G-III Apparel Group, Ltd. Reports First Quarter Fiscal 2025 Results; Updates Fiscal 2025 Outlook

Rhea-AI Summary

G-III Apparel Group (NasdaqGS: GIII) reported its Q1 Fiscal 2025 results with net sales of $609.7 million, a slight increase from $606.6 million last year. Net income was $5.8 million, or $0.12 per diluted share, compared to $3.2 million and $0.07 per share in the prior year, reflecting strong performance from brands like DKNY and Karl Lagerfeld. The company raised its GAAP and Non-GAAP net income per diluted share guidance for Fiscal 2025 and invested in AWWG for European expansion. G-III also amended and upsized its ABL credit facility to $700 million, extending its maturity to 2029. Fiscal 2025 net sales are projected at $3.20 billion, with net income expected between $170.0 million and $175.0 million. For Q2 FY2025, net sales are anticipated to be around $650.0 million with net income ranging from $10.0 million to $15.0 million.

Positive

• Net sales for Q1 FY2025 increased slightly to $609.7 million from $606.6 million last year.
• Net income for Q1 FY2025 rose to $5.8 million, or $0.12 per diluted share, from $3.2 million and $0.07 per share in the prior year.
• Strong performance from key brands DKNY and Karl Lagerfeld.
• Successful relaunch of Donna Karan.
• Raised GAAP and Non-GAAP net income guidance for Fiscal 2025.
• Investment in AWWG to accelerate European expansion.
• Amended and upsized ABL credit facility to $700 million, extending maturity to 2029.
• Approximately $1 billion in cash and availability, solidifying financial position.

Negative

• Incremental expenses of $60.0 million expected for Fiscal 2025, primarily related to new launches and marketing initiatives.
• Projected Fiscal 2025 net income ($170.0 million to $175.0 million) is below prior year's net income ($176.2 million).
• Non-GAAP net income for Fiscal 2025 is expected to be lower ($170.0 million to $175.0 million) compared to $189.8 million in Fiscal 2024.
• Full-year adjusted EBITDA for Fiscal 2025 expected to decrease to $295.0 million-$300.0 million from $324.1 million in Fiscal 2024.
• Q2 FY2025 net sales forecasted to drop to $650.0 million from $659.8 million in last year's period.
• Q2 FY2025 net income is projected to decrease to a range of $10.0 million and $15.0 million from $16.4 million last year.

Insights

Financial Analyst

The financial results for G-III Apparel Group's first quarter of fiscal 2025 show a marginal increase in net sales from $606.6 million to $609.7 million. However, what stands out is the improvement in net income from $3.2 million (or $0.07 per diluted share) to $5.8 million (or $0.12 per diluted share), indicating better cost management or operational efficiencies.

Investors should note the company's decision to upsize its ABL credit facility to $700 million and extend its maturity to 2029. This increases liquidity and gives G-III more financial flexibility for future investments. This move, along with the updated fiscal 2025 outlook projecting net income between $170.0 million and $175.0 million on sales of $3.20 billion, reflects a cautious yet optimistic growth strategy.

Despite the strong performance, there's a slight decrease in projected non-GAAP net income for fiscal 2025 compared to fiscal 2024. The expected net income range for the second quarter of fiscal 2025 is also lower than last year's, reflecting anticipated incremental expenses from brand launches and marketing initiatives. This could be a potential drawback for conservative investors.

Overall, the financial indicators present a stable yet cautious outlook, balancing between solid earnings and strategic reinvestments.

Market Research Analyst

G-III's strategic moves to invest in All We Wear Group (AWWG) to accelerate European expansion aligns well with the global trend of expanding into international markets. This investment could enhance G-III's brand visibility and market share in Europe, providing opportunities for revenue growth outside the US.

Furthermore, the relaunch of Donna Karan and the double-digit increases in DKNY and Karl Lagerfeld signal strong brand equity and consumer demand. These brands' performance suggests effective marketing and consumer alignment, key drivers for sustaining long-term growth.

However, the anticipated $60 million in incremental expenses raises questions about cost control and marketing ROI. It's important for investors to monitor how effectively these investments translate into increased market share and sales growth.

