GES
#So I think from the occupancy cost and improvements in rent, it's going to be a case by case store by store discussion.
It really depends on what those economics end up being for us to know what the impact.
And so, at this time, we really don't have any further guidance to give on that.
But we just know there's an opportunity because we have so much flexibility in the portfolio in the US and Canada.
Moving onto the gross margin opportunity itself, I think this really ties into some of the things that <UNK>'s talked about in the supply chain previously.
We believe that there is tremendous opportunity longer-term for us, based on the priorities he outlined on previous calls, as well, which is to strategically basically lineup a very strong supplier base and then work with fabric platforming opportunities and ensure that we actually drive the IMU improvement.
That IMU Improvement is already embedded in the guidance that we provided for this year in our gross margins and I'm talking on a global basis, it affects both US and Europe.
And over the course of the three-year plan, we continue to work on this.
Right now, we really don't have IMU improvements embedded.
But it is something we are going to continue to work toward.
In addition to that, I would like to say about supply chains, all the initiatives that we are adding so many initiatives, and I want to share with you several initiatives that we are trying to implement at this moment, like for example, since I arrived to Guess.
For example, is reducing the calendar, trying to potentiate, as much as possible, an open to buy.
As well trying to optimize our sourcing country's portfolio.
So, it means trying to be much more not so dependent on for example China, and trying to open new markets or new sourcing markets that we believe we can get really good price without jeopardizing our quality.
So, I think from a gross margin perspective, we basically embedded, in the US and Canada especially, nothing more promotional than last year.
I think we're expecting to be roughly equivalent.
So, that is what is assumed in the gross margin projections globally, not just in the US and Canada actually.
And regarding our pricing strategy, we are trying to always be very consistent with the price that we have in the Americas, and basically try to do price alignment in all the markets.
We just opened, for example, several markets where we try to be always and use US as a benchmark for other markets.
Regarding the lead times, I think that we have to split it into two.
The first one will be the tradi---+ , or the formal collection that we'll have a specific lead time.
But at the same time, we have to take into consideration the open to buy.
And open to buy basically what we are trying to do is have a newness on a monthly basis during the normal season into our stores or into our partners.
So this is important to take into consideration.
It is not as much thinking about the traditional lead time that you have to do the collection itself.
It is that we are leaving as much as we can in open to buy in order to shorten the lead time for that open to buy.
Thank you for the question, because I think it's a very relevant question.
Basically, we continue 100% concentrated on improving our product.
And basically, one of the reasons as I mentioned before, of the increase of order value in Europe wholesale is basically because I believe we are upgrading and elevating our product, and we are taking a lot of initiative in order to do that.
And basically, the product before, I think that we were pushing several categories.
Like for example, denim, dresses and knit tops.
And right now, what we are trying to do is outfitted collection.
It means basically, we are producing in product a whole collection with inside the collection we have trends, we have all the things that they must have that we have to have in that particular collection.
And at the same time, what we are trying to do is express in our stores or in our shop-in-shops in wholesale, they are trying to be very outfitted.
It means basically, you can be dressed or you can leave our stores dressed from top to bottom.
It means you can buy several items at the same time and always constant for example, whenever we do our visuals, broadly you went to our store lately, I think that you can see that we are presenting or we are doing a visual merchandising much more commercial than before.
And not how you say, not doing marketing on one particular product category.
More as a collection as a whole.
So this is a very important point that we believe we will continue doing this.
Because at the end, for us, what is important is expressing inside the store and showing in the windows what we are able to do in product.
In a way, I think they are different markets.
Also, I think the US at this moment is very challenging in general.
This is one of the reasons.
Rest reassured all the initiatives that we are doing in Europe, we are doing in the US, even more elevated I will say.
It's a question of time that I will see results in the US.
And I'm very excited what is happening in Europe, but it's not reflecting in the US.
But definitely rest reassured that we are doing exactly the same thing as we are doing in Europe at this moment, we are doing even in a more extreme way in the US.
Basically, visual merchandising, replenishment, assortment, allocations, all the initiatives that we believe is the right path for us, in order to be successful and in order to start seeing some positive comps in the US, we are doing as well in the US the same way as we are doing in Europe.
I'm going to answer to the first part of the question and <UNK> will answer on the second one.
Regarding the first question, I think that what is important and that you should keep in mind that right now, our allocation is not US.
