Guess to shut down 100 stores worldwide
NEW YORK: Guess? Inc plans to close about 100 stores worldwide, or about 9% of its network, joining retailers across the world that are rethinking their store fleets as customers return to shops after the coronavirus shutdown.
The closures will be in North America and China over the next 18 months.
Chief executive Carlos Alberini said that Wednesday that many of the retailer's leases were set to expire soon, which gives management a chance to renegotiate terms.
"The recent stock performance and expected demand under our new-normal model made very clear that our store portfolios around the world could be optimized to increase profitability," he said on a conference call with analysts.
Guess shares fell as much as 24% to $9.71 on Wednesday.
When excluding currency fluctuations, sales fell 50% in the company's first quarter that ended May 2, largely due to prolonged store shutdowns during the virus outbreak.
Retailers are wrestling with their store footprints as the impact of the pandemic disrupts spending patterns and speeds the shift toward online shopping.
Jared and Kay owner Signet Jewelers Ltd, J.C. Penney Co and Victoria's Secret have all announced permanent store closures over the past month.
As many as 25,000 stores are expected to shut this year, a record rate, according to Coresight Research.
Guess reduced expenses during the shutdown by furloughing all store workers and half its corporate workforce while laying off 150 employees at its Los Angeles headquarters.
Management also cut some salaries by as much as 70% and cancelled all capital expenditures that aren't "mission critical."
The fashion retailer suspended rent payments in April and is now in negotiations with landlords.
Chief financial officer Katie Anderson said Guess "has made progress with multiple landlords and is optimistic about what can be done to cut rental costs.''
About 70% of the company's leases globally are set to expire in the next three years.
In the United States and Canada, one-third of Guess stores have their leases ending soon and 15% of its European shops will come up for renewal in the next year.
Alberini said not all of these stores would be closed since there are some that are "very, very healthy."
As of Feb 1, the company operated 1,169 stores, with partners operating an additional 560, according to a company filing.