Thursday, March 18, 2010

Guess? Inc Real Estate Wannabe!

Guess? Inc (GES) reported improved results and Paul Marciano, CEO waxed eloquently about prospects. Very positive comments. Focus on this one and ponder the future of Guess? and how the risk profile will probably change.

“This year, we will reignite our plans for growth and invest in retail expansion, both in North America and Europe. We will also continue building our infrastructure....”

Guess is a fashion apparel company. When it starts to strategically move into infrastructure, bricks and mortar either owned or leased the cost model changes. Also existing retailers faced with competition for the exact same item from a suppliers store will not be that happy.

If the infrastructure expansion becomes significant there will be more to worry about other than how sexy the models are.

Think about it.