Our allocation is what we are selling in that particular store in LA, comparing with the particular store in New York.
And it's based on demographic behavior of each of the stores.
So at the end, what is important to know is that we are trying to tailor-made the product for each of the stores and also each of the cities and each of the regions.
And <UNK>, just following through on the tourist versus non-tourists, we haven't really specified the number.
Obviously, it's material enough for it to drive the comp and that's why we're calling it out as a driver.
Things have been tough.
I think consistently tough and we were expecting it to be tough in the first quarter as well.
And we expect this to continue and to at least the end of the first half.
So, let's see because that's when we lap the tourist drag at the experience from last year.
Broadly, yes.
From a profitability perspective, the thresholds that we apply basically apply to all the concepts that we're looking at for new stores or renewals.
And so for these particular stores, these particular concepts, they're obviously more profitable concepts, and we're able to get stores that are hitting our thresholds both from a four wall perspective, as well as a payback perspective.
And that's why we're looking to focus on expansions on these concepts.
On a commercial point of view, I think both concepts have a lot of potential in the US and Canada.
That's why we decided that I think we should concentrate more on the expansion of those two formats instead of the other formats.
That's why we are trying to develop both formats.
We're happy that they perform well during the quarter, because if we believe that has a great potential.
This is basically a reassurance for us that the G by Guess.
is going to have the potential we think.
At this moment, we have a few stores in G by Guess.
which you cannot compare with the other formats, because the other formats are bigger.
But at the same time, we are performing very well in the quarter and we believe that G by Guess.
with this split between men's and women's, which is basically the penetration of both at the same, I think is a very ---+ has a potential on a commercial point of view and on a product point of view for the US and the Canadian market.
It's our first underwear store in mainland China.
But as you may know, we have several underwear stores and we are very successful in Asia with that particular product category.
We believe that this underwear category could be very successful and has a lot of potential in mainland China.
And you know very well that our balance sheet has a significant amount of cash in it, but a lot of the cash is overseas.
As you again said, most of our growth is focused on international expansion, so that's quite convenient because the cash is already overseas.
From a US perspective, we basically see that our cash needs are being met with what cash we're generating over here, be it licensing or other businesses.
So we haven't really contemplated any kind of repatriation because our cash is sufficient for our needs right where it is.
For China, for China retail, what I can tell you is that basically it is a matter of timing.
And definitely, we will continue I think we have positive comps during the quarter in mainland China, but it's softer than we anticipated.
The reason why is because we're in the process of trying to adapt to the new ---+ we are pushing retail versus wholesale at this moment and basically this is taking a bit of time.
But at the same time, we open a lot of stores in several cities of China, which is ---+ I mean the receipt of the brand is quite positive.
At the same time, I think it's a question of timing.
Right now, we are ---+ all the profits on operational point of view, we have the accountability, and before we were having several partners that they were working with us on all these.
It's a little bit softer, but it's still very positive and we will continue working in order to improve this.
And I hope that they say the results in China, particularly in retail, we'll continue to accelerate on a faster pace.
Regarding the wholesale in China, basically what we are trying to do is moving some of the stores from our existing partners to retail.
So this is taking a bit of time, but definitely, I think is according to our strategy of going much more into a direct model in China.
Exactly.
And on the Americas wholesale, just as a reminder, the US Canada and Mexico and Brazil in that category ---+ in that segment, sorry.
And so the US is actually been slightly better, but I think the really important thing to note is that Canada and Mexico is now doing very well within the Americas wholesale segment.
They have had been doing well since the beginning of the year and that trend is continuing.
Brand perception for me what is important, is whatever the customer perceives at one point of time in one particular place.
So I mean it will depends.
Definitely our brand perception is different between what let's say, Los Angeles and in Shanghai or in London.
But definitely we are not ---+ I think the Company feels very comfortable with the brand position that we are having and basically with the DNA that we have been having for the last 50 years.
And definitely, we will continue on this path and we will continue ---+ what we have to try to do is basically elevate our product without ---+ and trying to continue working in a comprehensive collection and an outfitted collection, more than a trying to develop or trying to push one particular product category.
I think this is a particularly I was mentioning in the US.
I don't think that this is happening somewhere else.
Maybe a little bit in Europe, but not in Asia.
I think where it's very strong and this is happening big time at this moment is in specifically, in the US market.
