G-III Apparel Group, Ltd. Announces First Quarter Fiscal 2024 Results
- First Quarter Net Sales and GAAP and Non-GAAP Net Income Per Diluted Share Exceed Expectations
- G-III Raises Guidance for Fiscal Year 2024
-
Net Sales of
$606.6 Million $688.8 Million -
Net Income Per Diluted Share of
$0.07 $0.62 -
Non-GAAP Net Income Per Diluted Share of
$0.13 $0.72 - Announces New Long-Term License for the Halston Brand
Morris Goldfarb, G-III’s Chairman and Chief Executive Officer, said, “For the first quarter of fiscal 2024, we exceeded both our top and bottom line guidance with non-GAAP net income per diluted share of
Mr. Goldfarb continued, “Aligned with our initiative to direct resources toward new growth opportunities, we are pleased to announce a licensing agreement with Xcel Brands for the American heritage fashion brand, Halston. This 25-year master licensing agreement allows G-III to design and produce all categories of product for Halston and provides an option to buy the brand at the end of the licensing term. This agreement represents our third substantial growth opportunity announced this year alongside the re-positioning and global expansion of Donna Karan and a long-term license for Nautica in
Mr. Goldfarb concluded, “G-III continues to deliver positive results and we are off to a good start to the new fiscal year. Looking ahead, we are optimistic about our business and, as a result, are raising our guidance. We remain focused on driving our key strategic priorities and continuing to develop new growth opportunities.”
Results of Operations
Net sales for the first quarter ended April 30, 2023 decreased
Non-GAAP net income per diluted share was
Halston License
G-III has signed a global twenty-five year master license agreement with Xcel Brands to design and produce all categories of men’s and women’s product for the Halston brand. The agreement provides for an initial term of five years, followed by a twenty-year period, as well as a purchase option at the end of the twenty-five year term. First deliveries of Halston product are expected for the Fall 2024 season. The product will be distributed globally through better department stores and digital channels. G-III believes that significant opportunity exists in the better women’s apparel space where G-III has significant expertise. The Halston brand joins G-III’s portfolio of some of the largest American brands in the world.
Outlook
The Company today raised its guidance for the fiscal year ending January 31, 2024. The Company’s fiscal year 2024 guidance anticipates the expected impact from current levels of inflationary pressure on consumers and on the Company’s operations, as well as incremental costs associated with managing higher levels of inventory.
For fiscal 2024, the Company expects net sales of approximately
The Company is anticipating non-GAAP net income for fiscal 2024 between
The Company is projecting full-year adjusted EBITDA for fiscal 2024 between
For the second quarter of fiscal year 2024, the Company expects net sales of approximately
The Company is anticipating non-GAAP results for second quarter of fiscal 2024 between a net loss of
Non-GAAP Financial Measures
Reconciliations of GAAP net income (loss) to non-GAAP net income (loss), GAAP net income (loss) per diluted share to non-GAAP net income (loss) per diluted share and GAAP net income (loss) to adjusted EBITDA are presented in tables accompanying the financial statements included in this release and provide useful information to evaluate the Company’s operational performance. A description of the amounts excluded on a non-GAAP basis are provided in conjunction with these tables. Non-GAAP net income (loss), non-GAAP net income (loss) per diluted 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 substantial portfolio of more than 30 licensed and proprietary brands is anchored by its global power brands: DKNY, Donna Karan, Karl Lagerfeld, Calvin Klein and Tommy Hilfiger. G-III’s owned brands include DKNY, Donna Karan, Karl Lagerfeld, Vilebrequin, G.H. Bass, Eliza J, Jessica Howard, Andrew Marc, Marc New York, Wilsons Leather and Sonia Rykiel. G-III has fashion licenses under the Calvin Klein, Tommy Hilfiger, Nautica, Halston, 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 distributes directly to consumers through its DKNY, Karl Lagerfeld, Karl Lagerfeld Paris and Vilebrequin stores and its digital channels for the DKNY, Donna Karan, Vilebrequin, Karl Lagerfeld, Karl Lagerfeld Paris, Andrew Marc, Wilsons Leather and G.H. Bass brands.
