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The Company designs, markets, distributes and licenses lifestyle collections of contemporary apparel and accessories for men, women and children that reflect the American lifestyle and European fashion sensibilities.
US consumer spending will fall as discretionary dollars dry up through impending credit squeeze.
At this point, there is no evidence of declining consumer spending. The downward pressure on home prices could affect consumer spending, but unemployment and inflation are still low. We will know more after we see the numbers on consumer spending, housing and employment after Labor Day weekend. We may see some pressure on the markets after the reports, but I think this will be short lived.Guess has strong presence in Europe and are expanding in Asia. The weak dollar will help the bottom line. A lot of the growth is coming from their European business. European sales were up 77.2% in 2008 Q1 from a year ago. Look at the numbers for the last eight straight quarters. Guess is experiencing tremendous growth, and I don't expect that a minor decline in consumer spending is going to stop this juggernaut. If you short this stock you will get crushed. Analysts expect 50% earnings growth from a year ago to 33 cents per share when Guess reports on Sept. 4. It is hard to argue with this kind of growth.
9-7-07: The latest job report supports your thesis. We lost 4,000 jobs last month. Economists were predicting that we would GAIN 100,000 plus jobs. This is an indication that the economy is being hit harder than previously thought, certainly harder than I thought. There is a high likelihood of the feds cutting rates. The cut will not have an immediate impact on the current credit squeeze. The cut will eventually result in an increase in spending.Retail sales for last month beat expectations... and the S&P retail index fell. This tells me that investors are not expecting this trend to continue. It may be my optimistic nature, but I think this is going to create opportunities to buy. We will know more by November when the traditional year-end rally starts, unless, of course, we enter a recession.
Problem with that thesis is it paints everyone with a broad brush. GES is outperforming its peers in sales, and it gets a quickly increasing amount of (higher margin) revenue from the rest of the world. Tree, not forest.
ok... even if you believe this that only explains why the entire market will go down. If you believe this, then you should just short all your stocks. I am not so pessimistic, but its besides the point. People have to buy clothes. Its what you WEAR ON YOUR BODY. And while you may disagree, i really don't see people just stopping buying clothes based on the brand name. I just haven't seen any of it, particularly in younger individuals, who will be the future spenders. If anything younger people are completely enamored with brand names like guess. Now, from a stock perspective, all signs point to Guess? as a pretty good looking one in the future, so even if mr. pessimist over here thinks the market will go down, then that just gives a better chance for a good company like guess? to beat a slumping market. Remember the game is against the market, not if it makes money or loses money.
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