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Guess?, Inc. GES is in solid shape, courtesy of its impressive digital operations and other strategic growth endeavors. Notably, this Zacks Rank #1 (Strong Buy) stock has surged 53.9% in the past three months compared with the industry’s growth of 24.3%. Moreover, the stock has comfortably outperformed the Zacks Consumer Discretionary sector’s increase of 12% during the same period.
Let’s dive deeper.
E-commerce Business: A Key Driver
Guess? is benefitting from its solid digital efforts. In fact, the company’s online business remained operational amid the coronavirus-induced store closures. Notably, Guess?’s e-commerce business in North America and Europe increased 9% year over year in the second quarter of fiscal 2021. In its last earnings call, management notified that is optimistic about its online growth in the remaining half of 2020. In this regard, the company is increasing its marketing investment, repositioning product offerings and finishing the implementation of Salesforce platform.
Well, Guess? is on track with its digital-first initiative and investing in brand building through social media platforms such as Facebook FB, Twitter TWTR, Instagram and YouTube. Further, the company is focusing on linking brick-and-mortar stores, e-commerce and mobile sales to improve its online operations. This is likely to have enabled customers to reserve merchandise online and pick them up in stores.
Earlier, management stated that they are on track with upgrading online platform in the European and American regions. It is also planning to improve e-commerce operations by undertaking efforts such as better data capturing, improved customer profiling, personalized marketing and relationship management. These efforts are expected to help the company enhance customer base and enrich their experience, which is likely to drive sales.
Other Growth Drivers
The company is on track with boosting operating margin through cost-saving efforts, enhancing operating efficiencies as well as gross margin improvement efforts. Moreover, the company’s focus on its customer-centric initiatives that include global e-commerce strategy, Salesforce implementation as well as omnichannel experience redesign projects bode well.
Guess? which shares space with Hanesbrands HBI, launched a new customer 360 project to enhance personalization, customer data integration, journey engagement as well as results analysis. Moreover, management believes that such robust customer-centric efforts will increase the company’s e-commerce business penetration to represent more than 23% of its direct-to-consumer business in the next three to five years.
We believe that the aforementioned upsides along with store reopening following pandemic-led closures are likely to keep driving Guess?’s performance. Notably, the company is on track with reopening stores as restrictions to check COVID-19 are being lifted gradually. As of Aug 1, nearly 95% of the company’s stores were reopened.
You can see the complete list of today’s Zacks #1 Rank stocks here.
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