Corporate Governance Expert

The amendment and extension of the ABL credit facility not only improve G-III's liquidity but also solidify its financial stability. Extending the maturity date to 2029 ensures longer-term financial planning and reduces refinancing risks, providing a stable foundation for executing strategic initiatives.

From a corporate governance perspective, these actions reflect prudent financial management practices, enhancing shareholder value and positioning the company for sustainable growth. Investors should view this as a positive signal of the company's commitment to maintaining a strong financial position while pursuing growth opportunities.

It's also worth noting that the management's cautious optimism and reaffirmation of fiscal year 2025 net sales guidance demonstrate a balanced approach to growth and risk management.

• Net Sales of $609.7 Million for the First Quarter Compared to $606.6 Million Last Year
• First Quarter GAAP and Non-GAAP Net Income Per Diluted Share Exceed Guidance
• Raises GAAP and Non-GAAP Net Income Per Diluted Share Guidance for Fiscal Year 2025
• Invests in All We Wear Group (AWWG) to Accelerate European Expansion
• Amends and Upsizes ABL Credit Facility to $700 Million and Extends Maturity to 2029

NEW YORK--(BUSINESS WIRE)-- G-III Apparel Group, Ltd. (NasdaqGS: GIII) today reported results for the first quarter of fiscal 2025, ended April 30, 2024.

Morris Goldfarb, G-III’s Chairman and Chief Executive Officer, said, “We had a strong start to fiscal 2025, delivering first quarter earnings per diluted share well ahead of our expectations. Our performance was driven by double-digit increases in DKNY and Karl Lagerfeld along with a successful relaunch of Donna Karan, reflecting our commitment to investing in our owned brands and our ability to meet the ever-changing needs of our consumers. I am also excited to announce our partnership and investment in AWWG, a global fashion group and premier platform for iconic international brands, which furthers a number of our strategic priorities. Looking ahead, we remain cautiously optimistic and are reaffirming our fiscal year 2025 net sales and raising our guidance for net income per diluted share.”

Mr. Goldfarb concluded, “This morning’s announcement of the amendment and extension of our ABL credit facility further solidifies our financial position. With approximately $1 billion in cash and availability, we are well positioned to continue to invest in our brands and infrastructure to drive long-term growth and shareholder value.”

Results of Operations

First Quarter Fiscal 2025

Net sales for the first quarter ended April 30, 2024 were $609.7 million compared to $606.6 million in the prior year’s quarter. Net income for the first quarter was $5.8 million, or $0.12 per diluted share, compared to $3.2 million, or $0.07 per diluted share, in the prior year’s quarter.

Non-GAAP net income per diluted share was $0.12 for the first quarter compared to $0.13 in the same period last year. There were no non-GAAP adjustments during the first quarter of fiscal 2025. Non-GAAP net income per diluted share in the first quarter of fiscal 2024 excludes (i) expenses of $1.8 million related to the Karl Lagerfeld transaction that include incentive compensation and (ii) non-cash imputed interest expense of $1.8 million related to the note issued to seller as part of the consideration for the acquisition of Donna Karan International. The aggregate effect of these exclusions was equal to $0.06 per diluted share in last year’s first quarter.

Outlook

The Company today updated its outlook for the fiscal year ending January 31, 2025. This outlook continues to anticipate approximately $60.0 million in incremental expenses, primarily associated with the launches of Donna Karan, Nautica and Halston. Approximately 65% of these expenses are related to marketing initiatives to support the Donna Karan and DKNY brands. The remaining costs are principally related to technology and talent to expand operational capabilities.

Fiscal 2025

For fiscal 2025, the Company expects net sales of approximately $3.20 billion and net income between $170.0 million and $175.0 million, or between $3.58 and $3.68 per diluted share. This compares to net sales of $3.10 billion and net income of $176.2 million, or $3.75 per diluted share, for fiscal 2024.

Non-GAAP net income for fiscal 2025 is expected to be between $170.0 million and $175.0 million, or between $3.58 and $3.68 per diluted share. This compares to non-GAAP net income of $189.8 million, or $4.04 per diluted share, for fiscal 2024.

