Opinions
Gordon Reid
Guess Inc
GES-N
PAST TOP PICK
Feb 05, 2013
Stock price when the opinion was issued
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*SHORT* This company is really struggling. A retailer whose operating profit has declined annually by 24% in the past 3 years. Revenue has declined by 6%. Predominantly a denim company that does jeans. Denim essentially is in decline. The demographic they cater to is predominantly young people, 18-30 year olds, who have essentially been hurt the hardest by the slowdown in the economy. Dividend yield of 4.89%.
*Short* They’ve lost 24% in terms of revenue over the last couple of years. Margins are down to about 5%. Part of the issue is that their principal product, denim, is down and there is huge competition for it. They sell largely to millennial’s who are a little more price conscious. Not vertically integrated, so they are going to third-party vendors to produce the product with the design specs they put out. This could easily be 35%-40% down from here. Dividend yield of 6.47%.
(A Top Pick Feb 15/12. Down 19.58%.) Retail is tough because you have to get the fashion right. They also got caught with rising input costs. Also, have a fairly large base in Italy, which has not been doing well. He holds it because he likes the model. Expanding their store base internationally. Asia is growing very, very well along with northern Europe and Russia. Thinks management will get the fashion right.