G-III Apparel Group, Ltd. (NasdaqGS: GIII) today announced
operating results for the second quarter of fiscal 2011.
The Company reported that, for the three months ended July 31,
2010, net sales increased by 39% to $189.0 million from $135.9
million in the second quarter last year. This increase was stronger
than expected and resulted primarily from increased wholesale sales
of women’s dresses, sportswear and suits, as well as from higher
sales by the Company’s Wilsons retail outlet store business.
Net income for the second quarter of fiscal 2011 improved to
$3.0 million, or $0.15 per diluted share, compared to a net loss of
$2.8 million, or $0.17 per share, in the year-ago quarter. This
shift to profitability was driven by the increase in sales and
improved margins in the Company’s wholesale and retail
businesses.
Morris Goldfarb, G-III’s Chairman and Chief Executive Officer,
said, “The impact of our increasing diversification, both by
product categories and brand, was demonstrable in the second
quarter. We now have built a dress and sportswear business that is
shipping twelve months a year. We are looking ahead to a strong
second half of the year as a result of the combination of our dress
and sportswear business with our fall and winter outerwear
business.”
Mr. Goldfarb continued, “Our Wilsons business is on track to
show much improved results for this year coming off an improved
first half of the year. We believe that Wilsons is well positioned
for a strong second half of the year. We also are quite excited
about our Calvin Klein handbags and luggage launch, which we will
begin shipping next year and will also further diversify our
business.”
Mr. Goldfarb concluded, “We have strong momentum going into the
second half of the year with a solid order book and a well balanced
diversified business model which we believe will result in
continued growth in sales and profits.”
Outlook
The Company has revised its expectations upward for its fiscal
year ending January 31, 2011. It is now forecasting net sales of
approximately $1.025 billion compared to its prior forecast of
approximately $950.0 million of net sales and $800.9 million of net
sales in the prior fiscal year. The Company is now forecasting
fiscal year 2011 net income in the range of $52.0 million to $54.0
million, or $2.60 to $2.70 per diluted share. This represents an
increase from its prior guidance for net income of $44.0 million to
$46.0 million, or between $2.20 and $2.30 per diluted share, and
from net income of $31.7 million, or $1.83 per diluted share, in
the prior fiscal year. The Company is now forecasting EBITDA for
the fiscal year ending January 31, 2011 to increase between 56% and
61% from fiscal 2010 to a range of $96.3 million to $99.3 million.
The Company previously forecasted EBITDA to increase approximately
35% to 40% from fiscal 2010 to a range of approximately $83.3
million to $86.3 million, compared to EBITDA of $61.6 million in
fiscal 2010. 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 is a leading manufacturer and distributor of outerwear,
dresses, sportswear and women's suits under licensed brands, its
own brands and private label brands. G-III sells outerwear and
dresses under our own Andrew Marc, Marc New York and Marc Moto
brands and has licensed these brands to select third parties in
certain product categories. G-III has fashion licenses under the
Calvin Klein, Sean John, Kenneth Cole, Cole Haan, Guess?, Jones New
York, Jessica Simpson, Nine West, Ellen Tracy, Tommy Hilfiger,
Enyce, 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. Our other owned
brands include Jessica Howard, Eliza J, Black Rivet, G-III, Tannery
West, G-III by Carl Banks and Winlit. G-III also operates retail
outlet stores under the Wilsons Leather name.
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 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
(NASDAQGSM:GIII)
CONSOLIDATED STATEMENTS OF
OPERATIONS AND
SELECTED BALANCE SHEET DATA
(in thousands, except per share
amounts)
(Unaudited) Three Months Ended Six Months Ended July 31,
July 31,
2010
2009
2010
2009
Net sales $ 188,960 $ 135,926 $ 343,237 $ 243,489 Cost of sales
128,206 95,111 233,447 171,459
Gross profit 60,754 40,815 109,790 72,030 Selling, general
and administrative expenses
53,844
43,195
103,525
84,078
Depreciation and amortization
1,277
1,384
2,557
2,788
Operating income/(loss) 5,633 (3,764 ) 3,708 (14,836 )
Interest and financing charges, net 634 1,022
996 1,707
Income/(loss) before taxes
4,999
(4,786
)
2,712
(16,543
)
Income tax expense/(benefit) 2,000 (2,010 )
1,085 (6,948 ) Net income/(loss) $ 2,999 $ (2,776 ) $ 1,627
$ (9,595 ) Net income/(loss) per common share: Basic
$
0.16 $ (0.17 )
$ 0.09 $ (0.57
) Diluted
$ 0.15
$ (0.17 ) $
0.08 $ (0.57 )
Weighted average shares outstanding: Basic 19,126 16,726 19,016
16,711 Diluted 19,652 16,726 19,540 16,711
Balance Sheet
Data (in thousands): At July 31,
At July 31,
2010
2009
Working Capital $ 175,877 $ 92,699 Cash 6,147 5,682
Inventory 223,543 172,439 Total Assets 457,329 373,099 Outstanding
Borrowings 77,411 111,336 Total Shareholders' Equity $ 239,709 $
153,895
G-III APPAREL GROUP, LTD. AND
SUBSIDIARIES
RECONCILIATION OF EBITDA TO
ACTUAL AND FORECASTED NET INCOME
(in thousands) (Unaudited) Forecasted Actual Twelve
Months Ending Twelve Months Ended January 31, 2011 January 31, 2010
EBITDA, as defined $96,300 - $99,300 $ 61,587 Depreciation and
amortization 6,200 5,380 Interest and financing charges, net 3,400
4,705 Income tax expense
34,700 - 35,700
19,784
Net income
$52,000 - $54,000
$ 31,718
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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