Full-year adjusted EBITDA for fiscal 2025 is expected to be between $295.0 million and $300.0 million compared to adjusted EBITDA of $324.1 million in fiscal 2024.

Second Quarter Fiscal 2025

For the second quarter of fiscal 2025, the Company expects net sales of approximately $650.0 million compared to $659.8 million in the same period last year. Net income is expected to be in the range of $10.0 million and $15.0 million, or $0.22 and $0.32 per share. This compares to net income of $16.4 million, or $0.35 per diluted share, in last year’s second quarter.

Non-GAAP net income for the second quarter of fiscal 2025 is expected to be between $10.0 million and $15.0 million, or between $0.22 and $0.32 per share. This compares to non-GAAP net income of $18.6 million, or $0.40 per diluted share, for the second quarter of fiscal 2024.

Non-GAAP Financial Measures

Reconciliations of GAAP net income to non-GAAP net income, GAAP net income per diluted share to non-GAAP net income per diluted share and GAAP net income 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, non-GAAP net income 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 Apparel Group, Ltd., a global leader in fashion with expertise in design, sourcing and marketing, owns and licenses a portfolio of over 30 preeminent brands. The Company is differentiated across unique brand propositions, product categories and consumer touch points. G-III owns ten iconic brands including, DKNY, Karl Lagerfeld, Donna Karan and Vilebrequin, and licenses over 20 brands, including Calvin Klein, Tommy Hilfiger, Nautica, Halston and National Sports leagues, among others.

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 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, risks related to acts of terrorism and the effects of war, 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 the United States government and business and general economic conditions, including inflation and higher interest rates, 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) CONSOLIDATED STATEMENTS OF INCOME (In thousands, except per share amounts)
		Three Months Ended April 30,
		2024				2023
		(Unaudited)
Net sales		$	609,747			$	606,589
Cost of goods sold			350,854				356,788
Gross profit			258,893				249,801
Selling, general and administrative expenses			236,621				227,961
Depreciation and amortization			8,768				6,576
Operating profit			13,504				15,264
Other (loss) income			(223	)			973
Interest and financing charges, net			(5,424	)			(12,151	)
Income before income taxes			7,857				4,086
Income tax expense			2,305				945
Net income			5,552				3,141
Less: Loss attributable to noncontrolling interests			(250	)			(95	)
Net income attributable to G-III Apparel Group, Ltd.		$	5,802			$	3,236
Net income attributable to G-III Apparel Group, Ltd. per common share:
Basic		$	0.13			$	0.07
Diluted		$	0.12			$	0.07
Weighted average shares outstanding:
Basic			45,484				46,286
Diluted			46,734				47,442

Selected Balance Sheet Data (in thousands):		As of April 30,
		2024			2023
		(Unaudited)
Cash and cash equivalents		$	508,434		$	289,729
Working capital			1,140,449			983,659
Inventories			479,671			630,308
Total assets			2,565,399			2,554,483
Total debt			426,351			543,004
Operating lease liabilities			224,452			253,430
Total stockholders' equity			1,519,875			1,380,447

G-III APPAREL GROUP, LTD. AND SUBSIDIARIES RECONCILIATION OF GAAP NET INCOME TO NON-GAAP NET INCOME (In thousands)
		Three Months Ended
		April 30, 2024			April 30, 2023
		(Unaudited)
GAAP net income attributable to G-III Apparel Group, Ltd.		$	5,802		$	3,236
Excluded from non-GAAP:
Expenses related to Karl Lagerfeld acquisition			—			1,821
Non-cash imputed interest			—			1,817
Income tax impact of non-GAAP adjustments			—			(841	)
Non-GAAP net income attributable to G-III Apparel Group, Ltd., as defined		$	5,802		$	6,033