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, risks related to the COVID-19 pandemic, reliance on licensed product, risks relating to G-III’s ability to increase revenues from sales of its other products, new acquired businesses or new license agreements as licenses for Calvin Klein and Tommy Hilfiger product expire on a staggered basis, reliance on foreign manufacturers, risks of doing business abroad, supply chain disruptions, possible adverse effects from elevated inventory levels, the current economic and credit environment risks related to our indebtedness, 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, the impact on G-III’s business of the imposition of tariffs by
G-III APPAREL GROUP, LTD. AND SUBSIDIARIES |
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(Nasdaq: GIII) |
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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
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(In thousands, except per share amounts) |
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|
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Three Months Ended April 30, |
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2023 |
|
2022 |
||||
|
|
(Unaudited) |
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|
|
|
|
|
|
|
||
Net sales |
|
$ |
606,589 |
|
|
$ |
688,757 |
|
Cost of goods sold |
|
|
356,788 |
|
|
|
442,718 |
|
Gross profit |
|
|
249,801 |
|
|
|
246,039 |
|
|
|
|
|
|
|
|
||
Selling, general and administrative expenses |
|
|
227,961 |
|
|
|
185,407 |
|
Depreciation and amortization |
|
|
6,576 |
|
|
|
6,095 |
|
Operating profit |
|
|
15,264 |
|
|
|
54,537 |
|
|
|
|
|
|
|
|
||
Other income (loss) |
|
|
973 |
|
|
|
(2,708 |
) |
Interest and financing charges, net |
|
|
(12,151 |
) |
|
|
(12,203 |
) |
Income before income taxes |
|
|
4,086 |
|
|
|
39,626 |
|
|
|
|
|
|
|
|
||
Income tax expense |
|
|
945 |
|
|
|
9,000 |
|
Net income |
|
|
3,141 |
|
|
|
30,626 |
|
Less: Loss attributable to noncontrolling interests |
|
|
(95 |
) |
|
|
(8 |
) |
Net income attributable to G-III Apparel Group, Ltd. |
|
$ |
3,236 |
|
|
$ |
30,634 |
|
|
|
|
|
|
|
|
||
Net income attributable to G-III Apparel Group, Ltd. per common share: |
|
|
|
|
|
|
||
Basic |
|
$ |
0.07 |
|
|
$ |
0.64 |
|
Diluted |
|
$ |
0.07 |
|
|
$ |
0.62 |
|
|
|
|
|
|
|
|
||
Weighted average shares outstanding: |
|
|
|
|
|
|
||
Basic |
|
|
46,286 |
|
|
|
48,016 |
|
Diluted |
|
|
47,442 |
|
|
|
49,108 |
|
|
|
|
|
|
|
|
Selected Balance Sheet Data (in thousands): |
|
As of April 30, |
||||
|
|
2023 |
|
2022 |
||
|
|
(Unaudited) |
||||
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
289,729 |
|
$ |
438,411 |
Working capital |
|
|
983,659 |
|
|
1,164,595 |
Inventories |
|
|
630,308 |
|
|
550,059 |
Total assets |
|
|
2,554,483 |
|
|
2,718,272 |
Total debt |
|
|
543,004 |
|
|
521,382 |
Operating lease liabilities |
|
|
253,430 |
|
|
180,798 |
Total stockholders' equity |
|
|
1,380,447 |
|
|
1,558,292 |
G-III APPAREL GROUP, LTD. AND SUBSIDIARIES |
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RECONCILIATION OF GAAP NET INCOME TO NON-GAAP NET INCOME |
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(In thousands) |
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|
|
|
|
|
||
|
|
Three Months Ended |
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|
|
April 30, 2023 |
|
April 30, 2022 |
||||
|
(Unaudited) |
|||||||
|
|
|
|
|
|
|||
GAAP net income attributable to G-III Apparel Group, Ltd. |
|
$ |
3,236 |
|
|
$ |
30,634 |
|
|
|
|
|
|
|
|
||
Excluded from non-GAAP: |
|
|
|
|
|
