Guess Tests New Teen Retail Concept

On the heels of record earnings, Guess Inc. recently said that it would test a new retail concept, called G by Guess, aimed at the red-hot teen market. The first store is scheduled to open in April in California, with an additional 24 stores scheduled by the end of July.

Featuring lower-priced clothes than its 334 regular Guess stores, G will likely compete directly with such stores as American Eagle Outfitters, Hollister, Aeropostale and Abercrombie & Fitch.

"This is an interesting test for Guess, because in the past, when they've decided to go upscale, they kind of stepped away from this cost-conscious consumer," said Eric Beder, an analyst who follows the company for Brean Murray Carret & Co. "And while it is a saturated market, Guess definitely has a unique viewpoint."

"Because they're testing these in markets where they don't have regular Guess stores, there's no potential for cannibalization," said Scott Birkby, an analyst who follows teen apparel for Caris & Co. "This is a good expansion strategy."

Last week, the company said that its revenues for the fourth quarter grew 25% to $346.4 million, while net earnings increased 77% to $45.7 million.

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