By scaling back wholesale distribution to big department stores in the U.S., such as Macy's, and buying back licenses to sell its clothing worldwide, Guess Inc. is aggressively expanding its
highly profitable retail chain. It is opening dozens of new boutiques each year across the globe, from Milan to Mumbai, India.
Sales in Europe last year totaled $252 million--about 10
times the size of the company's revenue in 2003, and operating margins doubled to a lofty 25% during that time.
Europe, where Guess enjoys an upscale image among the suburban set, is
especially profitable for apparel companies. It has relatively few powerful chains squeezing ever-lower prices from suppliers, or introducing their own private brands. Guess co-founders Paul and
Maurice Marciano--who started out in the 1970s selling jeans in the south of France before coming to the U.S.--are also benefiting from local-market savvy gained through licensees, which have long
been required to spend vigorously on advertising.
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