|
||
Expenses related to Karl Lagerfeld acquisition |
|
|
1,821 |
|
|
|
4,179 |
|
Non-cash imputed interest |
|
|
1,817 |
|
|
|
1,671 |
|
Income tax impact of non-GAAP adjustments |
|
|
(841 |
) |
|
|
(1,328 |
) |
|
|
|
|
|
|
|
||
Non-GAAP net income attributable to G-III Apparel Group, Ltd., as defined |
|
$ |
6,033 |
|
|
$ |
35,156 |
|
Non-GAAP net income is a “non-GAAP financial measure” that excludes (i) expenses related to the Karl Lagerfeld transaction that include incentive compensation, professional fees and, in fiscal 2023, foreign currency losses, and (ii) non-cash imputed interest expense. For fiscal 2024 and 2023, the income tax impact of non-GAAP adjustments is calculated using an effective tax rate derived from our results of operations excluding the non-GAAP adjustments. Management believes that these non-GAAP financial measures provide meaningful supplemental information regarding our performance by excluding items that are not indicative of our core business operating results. Management uses these non-GAAP financial measures to assess our performance on a comparative basis and believes that they are also useful to investors to enable them to assess our performance on a comparative basis across historical periods and facilitate comparisons of our operating results to those of our competitors. The presentation of this financial information is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP.
G-III APPAREL GROUP, LTD. AND SUBSIDIARIES |
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RECONCILIATION OF GAAP NET INCOME PER SHARE TO NON-GAAP NET INCOME PER SHARE |
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|
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|
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|
|
Three Months Ended |
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|
April 30, 2023 |
|
April 30, 2022 |
||||
|
(Unaudited) |
|||||||
|
|
|
|
|
|
|||
GAAP diluted net income attributable to G-III Apparel Group, Ltd. per common share |
|
$ |
0.07 |
|
|
$ |
0.62 |
|
|
|
|
|
|
|
|
||
Excluded from non-GAAP: |
|
|
|
|
|
|
||
Expenses related to Karl Lagerfeld acquisition |
|
|
0.04 |
|
|
|
0.09 |
|
Non-cash imputed interest |
|
|
0.04 |
|
|
|
0.04 |
|
Income tax impact of non-GAAP adjustments |
|
|
(0.02 |
) |
|
|
(0.03 |
) |
|
|
|
|
|
|
|
||
Non-GAAP diluted net income attributable to G-III Apparel Group, Ltd. per common share, as defined |
|
$ |
0.13 |
|
|
$ |
0.72 |
|
Non-GAAP diluted net income per common share is a “non-GAAP financial measure” that excludes (i) expenses related to the Karl Lagerfeld transaction that include incentive compensation, professional fees and, in fiscal 2023, foreign currency losses, and (ii) non-cash imputed interest expense. For fiscal 2024 and 2023, the income tax impact of non-GAAP adjustments is calculated using an effective tax rate derived from our results of operations excluding the non-GAAP adjustments. Management believes that these non-GAAP financial measures provide meaningful supplemental information regarding our performance by excluding items that are not indicative of our core business operating results. Management uses these non-GAAP financial measures to assess our performance on a comparative basis and believes that they are also useful to investors to enable them to assess our performance on a comparative basis across historical periods and facilitate comparisons of our operating results to those of our competitors. The presentation of this financial information is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP.
