Los Angeles fashion firm Guess Inc., known for its tight jeans and beach babe models, is replacing co-founder Paul Marciano with a new chief executive from outside the company.
In August, Victor Herrero, 46, will step into Marciano's shoes after spending a dozen years building up operations in Europe and Asia for Inditex, the Spanish apparel giant that owns the Zara and Stradivarius brands.
Companies such as Guess, which still does major business in denim, have struggled as the rise of yoga-wear eats into jeans sales. Bringing in Herrero, who has an overseas background as well as experience in fast fashion, is a savvy move, said Ron Friedman, a retail expert at Los Angeles accounting and consulting firm Marcum.
"Somebody has to come in and shake it up, do something different," Friedman said.
FOR THE RECORD:
Guess Inc.: In the July 15 Business section, an article about Guess Inc.'s naming of a new chief executive was accompanied by a photo of co-founder Maurice Marciano, not outgoing CEO Paul Marciano. Paul Marciano is pictured above. —
Same-store sales were negative last quarter in North America, but retail performance and stronger wholesale shipments to Europe helped dull the sting, according to the company. Nearly 46% of revenue and 59% of profit from the year ended Jan. 31 came from Europe and Asia.
Guess directly operated 470 stores in the U.S. and Canada and 361 stores elsewhere as of May. Licensees and distributors run another 836 stores outside the U.S. and Canada. In the U.S., the Guess network also includes factory outlet stores, G by Guess stores targeting discount shoppers, accessories stores and Marciano stores directed at older consumers.
Herrero's contract allows him an initial annual base salary of $1.2 million, according to regulatory filings. He is also entitled to a $2-million signing bonus and performance-based bonuses.
Marciano said in a statement that he and his older brother and co-founder Maurice Marciano spent more than a year working with the Guess board to find his successor. The company struck an agreement with Herrero on July 7, according to a regulatory filing Tuesday.
Paul will succeed Maurice as executive chairman while continuing to serve as chief creative officer. Maurice, who was named chairman emeritus, will remain a director.
Paul, who is in his early 60s, has been chief executive for more than 15 years. For seven years, he shared the title with Maurice, who is four years older.
"The brothers have been running the company for many, many years," Friedman said. "They need to bring in new blood."
The Marciano brood, which also includes brothers Georges and Armand, founded Guess in 1981 after leaving southern France. The company is based in downtown Los Angeles, where the clan started out in a rented 700-square-foot office.
An early design, the stonewashed, slim-fit jeans known as the 3-zip Marilyn, was a hit at Bloomingdale's. Today, a pair of Guess ultra-low rise skinny jeans sells for $158 online.
The Marcianos cultivated an image of sexy yet fun glamour. Paul Marciano, with his shock of white hair, is frequently photographed with pouty models and at sports games sitting near the likes of Ben Affleck and Clint Eastwood, as his Instagram profile attests.
Guess also developed a reputation for hiring bombshell blondes for its marketing campaigns. Supermodel Claudia Schiffer, tabloid queen Anna Nicole Smith, heiress Paris Hilton and a bevy of Victoria's Secret cat-walkers are all Guess alums.
But Guess' history has been fraught with tumult.
In 1983, the brothers sold a half-interest in Guess to Joe, Avi and Ralph Nakash, owners of apparel maker Jordache Enterprises Inc. Six and a half years of legal war followed, with the two jeans empires battling it out through federal investigations, a dozen lawsuits and an estimated $80 million in legal expenses.
In 1990, a settlement returned full ownership of Guess to the Marcianos.
Georges Marciano left the company in 1993, reportedly over a dispute over strategy. Armand Marciano resigned in 2003 and heads business operations at ABS by Allen Schwartz, another downtown Los Angeles fashion company.
The $2.4-billion company is now no longer in its heyday.
Revenue slid 8.4% to $478.8 million for the quarter ended May 2, a fall attributed in large part to a strong dollar. Guess stock is down 19% year over year, closing Tuesday at $21.16 a share.