-- Expects Net Sales and Operating Profit
for Retail Operations to be Lower Than Anticipated --
G-III Apparel Group, Ltd. (NasdaqGS:GIII) today announced an
update to its fourth quarter and full fiscal year ended January 31,
2017 net sales and net income estimates. Fourth quarter net sales
from the Company’s retail operations segment are expected to be
less than anticipated due to unseasonably warm weather in the first
part of the quarter, persistent lower traffic as compared to last
year, issues with respect to the design and merchandising of
accessories sold at the Wilsons stores, and an overall challenging
retail environment. The Company was anticipating positive
comparative sales increases in the low single digits for both the
Wilsons and Bass retail chains. The Company now anticipates
comparative sales to be down low-double digits for Wilsons and down
mid-single digits for G.H. Bass. In addition, gross margin will be
adversely impacted due to higher than planned promotional activity
in the retail operations segment. As a result, the Company expects
the retail operations segment to experience a decrease in net sales
of approximately $20 million and a decrease in net income of
approximately $10 million, equal to $0.20 per diluted share, in the
fourth quarter compared to the anticipated results for the segment
previously included in the Company’s forecast. The forecast for the
wholesale operations segment remains consistent with the Company’s
prior expectations.
For the full fiscal year ending January 31, 2017, the Company is
now forecasting net sales of approximately $2.41 billion and net
income between $57 million and $62 million, or a range between
$1.21 and $1.31 per diluted share, compared to the previous
guidance of net sales of approximately $2.43 billion and net income
between $67 million and $72 million, or a range between $1.41 and
$1.51 per diluted share. The full year forecast continues to
include an estimate of net sales of approximately $25 million and
operating losses and additional interest expense of approximately
$21 million, before taxes, equal to $0.28 per diluted share,
associated with the acquisition of Donna Karan International, Inc.
The current year’s forecast also continues to include professional
fees of approximately $15 million, before taxes, equal to
approximately $0.20 per diluted share, in connection with the
acquisition and the impact of the issuance of approximately 2.6
million shares of new G-III common stock to the seller.
Excluding professional fees associated with the acquisition of
Donna Karan in fiscal 2017 and other income in fiscal 2016, the
Company is now forecasting non-GAAP net income per diluted share of
between $1.41 and $1.51, for the full 2017 fiscal year compared to
$2.44 for the 2016 fiscal year. The non-GAAP forecast includes the
estimated operating losses and additional interest expense of
approximately $21 million, before taxes, equal to $0.28 per diluted
share, related to the Donna Karan business and the issuance of
additional shares associated with the acquisition of Donna
Karan.
The Company is now projecting adjusted EBITDA for fiscal 2017 of
between approximately $148 million and $155 million compared to
adjusted EBITDA of $210.1 million in fiscal 2016 and to its
previous forecast of adjusted EBITDA of between approximately $163
million and $171 million. The current projection includes estimated
operating losses of $14 million of the post-acquisition Donna Karan
business, but excludes professional fees associated with the
acquisition of Donna Karan.
Non-GAAP net income per diluted share and adjusted EBITDA should
be evaluated in light of the Company’s financial results prepared
in accordance with U.S. GAAP. Reconciliations of forecasted and
actual GAAP net income per share to forecasted and actual non-GAAP
net income per share and of GAAP net income to adjusted EBITDA are
included in tables accompanying the condensed financial statements
in this release.
About G-III Apparel Group,
Ltd.
G-III is a leading manufacturer and distributor of apparel and
accessories under licensed brands, owned brands and private label
brands. G-III’s owned brands include Donna Karan, DKNY,
Vilebrequin, Andrew Marc, Marc New York, Bass, G.H. Bass, Weejuns,
G-III Sports by Carl Banks, Eliza J, Black Rivet and Jessica
Howard. G-III has fashion licenses under the Calvin Klein, Tommy
Hilfiger, Karl Lagerfeld, Kenneth Cole, Cole Haan, Guess?, Jones
New York, Jessica Simpson, Vince Camuto, Ivanka Trump, Ellen Tracy,
Kensie, Levi's and Dockers brands. Through our team sports
business, G-III has licenses with the National Football League,
National Basketball Association, Major League Baseball, National
Hockey League, Hands High, Touch by Alyssa Milano and more than 100
U.S. colleges and universities. G-III also operates retail stores
under the Donna Karan, Wilsons Leather, Bass, G.H. Bass & Co.,
Vilebrequin 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, 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 acquisition of Donna Karan International Inc. 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
RECONCILIATION OF FORECASTED AND ACTUAL
GAAP NET INCOME PER SHARE TO
FORECASTED AND ACTUAL NON-GAAP NET
INCOME PER SHARE
(Unaudited)
Revised Forecasted Twelve
Months Ending January 31, 2017
Prior Forecasted Twelve
Months Ending January 31, 2017
Actual Twelve Months Ended
January 31, 2016
GAAP diluted net income per common share $ 1.21 - $ 1.31 $1.41 -
$1.51 $ 2.46 Excluded from non-GAAP: Professional fees associated
with Donna Karan acquisition, net of taxes 0.20 0.20 - Other
income, net of taxes - - (0.02) Non-GAAP diluted net income per
common share $ 1.41 - $ 1.51 $1.61 - $1.71 $ 2.44
Non-GAAP diluted net income per share is a “non-GAAP financial
measure” that excludes (i) professional fees incurred in connection
with the acquisition of Donna Karan in fiscal 2017 and (ii) other
income in fiscal 2016 which consisted of the reduction of the
estimated contingent consideration payable in connection with the
acquisition of Vilebrequin. Management believes that this non-GAAP
financial measure provides meaningful supplemental information
regarding our performance by excluding acquisition expenses and
other income that is not indicative of our core business operating
results. Management uses this non-GAAP financial measure to assess
our performance on a comparative basis and believes that it is 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)
(Unaudited)
Revised Forecasted TwelveMonths
EndingJanuary 31, 2017
ActualTwelve Months EndedJanuary 31, 2016
Net income $ 57,000 – $ 62,000
$ 114,333
Professional fees associated with the Donna Karan acquisition
15,000 - Other income -
(1,068)
Depreciation and amortization 31,700 25,392 Interest and financing
charges, net 13,300 6,691 Income tax expense 31,000 – 33,000
64,800 Adjusted EBITDA, as defined $ 148,000 – $ 155,000
$ 210,148
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)
estimated expenses incurred in connection with the acquisition of
Donna Karan in fiscal 2017 and (ii) other income in fiscal 2016
which consisted of the reduction of the estimated contingent
consideration payable in connection with the acquisition of
Vilebrequin. Forecasted net income and adjusted EBITDA include $14
million of estimated operating losses associated with the
acquisition of Donna Karan. 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 generally accepted accounting principles.
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version on businesswire.com: http://www.businesswire.com/news/home/20170105006136/en/
For G-III Apparel Group, Ltd.Investor RelationsJames Palczynski,
203-682-8229orG-III Apparel Group, Ltd.Neal S. Nackman,
212-403-0500Chief Financial Officer
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