— Net Sales Increase 3.6% for First Quarter
to $634 million —
— GAAP Net Income Per Diluted Share for the
First Quarter Increased to $0.24 vs. $0.20 Last Year —
— Non-GAAP Net Income Per Diluted Share for
the First Quarter Increased to $0.25 vs. $0.22 Last Year —
— Company Reaffirms Full Year Guidance
—
G-III Apparel Group, Ltd. (NasdaqGS: GIII) today announced
operating results for the first quarter of fiscal 2020 ended April
30, 2019.
Net sales for the first quarter ended April 30, 2019 increased
3.6% to $633.6 million from $611.7 million in the same period last
year. The Company reported GAAP net income for the first quarter of
$12.0 million, or $0.24 per diluted share, compared to $9.9
million, or $0.20 per diluted share, in the prior year’s comparable
period.
Non-GAAP net income per diluted share was $0.25 for the first
quarter of this year compared to $0.22 in the same period last
year. Non-GAAP net income per diluted share excludes non-cash
imputed interest expense related to the note issued to seller (the
“Seller Note”) as part of the consideration for the acquisition of
Donna Karan International of $1.3 million in this quarter compared
to $1.2 million in the first quarter last year and a $0.8 million
gain on lease terminations in the current quarter. The aggregate
effect of these exclusions was equal to $0.01 per diluted share in
the first quarter of this year and $0.02 per diluted share in
fiscal 2019.
Morris Goldfarb, G-III’s Chairman and Chief Executive Officer,
said, “We are pleased to have reported first quarter net income per
diluted share that was at the high end of our expectations. Our
results were once again fueled by strong performance in our
wholesale business led by our five global power brands DKNY, Donna
Karan, Calvin Klein, Tommy Hilfiger and Karl Lagerfeld.”
Mr. Goldfarb concluded, “We know disruption in the retail
industry has never been greater, but we remain confident in our
ability to adapt to unique challenges. We are well positioned for a
solid year and I am confident we are poised to achieve significant
growth over the next several years.”
Impact of New Lease Accounting
Rules
Effective February 1, 2019, the Company adopted the new Lease
Accounting Standards Codification Topic 842 (“ASC 842”) which
resulted in a significant increase in its reported assets and
liabilities associated with its operating leases. The adoption of
ASC 842 will have a significant impact on the Company’s
Consolidated Balance Sheet, but is not expected to have a material
impact on its Consolidated Statements of Income and Comprehensive
Income or Consolidated Statements of Cash Flows.
Outlook
G-III Apparel Group today reaffirmed guidance for the fiscal
year ending January 31, 2020, which incorporates the impact on
certain of the Company’s products, of the current 25% tariffs
imposed on nearly $200 billion of total goods imported from China
into the U.S. However, the Company has not incorporated any future
increases in tariffs on additional goods imported from China into
the US in its fiscal 2020 guidance.
For fiscal 2020, the Company is forecasting net sales of
approximately $3.28 billion and net income between $163 million and
$168 million, or between $3.19 and $3.29 per diluted share.
The Company is anticipating non-GAAP net income for fiscal 2020
between $167 million and $172 million, or between $3.25 and $3.35
per diluted share. Non-GAAP guidance excludes non-cash imputed
interest expense related to the Seller Note of approximately $5.4
million and a $0.8 million gain on lease terminations. The
aggregate effect of these exclusions is equal to $0.06 per diluted
share.
The Company is projecting full-year adjusted EBITDA for fiscal
2020 between $307 million and $313 million compared to adjusted
EBITDA of $269.4 million in fiscal 2019.
For the second fiscal quarter ending July 31, 2020, the Company
is forecasting net sales of approximately $660.0 million and net
income between $8.0 million and $13.0 million, or between $0.15 and
$0.25 per diluted share. This forecast compares to net sales of
$624.7 million and net income of $10.1 million, or $0.20 per
diluted share, reported in the second quarter of fiscal 2019.
Non-GAAP guidance excludes non-cash imputed interest expense
related to the Seller Note of approximately $1.3 million, or $0.02
per share, in the second quarter of fiscal 2020, and $1.2 million,
or $0.02 per share, in the second quarter of prior year. On an
adjusted basis, excluding non-cash imputed interest, the
Company is forecasting non-GAAP net income between $0.17 and $0.27
per diluted share. This compares to non-GAAP net income of $0.22
per diluted share in second quarter of fiscal year 2019.
