Can Guess Stock Return To Pre-Inflation Shock Highs?

[Note: Guess
GES
’ FY’23 ended on Jan 28, 2023]

Guess Stock (NYSE: GES), a retailer that designs, markets, distributes, and licenses apparel and accessories for men, women, and children, currently trades at $20 per share, around 35% below its level of $31 seen on May 27, 2021 (pre-inflation shock high), and has the potential for sizable gains. GES saw its stock trading at around $14 at the end of September 2022, when the Fed kept increasing rates, and now remains 38% above that level. In comparison, the S&P 500 gained about 20% during this period. The company’s stock benefited from the growth in the international business, but the Americas Retail business saw softness in demand during this time. As a general protective move to shore up inventory, the retailer ordered products earlier than normal to deal with supply chain headwinds. The strategy seems to have worked in FY2023 (year ended Jan 2023), as the company has been able to deliver more products to wholesalers due to its accurate acquisition of enough products. Still, the foreign currency fluctuations are definitely a drag on the company and we expect the FX headwinds to continue in FY 2024 as well.