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

Net Sales of $644.8 Million for the Second Quarter Compared to $659.8 Million Last Year

Second 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

Repaid $400 Million Senior Secured Notes Due August 2025

Repurchased 1.2 Million Shares of the Company's Common Stock for $31.6 Million

Announces New Global Apparel License for the Converse Brand

NEW YORK, Sept. 05, 2024 (GLOBE NEWSWIRE) -- G-III Apparel Group, Ltd. (NASDAQ:GIII) today reported results for the second quarter of fiscal 2025 ended July 31, 2024.

Morris Goldfarb, G-III's Chairman and Chief Executive Officer, said, "We delivered a strong first half of the year. Our second quarter non-GAAP net income per diluted share of $0.52 exceeded our expectations, led by our owned brands. DKNY and Karl Lagerfeld collectively grew double-digits and the Donna Karan relaunch has been incredibly successful, in addition to continued solid performance with healthy sell-throughs across the rest of our business."

Mr. Goldfarb concluded, "Having the most desirable brands is central to our strategy and I am pleased with the transition to our go-forward portfolio, which will continue to evolve for the future. Our new businesses are working, and I am excited to announce a licensing agreement for Converse, Inc., a globally recognized American youth lifestyle brand. This new partnership represents a significant opportunity to expand our active lifestyle category while leveraging our core capabilities to build a global apparel business. The powerful combination of our brands, our business model and diverse growth drivers, together with our agility, operating discipline and strong foundation give us confidence that our strategy will deliver long-term shareholder value."

Mr. Goldfarb concluded, "Given our second quarter earnings per diluted share outperformance, we are reaffirming our fiscal year 2025 net sales and, once again, raising our earnings per diluted share outlook. Despite the uncertain macroeconomic environment, we remain optimistic about the remainder of the year and our orderbook is in a good position for the important Fall and Holiday seasons."

Results of Operations

Second Quarter Fiscal 2025 Financial Results

Net sales for the second quarter ended July 31, 2024 decreased 2% to $644.8 million compared to $659.8 million in the prior year's second quarter.

Net income for the second quarter was $24.2 million, or $0.53 per diluted share, compared to $16.4 million, or $0.35 per diluted share, in the prior year's second quarter.

Non-GAAP net income per diluted share was $0.52 for the second quarter compared to $0.40 in the same period last year. Non-GAAP net income per diluted share excludes (i) in the second quarter of fiscal 2025, the $0.6 million gain on the forgiveness of certain liabilities related to the acquisition of the minority interest of our DKNY business in China that we did not already own, (ii) in the second quarter of fiscal 2024, incentive compensation expenses of $1.8 million related to the Karl Lagerfeld transaction and (iii) in the second quarter of fiscal 2024, non-cash imputed interest expense of $1.1 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 $(0.01) per diluted share in the second quarter of this year and $0.05 per diluted share in last year's second quarter.

Balance Sheet as of Second Quarter Fiscal 2025

Inventories decreased 24% to $610.5 million at the end of this year's second quarter compared to $804.9 million in the second quarter of last year.

During the quarter, we bought back 1,180,328 of our shares of common stock for an aggregate purchase price of $31.6 million.

Converse License

G-III signed a license agreement for Converse, Inc. to design and produce men's and women's apparel for distribution globally. The product is expected to launch in Fall 2025. Converse is an iconic American youth lifestyle brand and represents a significant opportunity for G-III to expand the active lifestyle business, providing exposure to a differentiated consumer and distribution network while leveraging existing fashion talent.

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

Net sales are expected to increase by approximately 3% to $3.20 billion (unchanged to prior guidance), compared to net sales of $3.10 billion for fiscal 2024.

Net income is expected to be between $179.0 million and $184.0 million (prior $170.0 million and $175.0 million), or diluted earnings per share between $3.94 and $4.04 (prior $3.58 and $3.68). This compares to 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 $180.0 million and $185.0 million (prior $170.0 and $175.0 million), or diluted earnings per share between $3.95 and $4.05 (prior $3.58 and $3.68). This compares to non-GAAP net income of $189.8 million, or diluted earnings per share of $4.04 for fiscal 2024.

Adjusted EBITDA for fiscal 2025 is expected to be between $305.0 million and $310.0 million (prior $295.0 million and $300.0 million) compared to adjusted EBITDA of $324.1 million in fiscal 2024.

Net interest expense is expected to be approximately $24.0 million, including a $1.7 million non-GAAP charge related to the write-off of deferred financing costs associated with the redemption of our senior secured notes. We estimate a tax rate of 28.5% for fiscal 2025.

Third Quarter Fiscal 2025

Net sales for the third quarter of fiscal 2025 are expected to increase by approximately 3% to $1.10 billion compared to $1.07 billion in the same period last year.

Net income for the third quarter of fiscal 2025 is expected to be in the range of $97.0 million and $102.0 million, or diluted earnings per share between $2.18 and $2.28. This compares to net income of $127.6 million, or diluted earnings per share of $2.74, in last year's third quarter.

Non-GAAP net income for the third quarter of fiscal 2025 is expected to be between $98.0 million and $103.0 million, or diluted earnings per share between $2.20 and $2.30. This compares to non-GAAP net income of $129.6 million, or diluted earnings per share of $2.78, for the third 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 July 31,

 

Six Months Ended July 31,

 

 

2024

 

2023

 

2024

 

2023

 

 

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales

 

$

644,755

 

 

$

659,761

 

 

$

1,254,502

 

 

$

1,266,350

 

Cost of goods sold

 

 

368,881

 

 

 

383,108

 

 

 

719,735

 

 

 

739,897

 

Gross profit

 

 

275,874

 

 

 

276,653

 

 

 

534,767

 

 

 

526,453

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative expenses

 

 

229,030

 

 

 

239,207

 

 

 

465,651

 

 

 

467,168

 

Depreciation and amortization

 

 

5,380

 

 

 

5,959

 

 

 

14,148

 

 

 

12,535

 

Operating profit

 

 

41,464

 

 

 

31,487

 

 

 

54,968

 

 

 

46,750

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other (loss) income

 

 

(2,952

)

 

 

192

 

 

 

(3,175

)

 

 

1,165

 

Interest and financing charges, net

 

 

(4,876

)

 

 

(9,492

)

 

 

(10,300

)

 

 

(21,642

)

Income before income taxes

 

 

33,636

 

 

 

22,187

 

 

 

41,493

 

 

 

26,273

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income tax expense

 

 

9,447

 

 

 

5,951

 

 

 

11,752

 

 

 

6,896

 

Net income

 

 

24,189

 

 

 

16,236

 

 

 

29,741

 

 

 

19,377

 

Less: Loss attributable to noncontrolling interests

 

 

(23

)

 

 

(202

)

 

 

(273

)

 

 

(297

)

Net income attributable to G-III Apparel Group, Ltd.

 

$

24,212

 

 

$

16,438

 

 

$

30,014

 

 

$

19,674

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to G-III Apparel Group, Ltd. per common share:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.54

 

 

$

0.36

 

 

$

0.67

 

 

$

0.43

 

Diluted

 

$

0.53

 

 

$

0.35

 

 

$

0.65

 

 

$

0.42

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

44,569

 

 

 

45,714

 

 

 

45,022

 

 

 

45,996

 

Diluted

 

 

45,483

 

 

 

46,570