Non-GAAP net income is a “non-GAAP financial measure” that excludes in the first quarter of fiscal 2024 (i) expenses related to the Karl Lagerfeld transaction that include incentive compensation and (ii) non-cash imputed interest expense. There were no non-GAAP adjustments during the first quarter of fiscal 2025. The income tax impact of non-GAAP adjustments is calculated using the effective tax rate for the period. 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 RECONCILIATION OF GAAP NET INCOME PER SHARE TO NON-GAAP NET INCOME PER SHARE
		Three Months Ended
		April 30, 2024			April 30, 2023
		(Unaudited)
GAAP diluted net income attributable to G-III Apparel Group, Ltd. per common share		$	0.12		$	0.07
Excluded from non-GAAP:
Expenses related to Karl Lagerfeld acquisition			—			0.04
Non-cash imputed interest			—			0.04
Income tax impact of non-GAAP adjustments			—			(0.02	)
Non-GAAP diluted net income attributable to G-III Apparel Group, Ltd. per common share, as defined		$	0.12		$	0.13

Non-GAAP diluted net income per common share is a “non-GAAP financial measure” that excludes in the first quarter of fiscal 2024 (i) expenses related to the Karl Lagerfeld transaction that include incentive compensation and (ii) non-cash imputed interest expense. There were no non-GAAP adjustments during the first quarter of fiscal 2025. The income tax impact of non-GAAP adjustments is calculated using the effective tax rate for the period. 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 RECONCILIATION OF FORECASTED AND ACTUAL NET INCOME TO FORECASTED AND ACTUAL ADJUSTED EBITDA (In thousands)
								Forecasted Twelve			Actual Twelve
		Three Months Ended						Months Ended			Months Ended
		April 30, 2024			April 30, 2023			January 31, 2025			January 31, 2024
		(Unaudited)
Net income attributable to G-III Apparel Group, Ltd.		$	5,802		$	3,236		$	170,000 - 175,000		$	176,168
Asset impairments			—			—			—			6,758
Expenses related to Karl Lagerfeld acquisition			—			1,821			—			6,115
One-time expenses primarily related to our DKNY business in China			—			—			—			3,138
Change in fair value of earnout liability			—			—			—			(1,041	)
Depreciation and amortization			8,768			6,576			34,000			27,523
Interest and financing charges, net			5,424			12,151			25,000			39,595
Income tax expense			2,305			945			66,000			65,859
Adjusted EBITDA, as defined		$	22,299		$	24,729		$	295,000 - 300,000		$	324,115

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 in fiscal 2024 (i) asset impairments, (ii) expenses related to the Karl Lagerfeld transaction that include incentive compensation, (iii) one-time expenses, primarily related to our DKNY business in China and (iv) the gain recorded from the reduction of the earnout liability related to our acquisition of Sonia Rykiel in fiscal 2022. There are no non-GAAP exclusions for the first quarter or full year of fiscal 2025. Adjusted EBITDA is being presented as a supplemental disclosure because management believes that it is a common measure of operating performance in the apparel industry. Adjusted EBITDA should not be construed as an alternative to net income, as an indicator of the Company’s operating performance, or as an alternative to cash flows from operating activities as a measure of the Company’s liquidity, as determined in accordance with GAAP.

G-III APPAREL GROUP, LTD. AND SUBSIDIARIES RECONCILIATION OF FORECASTED AND ACTUAL GAAP NET INCOME TO FORECASTED AND ACTUAL NON-GAAP NET INCOME (In thousands)
		Forecasted Three			Actual Three				Forecasted Twelve			Actual Twelve
		Months Ending			Months Ended				Months Ended			Months Ended
		July 31, 2024			July 31, 2023				January 31, 2025			January 31, 2024
		(Unaudited)
Net income attributable to G-III Apparel Group, Ltd.		$	10,000 - 15,000		$	16,438			$	170,000 - 175,000		$	176,168
Excluded from non-GAAP:
Asset impairments			—			—				—			6,758
Expenses related to Karl Lagerfeld acquisition			—			1,848				—			6,115
Non-cash imputed interest			—			1,086				—			3,798
One-time expenses primarily related to our DKNY business in China			—			—				—			3,138
Change in fair value of earnout liability			—			—				—			(1,041	)
Income tax impact of non-GAAP adjustments			—			(786	)			—			(5,137	)
Non-GAAP net income attributable to G-III Apparel Group, Ltd., as defined		$	10,000 - 15,000		$	18,586			$	170,000 - 175,000		$	189,799