G-III APPAREL GROUP, LTD. AND SUBSIDIARIES |
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RECONCILIATION OF FORECASTED AND ACTUAL NET INCOME (LOSS) TO FORECASTED AND ACTUAL ADJUSTED EBITDA |
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(In thousands) |
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Forecasted Twelve |
|
Actual Twelve |
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|
|
Three Months Ended |
|
Months Ended |
|
Months Ended |
||||||
|
|
April 30, 2023 |
|
April 30, 2022 |
|
January 31, 2024 |
|
January 31, 2023 |
||||
|
(Unaudited) |
|||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) attributable to G-III Apparel Group, Ltd. |
|
$ |
3,236 |
|
$ |
30,634 |
|
$ |
125,000 - 130,000 |
|
$ |
(133,061) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Karl Lagerfeld investment gain |
|
|
— |
|
|
— |
|
|
— |
|
|
(27,071) |
Expenses related to Karl Lagerfeld acquisition |
|
|
1,821 |
|
|
— |
|
|
6,071 |
|
|
13,895 |
Asset impairments and gain on lease terminations |
|
|
— |
|
|
— |
|
|
— |
|
|
349,686 |
Bonus accrual expense reversed due to goodwill impairment charge |
|
|
— |
|
|
— |
|
|
— |
|
|
(17,900) |
Depreciation and amortization |
|
|
6,576 |
|
|
6,095 |
|
|
31,409 |
|
|
27,762 |
Interest and financing charges, net |
|
|
12,151 |
|
|
12,203 |
|
|
54,229 |
|
|
56,602 |
Income tax expense |
|
|
945 |
|
|
9,000 |
|
|
50,291 |
|
|
(3,788) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA, as defined |
|
$ |
24,729 |
|
$ |
57,932 |
|
$ |
267,000 - 272,000 |
|
$ |
266,125 |
Adjusted EBITDA is a “non-GAAP financial measure” which represents earnings before depreciation and amortization, interest and financing charges, net and income tax expense and excludes (i) the gain in the fair value of the Company’s minority ownership in Karl Lagerfeld that it held prior to the Company becoming the sole owner of the Karl Lagerfeld entities, (ii) expenses related to the Karl Lagerfeld acquisition that included incentive compensation, professional fees, and, in fiscal 2023, amortization of inventory valuation adjustments and foreign currency losses, (iii) asset impairments, including the goodwill write-down of
G-III APPAREL GROUP, LTD. AND SUBSIDIARIES |
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RECONCILIATION OF FORECASTED AND ACTUAL GAAP NET INCOME (LOSS) TO FORECASTED AND ACTUAL NON-GAAP NET INCOME (LOSS) |
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(In thousands) |
|||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
Forecasted Three |
|
Actual Three |
|
Forecasted Twelve |
|
Actual Twelve |
||||
|
Months Ending |
|
Months Ended |
|
Months Ended |
|
Months Ended |
||||
|
July 31, 2023 |
|
July 31, 2022 |
|
January 31, 2024 |
|
January 31, 2023 |
||||
(Unaudited) |
|||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) attributable to G-III Apparel Group, Ltd. |
$ |
(5,000) - 0,000 |
|
$ |
36,319 |
|
$ |
125,000 - 130,000 |
|
$ |
(133,061) |
|
|
|
|
|
|
|
|
|
|
|
|
Excluded from non-GAAP: |
|
|
|
|
|
|
|
|
|
|
|
Karl Lagerfeld investment gain |
|
— |
|
|
(30,925) |
|
|
— |
|
|
(27,071) |
Expenses related to Karl Lagerfeld acquisition |
|
1,821 |
|
|
5,693 |
|
|
6,071 |
|
|
13,895 |
Non-cash imputed interest |
|
1,086 |
|
|
1,740 |
|
|
3,798 |
|
|
6,947 |
Asset impairments and gain on lease terminations |
|
— |
|
|
(29) |
|
|
— |
|
|
349,686 |
Bonus accrual expense reversed due to goodwill impairment charge |
|
— |
|
|
— |
|
|
— |
|
|
(17,900) |
Income tax impact of non-GAAP adjustments |
|
(907) |
|
|
6,220 |
|
|
(2,869) |
|
|
(53,737) |
Non-GAAP net income (loss) attributable to G-III Apparel Group, Ltd., as defined |
$ |
(3,000) - 2,000 |
