http://www.morningstar.com/earnings/50040474-guess-inc-ges-q4-2013.aspx

Guess? Inc GES
Q4 2013 Earnings Call Transcript

Transcript Call Date 03/20/2013

Operator: Good day, everyone, and welcome to the Guess? Fourth Quarter Fiscal 2013 Earnings Conference Call. On the call are Paul Marciano, Chief Executive Officer; Nigel Kershaw, Interim Chief Financial Officer and Russell Bowers, Chief Financial Officer of North American Retail.

During today's call, the Company will be making forward-looking statements, including comments regarding future plans and financial outlook. The Company's actual results may differ materially from current expectations based on risk factors included in the Company's quarterly and annual reports filed in the SEC.

Now I would like to turn the call over to Paul Marciano.

Paul Marciano - CEO, Vice Chairman and Creative Director: Thank you. Good afternoon and thank you for joining us today. For total Company, in the fourth quarter, we delivered adjusted earnings per share of $0.95, which were at the high end of expectation despite a very fragile Europe economic environment and a challenging North American Retail market.

Before we get into the detail of the call, I want to address a few important issues upfront. I've been very disappointed with the performance in the retail North America over the past year. We have taken a hard look at this business and we are in the process of making some strategic management changes. My top priority is to continue to focus on building an executive team with a combination of new and existing talents.

We are bringing on board two new top executives; one, to head our design who will work directly with me and has a strong background of the young female customers for the past 15 years. And another executive for all merchandising retail North America. They will start within 60 days and I'm very excited to work with these new team members. Also, we resumed the search for Corporate COO. These changes will position us better to execute our long-term strategies.

In North America, in the fourth quarter, comp sales for retail North America were down 6%, which was within the range of expectation; however, traffic trend decline at the end of January and the softness continued into March. We believe that the tax change and adverse weather has all contributed to this decline in a certain degree as a recent slowdown was not significant in a cold weather states. But clearly products played the biggest role in this decline, I'm convinced about that. For me everything starts with the product and end with the products. We have developed a three-point strategy to drive the growth in our business; increase our denim offering and iconic style at entry price point, shorten our supply chain calendar and enhance our denim heritage.

I strongly believe that the heritage of Guess? is rooted in denim. The Guess? girl with sexy and young looks to us for iconic and sexy styles. We must be more innovative than ever in our denim design, always pushing for the best fit, the newest washes and the most inspiring print at affordable points.

In the past 18 months, the strategy was focused on running more sales in higher priced product category. Today, as a result, we realized that we have excluded the young aspirational Guess? girl with more price conscious, than ever. This aspirational girl is very important to us and we'll be increasing our denim offering at $75 to $95 price point, just to the majority of what we have now from $108 to $148 of bulk of our offering.

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