Sterne Agee Says No Guessing About Guess; Sees Strong Upside (GES)

Sterne Agee is reiterating its Buy rating and $50 price target on shares of Guess GES after visiting a couple of the company's stores. In a note to clients, Sterne Agee writes, "We had the opportunity yesterday to take a guided tour with investors through the Soho locations of the Guess and Guess by Marciano stores. The Guess store was full-price apart from a denim promotion running from 8/23 through 9/6 offering $25 off denim with a charitable donation of $5. Last week GES again held a customer loyalty event done four times a year with 20% off new lines plus 50% off sale during the week for Guess loyalty members and open to others who signed up to join on the weekend. In contrast to the commonplace denim found at most retailers with the same fits and washes, Guess denim looked new and differentiated with a focus upon washes and treatments. Price points remained compelling at $128-$148 for premium with basic at $79-$98 despite offering a range of styles featuring trendy fits, washes, detailing, or “treatments” – including creasing, whiskers, and a waxy coating to name a few – rather than embellishments. Outerwear is another key product category now with an assortment of on-trend leather and pvc jackets for fall. Non-denim bottoms will be increased in the mix in September and will be an important category this year. GES also has well-priced accessories and we were impressed by the line of boots/shoes along with handbags and watches." Shares of Guess closed at $37.45 yesterday.