Guess Inc.

The Los Angeles-based apparel manufacturer, one of the world’s leading producers of designer jeans, is near the top of The Times’ return-on-equity chart for 1996, in part because demand for its stock was weak while demand for its product was strong.

Guess posted a 1996 profit of $52.3 million on sales of $551 million. That was a 20.8% rise in profit and a 13.2% gain in sales from 1995, largely due to growth in Guess’ wholesale operations abroad, along with increases in the company’s domestic retailing and licensing operations.

Nonetheless, Wall Street has not been convinced that the company’s performance will continue and has bid its equity value down. Thus its profits represent a high return on that reduced equity.

Guess’ stock also suffered from general investor disinterest in apparel stocks and less excitement over initial public offerings in the second half of 1996.

After delaying its IPO twice, Guess scaled back the Aug. 8 offering. The company reduced the issue from 9.2 million shares to 7 million and trimmed the price to $18 a share from the original estimates of $21 to $23.

Even so, the stock price has tumbled; it’s now about $11 on the New York Stock Exchange.

Guess, which has used high-profile marketing campaigns to build up business, is also trying to address public controversies that developed in 1996.

Shortly before the company made its stock offering, a garment workers union filed suit against Guess and several of its contractors, accusing them of violating a number of labor laws, including nonpayment of minimum wage and overtime.

Guess denied the charges and has filed a defamation suit against the union.

The company, which is shifting much of its production to Latin America, also faces more competition in the designer jeans market. Sales of Calvin Klein’s CK line have been growing, and there are challenges from such relative newcomers as Tommy Hilfiger and Diesel.