Dive Brief:
- Guess?, a traditional brick-and-mortar retailer, posted a $21.2 million net loss for the first quarter of 2019, but attributed better gross margins to various supply chain initiatives.
- The retailer's operating margins improved in its America, Asia and Licensing segments, offsetting a decline in operating margins for the Europe segment due to higher distribution costs resulting from a new distribution center.
- The CEO of Guess? also announced a new digital office to explore how technology can benefit the company.
Dive Insight:
Guess? may still be operating at a net loss, but its gross margins have remained pretty steady over the past five years, suggesting that the retailer has adjusted to the e-commerce age better than most. In fact, its partnership with Alibaba appears to be a key growth driver for the retailer.
"We have been chosen by Alibaba as one of the few international brand partners with existing physical stores for this new mall," Guess? CEO Victor Herrero said in the earnings call. "Most of their brands in the mall are online-only brands. This is a unique opportunity for us to collaborate with Alibaba in this experiment in experiential physical retail that we believe will provide us consumer insight that will enhance our e-commerce business."
Chinese retail's focus on new technologies seems to be impacting Guess?'s decision-making as well: in the earnings call, Herrero announced a new Guess? Digital Office, which will explore how tech can improve the company.
"The idea of the Guess? Digital Office is to embrace the way technology is transforming the new retail environment, adapting innovative solutions that leverage data intelligence on products and customer behavior to make the purchase and consumer experience more seamless," Herrero said. "This global digital office is of such a higher strategic importance that it will report directly to me with technological oversight from our CIO."
Guess?'s eagerness to investigate new technological trends and follow e-commerce giant Alibaba's lead suggests the retailer is on the right track when it comes to addressing and meeting consumer expectations in the new "retail as a service" environment.