The American apparel and accessories brand has revealed plans to permanently shutter about 100 stores in North America and China, or roughly 9% of its global network. The closures will take place over the next 18 months.
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“The recent store performance and expected demand under our ‘new normal’ model made very clear that our store portfolios around the world could be optimized to increase profitability,” CEO Carlos Alberini said in the company’s earnings conference call on Wednesday.
About 70% of Guess’ leases around the world are set to expire within three years, giving management “significant negotiation power” for future renewals: In the U.S. and Canada, a third of its outposts are already approaching the end of their leases, while 15% of its Europe-based units are up for renewal in the next year.
“It doesn’t mean that we are going to close all those stores,” Alberini explained. “There are a lot of stores that are very, very healthy. And even with the ‘new normal’ numbers here, we think that we can continue to maintain a very strong presence.”
The Los Angeles-based brand added that it had begun suspending rent payments in April, when the majority of its locations were closed in accordance with government-mandated coronavirus-related lockdowns. It said it was currently in discussions with landlords regarding its lease obligations.
At present, Guess has resumed business at more than 400 outposts in Europe and upwards of 180 units in the U.S. and Canada, with expectations to reopen all stores by the end of June. (The brand has 1,169 stores, with partners operating an additional 560 outposts.)
“I’m thrilled to report that most reopened stores are performing better than we anticipated,” Alberini said. “We continue to be careful with our actions and follow strict protocols as we reopen our stores, showrooms, headquarter operations and distribution facilities, and we are excited to see the light at the end of the tunnel when we become fully operational.”
According to a recent report from retail data firm Coresight Research, as many as 20,000 to 25,000 stores in the U.S. could close their doors for good this year. (About 55% to 60% of those locations can be found in malls, which are facing challenges compounded by the health crisis.) So far, Nordstrom, JCPenney and Victoria’s Secret as well as Wilsons Leather and G.H. Bass parent G-III Apparel Group are among the retailers that have announced permanent shutdowns of stores.