditional GUESS' stores and appeal
to a slightly older, more sophisticated customer.
We also directly operated 38 stores in Mexico and eight stores in Brazil through
our majority-owned joint ventures, comprised of 31 full-priced GUESS' retail
stores, 11 GUESS' factory outlet stores and four GUESS' retail accessories stores.
e-Commerce. Our Americas Retail segment also includes our retail websites in
the U.S., Canada and Mexico, including www.guess.com, www.gbyguess.com, www.guessbymarciano.com,
www.marciano.com, www.guessfactory.com, www.guesskids.com, www.guess.ca, www.gbyguess.ca,
www.guessbymarciano.ca, www.guessfactory.ca and www.guess.mx. These websites
operate as virtual storefronts that, combined with our retail stores, provide
a seamless shopping experience to the consumer to sell our products and promote
our brands. They also provide fashion information and a mechanism for customer
feedback while promoting customer loyalty and enhancing our brand identity through
interactive content online and through smartphone applications. In the U.S.
and Canada, our websites and mobile sites are integrated with our CRM system
and loyalty programs. In the U.S. and Canada, e-commerce orders may be fulfilled
from our distribution centers, or from our retail stores, or both.
Europe Segment
In our Europe segment, we sell our products through wholesale, retail and e-commerce
channels, primarily throughout Europe and the Middle East. In fiscal 2016, our
Europe segment accounted for approximately 33.0% of our revenues and 45.7% of
our earnings from operations.
European Wholesale Distribution. Our European wholesale business generally relies
on a large number of smaller regional distributors and agents to distribute
our products primarily to smaller independent multi-brand boutiques. Our products
are also sold directly to large, well known department stores like El Corte
Inglès, Galeries Lafayette and Printemps. Overall, we have thousands
of customers with no single customer representing more than 1% of our consolidated
net revenue. The type of customer varies from region to region depending on
both the prominence of the GUESS' brand in each region and the dominance of
a particular type of retail channel in each region. In countries where the brand
is well known, we operate through showrooms where agents and distributors can
view our line and place orders. We currently have showrooms in key cities such
as Barcelona, Dusseldorf, Florence, Lugano, Munich and Paris. In countries where
the brand is less prominent, we may use one large distributor for the entire
region. Revenues from sales to our licensee operated stores (see European Retail
Network below) are recognized as wholesale sales within our European wholesale
operations. We sell both our apparel and certain accessories products under
our GUESS' and MARCIANO brand concepts through our wholesale channel, operating
primarily through two seasons, Spring/Summer and Fall/Winter. Generally our
Spring/Summer sales campaign is from April to September with the related shipments
occurring primarily from November to April. The Fall/Winter sales campaign is
from November to April with the related shipments occurring primarily from May
to October. The Company’s goal is to take advantage of early-season demand
and potential reorders by offering a pre-collection assortment which ships at
the beginning of each season. Customers retain the ability to request early
shipment of backlog orders or delay shipment of orders depending on their needs.
European Retail Network. Our European retail network is comprised of a mix of
directly operated and licensee operated GUESS' and MARCIANO retail and outlet
stores, GUESS' Accessories retail and outlet stores, GUESS' Footwear stores,
GUESS' Kids stores and Gc stores.
Asia Segment
Our growth in Asia has been fueled by our businesses in South Korea, where we
began operating directly in 2007. We believe there continues to be significant
potential in Asia, particularly in mainland China, and plan to allocate sufficient
resources to fuel future growth. Our Asia retail business includes both licensee
and directly operated stores, including GUESS', GUESS' Kids, GUESS' Accessories,
GUESS' Underwear, G by GUESS, Gc and GUESS' Footwear stores. Concessions are
widely used in Asia and generally represent directly managed areas within a
department store setting. Our Asia wholesale customer base is comprised primarily
of a small number of selected distributors with which we have contractual distribution
arrangements. We and our partners have flagship stores in key cities such as
Beijing, Seoul and Shanghai, and we have partnered with licensees to develop
our business in the second-tier and third-tier cities in this region.
Americas Wholesale Segment
In our Americas Wholesale segment, we sell our products through wholesale channels
throughout the Americas and to third party distributors based in Central and
South America. Our Americas Wholesale business generally experiences stronger
performance from July through November.
Our Americas Wholesale merchandising strategy is to focus on trend-right products
supported by key fashion basics. We have sales representatives in New York,
Los Angeles, Toronto, Montreal, Mexico City and Vancouver who coordinate with
customers to determine the inventory level and product mix that should be carried
in each store. Additionally, we use merchandise coordinators who work with the
stores to ensure that our products are displayed appropriately. During fiscal
2016, our two largest wholesale customers accounted for approximately 3.4% of
our consolidated net revenue.
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