|
$ |
19,018 |
|
$ |
132,000 - 137,000 |
|
$ |
138,759 |
Non-GAAP net income (loss) is a “non-GAAP financial measure” that excludes (i) the gain in the fair value of the Company’s minority ownership in Karl Lagerfeld that it held prior to the Company becoming the sole owner of the Karl Lagerfeld entities, (ii) expenses related to the Karl Lagerfeld transaction that include incentive compensation, professional fees, and, in fiscal 2023, amortization of inventory valuation adjustments and foreign currency losses, (iii) non-cash imputed interest expense, (iv) asset impairments, including the goodwill write-down of
G-III APPAREL GROUP, LTD. AND SUBSIDIARIES |
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RECONCILIATION OF FORECASTED AND ACTUAL GAAP NET INCOME (LOSS) PER SHARE TO FORECASTED AND ACTUAL NON-GAAP NET INCOME (LOSS) PER SHARE |
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Forecasted Three |
|
Actual Three |
|
Forecasted Twelve |
|
Actual Twelve |
||||
|
|
Months Ending |
|
Months Ended |
|
Months Ended |
|
Months Ended |
||||
|
|
July 31, 2023 |
|
July 31, 2022 |
|
January 31, 2024 |
|
January 31, 2023 |
||||
|
(Unaudited) |
|||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP diluted net income (loss) attributable to G-III Apparel Group, Ltd. per common share |
|
$ |
(0.10) - 0.00 |
|
$ |
0.74 |
|
$ |
2.65 - 2.75 |
|
$ |
(2.79) |
Adjustment from GAAP diluted shares to Non-GAAP diluted shares(1) |
|
|
— |
|
|
— |
|
|
— |
|
|
0.06 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Excluded from non-GAAP: |
|
|
|
|
|
|
|
|
|
|
|
|
Karl Lagerfeld investment gain |
|
|
— |
|
|
(0.63) |
|
|
— |
|
|
(0.56) |
Expenses related to Karl Lagerfeld acquisition |
|
|
0.04 |
|
|
0.12 |
|
|
0.13 |
|
|
0.29 |
Non-cash imputed interest |
|
|
0.02 |
|
|
0.03 |
|
|
0.08 |
|
|
0.14 |
Asset impairments and gain on lease terminations |
|
|
— |
|
|
(0.00) |
|
|
— |
|
|
7.18 |
Bonus accrual expense reversed due to goodwill impairment charge |
|
|
— |
|
|
— |
|
|
— |
|
|
(0.37) |
Income tax impact of non-GAAP adjustments |
|
|
(0.02) |
|
|
0.13 |
|
|
(0.06) |
|
|
(1.10) |
Non-GAAP diluted net income (loss) attributable to G-III Apparel Group, Ltd. per common share, as defined |
|
$ |
(0.06) - 0.04 |
|
$ |
0.39 |
|
$ |
2.80 - 2.90 |
|
$ |
2.85 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP diluted shares(1) |
|
|
47,000 |
|
|
49,109 |
|
|
47,500 |
|
|
48,694 |
(1) |
Represents adjustment for shares used to calculate diluted earnings per share. Due to our recording a GAAP net loss for fiscal year 2023, diluted shares were the same as basic shares for GAAP. When applying nonGAAP exclusions our results moved from a net loss to net income position. |
||
Non-GAAP diluted net income per common share is a “non-GAAP financial measure” that excludes (i) the gain in the fair value of the Company’s minority ownership in Karl Lagerfeld that it held prior to the Company becoming the sole owner of the Karl Lagerfeld entities, (ii) expenses related to the Karl Lagerfeld transaction that include incentive compensation, professional fees, and, in fiscal 2023, amortization of inventory valuation adjustments and foreign currency losses, (iii) non-cash imputed interest expense, (iv) asset impairments, including the goodwill write-down of
View source version on businesswire.com: https://www.businesswire.com/news/home/20230606005325/en/
G-III Apparel Group, Ltd.
Company Contact:
Priya Trivedi
SVP of Investor Relations and Treasurer
(646) 473-5228
Investor Relations Contact:
Tom Filandro
ICR, Inc.
(646) 277-1235
Company Media Contact:
Andrew Blecher
andrew.blecher@g-iii.com
Source: G-III Apparel Group, Ltd.
