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Guess Seeks U.S. Help on Mexico Thefts

Trade: The company wants pressure applied to protect its clothing from hijackers en route to the U.S.

July 13, 2002|Bloomberg News

MEXICO CITY — Guess Inc. said it has asked the U.S. to pressure the Mexican government to protect its designer jeans and T-shirts from highway robberies in Mexico as they're being trucked to the U.S.

"The company is concerned about the hijackings and has communicated its concern to U.S. Ambassador Jeffrey Davidow," Guess spokeswoman Wendi Kopsick said. Embassy spokeswoman Cherie Feeley declined to comment.

The Los Angeles-based company might turn to Central American and Asian suppliers unless measures are taken to prevent future robberies of shipments of the designer clothing en route to the U.S., the Reforma newspaper reported Thursday, citing a company security official. Guess executives declined to be interviewed by Bloomberg News.

Foreign companies such as Japanese electronics makers Canon Inc. and Casio Computer Co. are shutting their Mexican factories and moving operations to Vietnam and China after salaries in Latin America's largest economy outpaced the rate of inflation for the last three years, reducing the availability of low-cost labor that once made Mexico an attractive place for manufacturers to invest.

Guess last week lost a shipment of 20,330 pairs of jeans, worth about $265,200, to hijackers in Mexico state, Reforma reported, citing an administrator at the factory where the jeans were made.

"This is a significant amount of money for a company that is already losing money this quarter," said Margaret Whitfield, a retail analyst at Brean Murray Securities Inc. in New York, who has a "strong buy" recommendation on Guess stock. "I could see why they might think of voiding these contracts."

It was the fourth time in three years that Guess--which said last week that it had a bigger-than-forecast loss in its second quarter because of lower sales and higher expenses--lost merchandise en route to the U.S. from its 20 Mexican suppliers, Reforma said. The stolen clothes often are sold by black-market vendors.

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