G-III Apparel Group, Ltd. (NasdaqGSM: GIII) today announced
operating results for the three and nine month periods ended
October 31, 2008. For the three months ended October 31, 2008, net
sales increased by 29.6% to $351.6 million from $271.2 million in
the same quarter of last year. Net income for the three months
ended October 31, 2008 was $28.8 million, or $1.68 per diluted
share, compared to $23.8 million, or $1.41 per diluted share, in
the prior year�s period. For the nine months ended October 31,
2008, net sales increased by 38.5% to $540.5 million from $390.2
million in the same period last year. Net income for the nine
months ended October 31, 2008 was $18.1 million, or $1.07 per
diluted share, compared to $16.4 million, or $0.99 per diluted
share, in the same period last year. Morris Goldfarb, Chairman and
Chief Executive Officer, said, �Our third quarter results represent
a solid performance given the conditions in the market. Calvin
Klein, which is our largest and fastest growing business, continues
to exceed plan and is particularly well suited to address the
current market environment with a strong fashion identity and an
excellent price-value proposition for consumers. We are excited
about the initial reception to our new Calvin Klein sportswear line
which will start to ship this spring season.� Mr. Goldfarb
continued, �Retailers have been slower to reorder and we expect to
see a higher level of promotional activity in the fourth quarter,
particularly in the luxury tier. Additionally, traffic and
comparable store sales results are lower than we had planned in our
recently acquired Wilsons outlet business. Accordingly, we are
revising our full year�s guidance down. We believe our strategy of
diversifying our product offerings, broadening our distribution
channels and offering a wide variety of brands to consumers will
help us weather the difficult retail and consumer environment we
are currently facing.� �G-III is a proactive and forward-thinking
organization with a great deal of talent that has demonstrated the
ability to succeed even in difficult markets. The kind of market we
are in can prompt significant changes in the competitive landscape.
We believe that G-III will ultimately benefit from these changes,
including the ongoing consolidation of retailers, competitors and
suppliers, in the form of increased market share and a wide
availability of business opportunities,� Mr. Goldfarb concluded.
Outlook For the full fiscal year ending January 31, 2009, the
Company has revised its guidance and now expects net sales of
approximately $715 million, compared to its prior guidance of net
sales of $730 million, net income in the range of $16.3 million to
$18.1 million, compared to its prior guidance of net income in the
range of $23.5 million to $24.4 million, and diluted net income per
share between $0.95 and $1.05, compared to its prior guidance of
diluted net income per share between $1.35 to $1.40. The Company is
also now forecasting EBITDA for the fiscal year ending January 31,
2009 to increase approximately 7% to 15% to a range of
approximately $40.5 to $43.5 million compared to its prior guidance
of EBITDA in the range of $54.0 million to $55.5 million. EBITDA
should be evaluated in light of the Company�s financial results
prepared in accordance with US GAAP. A reconciliation of EBITDA to
net income in accordance with US GAAP is included in a table
accompanying the condensed financial statements in this release.
About G-III Apparel Group, Ltd. G-III Apparel Group, Ltd. is a
leading manufacturer and distributor of outerwear and sportswear
under licensed brands, private labels and its own brands. G-III
also operates 119 outlet stores under the Wilsons Leather name.
G-III has fashion licenses, among others, under the Calvin Klein,
Sean John, Kenneth Cole, Cole Haan, Guess?, Jones New York, Jessica
Simpson, Nine West, Ellen Tracy, House of Dereon, IZOD, Tommy
Hilfiger, Levi�s and Dockers brands and sports licenses with the
National Football League, National Basketball Association, Major
League Baseball, National Hockey League, Touch by Alyssa Milano and
more than 100 U.S. colleges and universities. G-III works with
leading retailers in developing product lines to be sold under
their own proprietary private labels. G-III-owned brands include,
among others, Andrew Marc, Marc New York, Marvin Richards, G-III,
Jessica Howard, Eliza J., Industrial Cotton, Black Rivet, Siena
Studio, Colebrook, G-III by Carl Banks, Winlit, NY 10018 and La
Nouvelle Renaissance. Statements concerning the Company�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,
the nature of the apparel industry, including changing customer
demand and tastes, customer concentration, seasonality, customer
acceptance of new products, weakness in the retail sector, risks
related to the operation of a retail chain, the impact of
competitive products and pricing, dependence on existing
management, possible disruption from acquisitions, weak economic
conditions and the turmoil in the credit and financial markets, as
well as other risks detailed in the Company�s filings with the
Securities and Exchange Commission. The Company assumes no
obligation to update the information in this release. G-III APPAREL
GROUP, LTD. AND SUBSIDIARIES (NASDAQGSM:GIII) CONSOLIDATED
STATEMENTS OF OPERATIONS (in thousands, except per share amounts)
(Unaudited) � � Three Months Ended � Nine Months Ended 10/31/08 �
10/31/07 10/31/08 � 10/31/07 Net sales $ 351,599 $ 271,195 $
540,458 $ 390,192 Cost of sales � 239,080 � 190,932 � 381,520 �
280,660 Gross profit 112,519 80,263 158,938 109,532 � Selling
general and administrative expenses 58,937 36,470 118,625 75,019
Depreciation and amortization � 1,900 � 1,294 � 5,255 � 4,135
Operating profit 51,682 42,499 35,058 30,378 Interest and financing
charges, net � 2,496 � 1,892 � 4,161 � 2,304 Income before income
taxes 49,186 40,607 30,897 28,074 Income tax expense � 20,350 �
16,852 � 12,801 � 11,651 � Net income $ 28,836 $ 23,755 $ 18,096 $
16,423 � Basic net income per common share $ 1.74 $ 1.45 $ 1.10 $
1.03 � Diluted net income per common share $ 1.68 $ 1.41 $ 1.07 $
0.99 � Weighted average shares outstanding: Basic 16,526 16,393
16,507 16,015 Diluted 17,160 16,850 16,990 16,524 � Selected
Balance Sheet Data (in thousands): � At October 31, 2008 � At
October 31, 2007 � Working Capital $ 110,673 $ 132,886 Inventory
131,028 79,881 Total Assets 472,629 327,447 � Short-term and
revolving debt 170,659 71,795 Long-term debt - 8,144 Total
Shareholders' Equity $ 193,458 $ 172,473 � G-III APPAREL GROUP,
LTD. AND SUBSIDIARIES RECONCILIATION OF EBITDA TO ACTUAL AND
FORECASTED NET INCOME (in thousands) (Unaudited) � � � Forecasted
Twelve Months Ending January 31, 2009 Actual Twelve Months Ended
January 31, 2008 EBITDA, as defined $ 40,500 � 43,500 $ 37,782
Depreciation and amortization 7,100 5,427 Interest and financing
charges, net 5,600 3,158 Income tax expense 11,500 - 12,700 11,707
Net income $ 16,300 � 18,100 $ 17,490 EBITDA is a �non-GAAP
financial measure� which represents earnings before depreciation
and amortization, interest and financing charges, net, and income
tax expense. EBITDA is being presented as a supplemental disclosure
because management believes that it is a common measure of
operating performance in the apparel industry. 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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