Non-GAAP net income is a “non-GAAP financial measure” that excludes in fiscal 2024 (i) asset impairments, (ii) expenses related to the Karl Lagerfeld transaction that include incentive compensation, (iii) non-cash imputed interest expense, (iv) one-time expenses, primarily related to our DKNY business in China and (v) the gain recorded from the reduction of the earnout liability related to our acquisition of Sonia Rykiel in fiscal 2022. There are no non-GAAP exclusions for the second quarter or full year of fiscal 2025. The income tax impact of non-GAAP adjustments is calculated using an effective tax for the period. 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 RECONCILIATION OF FORECASTED AND ACTUAL GAAP NET INCOME PER SHARE TO FORECASTED AND ACTUAL NON-GAAP NET INCOME PER SHARE
		Forecasted Three			Actual Three				Forecasted Twelve			Actual Twelve
		Months Ending			Months Ended				Months Ended			Months Ended
		July 31, 2024			July 31, 2023				January 31, 2025			January 31, 2024
		(Unaudited)
GAAP diluted net income attributable to G-III Apparel Group, Ltd. per common share		$	0.22 - 0.32		$	0.35			$	3.58 - 3.68		$	3.75
Excluded from non-GAAP:
Asset impairments			—			—				—			0.14
Expenses related to Karl Lagerfeld acquisition			—			0.04				—			0.13
Non-cash imputed interest			—			0.03				—			0.08
One-time expenses primarily related to our DKNY business in China			—			—				—			0.07
Change in fair value of earnout liability			—			—				—			(0.02	)
Income tax impact of non-GAAP adjustments			—			(0.02	)			—			(0.11	)
Non-GAAP diluted net income attributable to G-III Apparel Group, Ltd. per common share, as defined		$	0.22 - 0.32		$	0.40			$	3.58 - 3.68		$	4.04

Non-GAAP diluted net income per common share is a “non-GAAP financial measure” that excludes in fiscal 2024 (i) asset impairments, (ii) expenses related to the Karl Lagerfeld transaction that include incentive compensation, (iii) non-cash imputed interest expense, (iv) one-time expenses, primarily related to our DKNY business in China and (v) the gain recorded from the reduction of the earnout liability related to our acquisition of Sonia Rykiel in fiscal 2022. There are no non-GAAP exclusions for the second quarter or full year of fiscal 2025. The income tax impact of non-GAAP adjustments is calculated using an effective tax for the period. 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.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240606744283/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.

FAQ

What were G-III Apparel Group's net sales for Q1 Fiscal 2025?

G-III Apparel Group reported net sales of $609.7 million for Q1 Fiscal 2025.

How did G-III Apparel Group's net income for Q1 Fiscal 2025 compare to last year?

Net income for Q1 Fiscal 2025 was $5.8 million, up from $3.2 million in the prior year.

What is G-III Apparel Group's updated guidance for Fiscal 2025 net income?

G-III anticipates net income between $170.0 million and $175.0 million for Fiscal 2025.

What is G-III Apparel Group's forecast for Q2 Fiscal 2025 net sales?

The company expects net sales of approximately $650.0 million for Q2 Fiscal 2025.

How has G-III Apparel Group's ABL credit facility changed?

G-III amended and upsized its ABL credit facility to $700 million, extending maturity to 2029.

What major investments did G-III Apparel Group make recently?

G-III invested in All We Wear Group (AWWG) to accelerate its European expansion.

What are the expected incremental expenses for G-III Apparel Group in Fiscal 2025?

The company expects approximately $60.0 million in incremental expenses, mainly for new launches and marketing initiatives.

How did G-III Apparel Group's non-GAAP net income per diluted share perform in Q1 Fiscal 2025?

Non-GAAP net income per diluted share was $0.12 in Q1 Fiscal 2025, compared to $0.13 in the same period last year.

What is G-III Apparel Group's expected full-year adjusted EBITDA for Fiscal 2025?

Full-year adjusted EBITDA for Fiscal 2025 is expected to be between $295.0 million and $300.0 million.

How did brands like DKNY and Karl Lagerfeld perform for G-III Apparel Group in Q1 Fiscal 2025?

Brands DKNY and Karl Lagerfeld saw double-digit increases in Q1 Fiscal 2025.