Retail operations
Sales trends decelerated in our retail business during the second half of the year. Comparable
store sales, which increased in the double-digit range during the first half of the year, turned negative in
September and remained negative through the fourth quarter. We ended the year with an increase in comparable
store sales of 5.8%. The performance of our Young Contemporary Women's business, which represents about
50% of our total retail business, was soft relative to the rest of the Company.
Our domestic retail stores generated $419 of sales per square foot in 2000. While the productivity of the stores
that had been open at the end of fiscal year 1999 was strong, the new stores, including Kids and Canada, did
not perform as well as expected.
Licensing
Our licensing business was strong in FY2000. We phased out several licenses that were not repre-
senting the brand appropriately or where the licensees were weak financially. This contributed to a decrease in
2000 revenue from royalties of almost $2 million versus 1999.
2000 accomplishments
Although 2000 was a challenging year for GUESS?, our team accomplished a great deal:
·
We opened a total of 56 new retail stores and closed 3 under-performing stores. A total of 53 stores were
added to our base, representing a 29% growth in square footage for the year. At the end of 2000, we had 212
stores occupying 1.1 million square feet in the U.S. and Canada.
·
As a result of the store expansion and a 5.8% increase in comparable store sales, our retail business grew by
31%, to represent 50% of GUESS? total revenues for 2000.
·
During 2000 we also launched our new Kid's store strategy. While the business is in its development stage
and several of our stores were unprofitable last year, we believe in the long-term potential of this business
which is a natural extension of our brand. We currently have 11 Kid's stores and some of them are doing very
well. We have identified several areas for improvement and are currently analyzing price point opportunities
and considering specific marketing for the Kid's venture.
·
We continue to support the expansion of our Canada operation. We currently own 60% of this business and
have an option to acquire the remaining 40% at the end of 2001. While Canada was not profitable last year due
to an oversized infrastructure and new stores pre-opening expenses, we are confident Canada will be profitable
this year.
·
Our Wholesale business expanded by almost 34% in 2000. We gained market share and built 270 shop-in-
shops, adding over 120,000 square feet in department stores. We also concentrated on the credit worthy, more
desirable accounts and reduced our overall number of accounts to gain a stronger customer portfolio.
·
During 2000, we continued to strengthen our management team, recruiting very talented executives from
some of the top retailers and manufacturers in the country. Our new head of Production comes from Reebok.
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Maurice
Paul
Marciano
Marciano
