Guess Inc.'s fourth-quarter results should have been cause for celebration.


The Los Angeles-based retailer beat analysts' estimates with revenues that jumped 23 percent and earnings that rose 73 percent from the same quarter a year earlier. The numbers capped a stellar year that saw Guess shares skyrocket 200 percent and top $37.


But instead of uncorking the champagne, investors took a hammer to Guess shares. After opening at $47.19 on Jan. 16, the day the fourth-quarter results were announced, the stock has sunk nearly 28 percent and settled in around $37 as of early last week.


What has investors spooked? The matter of Carlos Alberini, Guess president and chief operating officer, and the Securities and Exchange Commission is clearly part of the equation. The SEC is considering an investigation of Alberini in connection with his tenure at Mahwah, N.J.-based Footstar Inc., where he was chief financial officer prior to joining Guess.


Although Alberini maintains that an SEC probe is unnecessary, the possibility has investors concerned that he'll take his eye off Guess should he face an investigation. The turnaround specialist's cost-cutting efforts have been credited with helping push Guess' operating margins to nearly 11 percent last fiscal year, ahead of the company's planned pace.


There is also Guess' underwhelming projection of first-quarter same-store sales, a crucial measure in the retail industry. During a conference call, Alberini said March same-stores sales would be flat and, for the second quarter, the increase would be around 10 percent, below loftier expectations.


Perhaps sensing that the lukewarm projection signals a comedown, some institutional investors may be running from Guess. They are betting the stock has already peaked after rising 10-fold in the last two years. Sellers are following the lead of founders and co-chief executives Paul and Maurice Marciano, who have offloaded at least 775,000 shares of common stock since last year and could sell up to 4.9 million more, according to a document filed with the SEC.


Palomar Polishing
The Westwood Doubletree Hotel's days are numbered.


It is scheduled to close as early as this summer and undergo massive remodeling. When it opens a year later, it will have lost the Doubletree flag and been transformed into a sophisticated Hotel Palomar.


Kimpton Hotels & Restaurants Group Inc., a San Francisco-based boutique operator that has assumed management of the hotel, is spearheading the remodel along with Addison, Tex.-based Behringer Harvard and Dallas-based Realty America Group. Behringer and Realty America recently acquired the property from Lawrence, Kan.-based Linquist & Craig Hotels & Resorts Inc., with the former investment firm holding a majority stake.


In addition to L.A., there is a Hotel Palomar in San Francisco and locations planned in Washington, D.C., Arlington, Va., and Dallas. Kimpton, Behringer and Realty America have teamed up on the Dallas project.


Afzal Hemani, Kimpton's vice president of acquisitions and development, said the 18-story L.A. hotel would be going down to 260 rooms from 297 rooms. The rooms will be enlarged from just under 300 square feet to almost 400 square feet and more suites will be constructed.


"We are going to do a total gut job," said Hemani.


Kimpton has signed on Cheryl Rowley, a Beverly Hills-based designer, to redo the hotel's interior. She has worked on other Kimpton hotels, including the Hotel Palomar in San Francisco and several Hotel Monaco properties.


Hemani, who wouldn't discuss the cost of the remodeling project, said the L.A. hotel would be styled in dark woods, with splashes of color to add vibrancy. "It is contemporary, but it is not edgy. It is something that is very inclusive," he said.


As with its other properties, the refurbished hotel will include a restaurant intended to attract locals as well as hotel guests. Kimpton is currently searching for a chef, and Hemani emphasized the company is looking for rising stars.


*Staff reporter Rachel Brown can be reached at (323) 549-5225, ext. 224, or at rbrown@labusinessjournal.com .

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