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European Consumers Still Spending: Guess Founder

Tuesday, 31 Aug 2010 | 1:56 PM ET
Source: Guess.com

Guess shares have been punished as investors fret about its North American business, but sales are holding up well outside of the U.S., according to Maurice Marciano, the apparel company's chairman and founder.

Although the European economy appears to have slowed down, consumers there have not curtailed their spending as Americans have, he told CNBC Tuesday.

What's the difference? Jobs, Marciano said.

"The thing that we need is ... the job market to really start again, to pick up," he said. "I think that once people are going to be secure about their job and knowing that they have income, they will start spending again. Right now, they are shy about spending, and we cannot blame them."

Marciano's comments come as the latest read on consumer confidenceshowed a modest increase, but consumers' assessment of labor market conditions actually worsened.

According to Marciano, the core Guess consumer in the U.S.—a women between 18 and 25 years old—has slowed down her spending "a little bit."

"They buy basically what they need rather than what they want," he explained. "So there's been a slowdown in their spending ... We've not seen that in Europe, we've not seen that in Asia."

Guess? At The NYSE
Celebrating the launch of "Guess Seductive," with Maurice Marciano, chairman & founder of Guess?

Marciano's observations have been echoed by other retail executives, and that's one reason its shares have suffered. The stock currently is trading sharply below its 52-week high of $51.28, which it hit in late April.

In a research note, Wall Street Strategies analyst Brian Sozzi attributes the decline in the stock to some of the well-telegraphed trends in the retail sector: slowing sales and mall traffic, increase discounting and elevated inventories.

But at this price, Guess shares "are a sexy investment for a long-term minded investor," Sozzi said.

"Intense scrutiny on Guess' North American business would be overlooking the fact the brand is fast becoming global," he said, noting that half of its second-quarter revenuecame from its Asian and European operations.

Questions? Comments? Email us at consumernation@cnbc.com

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