Market Overview

G-III Apparel Group, Ltd. G-III Apparel Group, Ltd. Announces Third Quarter Fiscal 2020 Results

Share:

— Net Sales Increase 5.2% for Third Quarter to $1.13 Billion —

— Net Sales for the Wholesale Segment Increase 6.2% for Third Quarter to $1.07 Billion —

Full Year Guidance Revised —

G-III Apparel Group, Ltd. (NASDAQ:GIII) today announced operating results for the third quarter of fiscal 2020 ended October 31, 2019.

Net sales for the third quarter ended October 31, 2019 increased 5.2% to $1.13 billion from $1.07 billion in the same period last year. The Company reported GAAP net income for the third quarter of $95.4 million, or $1.97 per diluted share, compared to $94.0 million, or $1.86 per diluted share, in the prior year's comparable period.

Non-GAAP net income per diluted share was $1.99 for the third quarter of this year compared to $1.88 in the same period last year. Non-GAAP net income per diluted share excludes (i) non-cash imputed interest expense of $1.4 million in this quarter related to the note issued to seller (the "Seller Note") as part of the consideration for the acquisition of Donna Karan International compared to $1.2 million in the third quarter last year and (ii) a $0.1 million gain on lease terminations in the current quarter. The aggregate effect of these exclusions was equal to $0.02 per diluted share in each of the third quarter of this year and the prior year.

Morris Goldfarb, G-III's Chairman and Chief Executive Officer, said, "We are pleased to report third quarter results that exceeded our bottom-line expectations. We maintained good momentum in our wholesale business, in spite of the challenging retail and macro environment. Our merchants did a good job managing product costs, as we benefitted from accelerated inventory receipts and support from our Chinese vendor base to mitigate some of the impact of the tariffs that were imposed."

Mr. Goldfarb concluded, "We remain focused on continuing to grow our business in multiple categories and elevating our position as a supplier-of-choice for our retail partners. We remain confident in our future growth expectations, powered by the strength of our global power brands: DKNY, Donna Karan, Calvin Klein, Tommy Hilfiger and Karl Lagerfeld."

Outlook

G-III Apparel Group today issued revised guidance for the fiscal year ending January 31, 2020. This forecast also incorporates the expected impact of the additional tariffs implemented effective September 1, 2019.

For fiscal 2020, the Company is now forecasting net sales of approximately $3.20 billion and net income between $147 million and $152 million, or between $3.01 and $3.11 per diluted share. This compares to net sales of $3.08 billion and net income of $138.1 million, or $2.75 per diluted share for fiscal 2019.

The Company is anticipating non-GAAP net income for fiscal 2020 between $149 million and $154 million, or between $3.06 and $3.16 per diluted share. Non-GAAP guidance excludes (i) non-cash imputed interest expense of approximately $5.4 million related to the Seller Note and (ii) a $2.3 million gain on lease terminations. The aggregate effect of these exclusions is equal to $0.05 per diluted share. This guidance compares to non-GAAP net income of $143.9 million, or $2.86 per diluted share, for fiscal 2019. Non-GAAP results for fiscal 2019 exclude non-cash imputed interest expense of $5.0 million related to the Seller Note and asset impairments primarily related to leasehold improvements and furniture and fixtures at certain of our retail stores of $2.8 million. The aggregate effect of these exclusions was equal to $0.11 per diluted share in fiscal 2019.

The Company is projecting full-year adjusted EBITDA for fiscal 2020 between $283 million and $288 million compared to adjusted EBITDA of $269.4 million in fiscal 2019.

Non-GAAP Financial Measures

Reconciliations of GAAP net income per share to non-GAAP net income per share and of GAAP net income to adjusted EBITDA are presented in tables accompanying the condensed financial statements included in this release and provide useful information to evaluate the Company's operational performance. Non-GAAP net income per share and adjusted EBITDA should be evaluated in light of the Company's financial statements prepared in accordance with GAAP.

About G-III Apparel Group, Ltd.

G-III designs, sources and markets apparel and accessories under owned, licensed and private label brands. G-III's owned brands include DKNY, Donna Karan, Vilebrequin, G. H. Bass, Eliza J, Jessica Howard, Andrew Marc and Marc New York. G-III has fashion licenses under the Calvin Klein, Tommy Hilfiger, Karl Lagerfeld Paris, Kenneth Cole, Cole Haan, Guess?, Vince Camuto, Levi's and Dockers brands. Through its team sports business, G-III has licenses with the National Football League, National Basketball Association, Major League Baseball, National Hockey League and over 150 U.S. colleges and universities. G-III also operates retail stores under the DKNY, Wilsons Leather, G. H. Bass, Vilebrequin, Karl Lagerfeld Paris and Calvin Klein Performance names.

Statements concerning G-III's business outlook or future economic performance, anticipated revenues, expenses or other financial items; product introductions and plans and objectives related thereto; and statements concerning assumptions made or expectations as to any future events, conditions, performance or other matters are "forward-looking statements" as that term is defined under the Federal Securities laws. Forward-looking statements are subject to risks, uncertainties and factors which include, but are not limited to, reliance on licensed product, reliance on foreign manufacturers, risks of doing business abroad, the current economic and credit environment, the nature of the apparel industry, including changing customer demand and tastes, customer concentration, seasonality, risks of operating a retail business, risks related to G-III's ability to reduce the losses incurred in its retail operations, customer acceptance of new products, the impact of competitive products and pricing, dependence on existing management, possible disruption from acquisitions, risks relating to G-III's operations of Donna Karan International Inc., the impact on our business of the imposition of tariffs by the United States government and business and general economic conditions, as well as other risks detailed in G-III's filings with the Securities and Exchange Commission. G-III assumes no obligation to update the information in this release.

 

G-III APPAREL GROUP, LTD. AND SUBSIDIARIES

(NASDAQ:GIII)

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share amounts)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

October 31,

 

Nine Months Ended

October 31,

 

 

2019

 

2018

 

2019

 

2018

 

 

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales

 

$

1,128,403

 

$

1,072,982

 

$

2,405,847

 

$

2,309,423

Cost of goods sold

 

 

729,384

 

 

690,882

 

 

1,538,995

 

 

1,461,252

Gross profit

 

 

399,019

 

 

382,100

 

 

866,852

 

 

848,171

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative expenses

 

 

246,580

 

 

232,052

 

 

644,887

 

 

632,983

Depreciation and amortization

 

 

9,701

 

 

10,033

 

 

28,963

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