Shares of Guess? (NYSE:GES), an apparel retailer, dropped 14% as of 2:40 p.m. EST on Monday. The huge decline can be traced to a surprise announcement that the company is hiring a new CEO.
Guess? announced today that CEO Victor Herrero is leaving the company as of Feb. 2. Replacing him will be Carlos Alberini, the company's president and chief operating officer from 2000 to 2010. He will start after he is officially separated from his current employer Lucky Brand.
Maurice Marciano, the company's chairman, has agreed to act as interim CEO until Alberini's official start date.
Maurice Marciano heaped praise on Alberini: "I am very excited to have Carlos coming back as CEO at GUESS? Inc. He was instrumental in building the international business in Europe and Asia during his 10-year tenure with the company."
The company also announced that Paul Marciano has agreed to stay on as the company's chief creative officer.
Traders are selling off shares hard in response to the surprise turnover.
Guess? failed to provide details on Herrero's departure.
The plus for investors is that Alberini already has an intimate knowledge of the inner workings of the company and will likely be able to hit the ground running. That's important given that Guess? is still in the middle of a multiyear turnaround.
Will this management turmoil derail the company's effort to return to sustainable growth? The answer remains up in the air, so I plan to approach this stock with caution.
Check out the latest Guess? earnings call transcript.