Non-GAAP Financial
Measures
Reconciliations of GAAP net income per share to non-GAAP net
income per share and of GAAP net income to adjusted EBITDA are
presented in tables accompanying the condensed financial statements
included in this release and provide useful information to evaluate
the Company’s operational performance. Non-GAAP net income per
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 designs, sources and markets apparel and accessories under
owned, licensed and private label brands. G-III’s owned brands
include DKNY, Donna Karan, Vilebrequin, G. H. Bass, Andrew Marc,
Marc New York, Eliza J and Jessica Howard. G-III has fashion
licenses under the Calvin Klein, Tommy Hilfiger, Karl Lagerfeld
Paris, Kenneth Cole, Cole Haan, Guess?, Vince Camuto, Levi's and
Dockers brands. Through its team sports business, G-III has
licenses with the National Football League, National Basketball
Association, Major League Baseball, National Hockey League, and
over 150 U.S. colleges and universities. G-III also operates retail
stores under the DKNY, Wilsons Leather, G. H. Bass, Vilebrequin,
Karl Lagerfeld Paris 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 operations of Donna Karan International Inc., the impact
on our business of the imposition of tariffs by the United States
government and business 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(Nasdaq: GIII)CONDENSED CONSOLIDATED
STATEMENTS OF INCOME(In thousands, except per share
amounts)
Three Months Ended April
30,
2019 2018 (Unaudited) Net sales $ 633,552 $
611,743 Cost of goods sold 397,488 377,216 Gross
profit 236,064 234,527 Selling, general and administrative
expenses 201,859 202,071 Depreciation and amortization 9,473 9,380
Gain on lease terminations (829) — Operating profit
25,561 23,076 Other loss (648) (451) Interest and financing
charges, net (10,320) (9,620) Income before income
taxes 14,593 13,005 Income tax expense 2,550
3,120 Net income $ 12,043 $ 9,885 Net income per common
share: Basic $ 0.25 $ 0.20 Diluted $ 0.24 $ 0.20 Weighted
average shares outstanding: Basic 48,781 49,127
Diluted 49,774 50,137
Selected Balance Sheet Data (in thousands): At April
30, 2019 2018 (Unaudited) Cash and cash
equivalents $ 48,312 $ 71,048 Working capital 631,321 614,256
Inventories 538,955 463,463 Total assets (1) 2,442,956 2,040,563
Long-term debt 411,087 448,263 Operating lease liabilities (2)
361,424 — Total stockholders' equity 1,186,826 1,082,924 (1)
Total assets now include operating lease assets of
$320.2 million as of April 30, 2019 in accordance with ASC 842. (2)
These liabilities are now included in accordance with ASC 842.
G-III APPAREL GROUP, LTD. AND
SUBSIDIARIESRECONCILIATION OF GAAP NET INCOME PER SHARE
TONON-GAAP NET INCOME PER SHARE
Three Months Ended April 30, 2019
2018 (Unaudited) GAAP diluted net income per common
share $ 0.24 $ 0.20 Excluded from non-GAAP: Non-cash imputed
interest 0.03 0.02 Gain on lease terminations (0.02) — Income tax
impact of non-GAAP adjustments — —
Non-GAAP diluted net income per common share, as
defined $ 0.25 $ 0.22
Non-GAAP diluted net income per common share is a “non-GAAP
financial measure” that excludes non-cash imputed interest expense
and gain on lease terminations. The income tax impact of non-GAAP
adjustments is calculated using the effective tax rates for the
respective periods. Management believes that this non-GAAP
financial measure provides meaningful supplemental information
regarding our performance by excluding items that are 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
SUBSIDIARIESRECONCILIATION OF FORECASTED AND ACTUAL NET
INCOME TOFORECASTED AND ACTUAL ADJUSTED EBITDA(In
thousands)
Forecasted Twelve Months Ending Actual
Twelve Months Ended
January 31, 2020
January 31, 2019 (Unaudited) Net income $ 163,000 -
168,000 $
138,067
Gain on lease terminations (829) — Asset impairment charges
— 2,813 Depreciation and amortization 40,000 38,819 Interest and
financing charges, net 46,000 43,924 Income tax expense 59,000 -
60,000 45,763 Adjusted EBITDA, as
defined $ 307,000 - 313,000 $ 269,386
Adjusted EBITDA is a “non-GAAP financial measure” which
represents earnings before depreciation and amortization, interest
and financing charges, net, gain on lease terminations, asset
impairment charges primarily related to leasehold improvements and
furniture and fixtures at certain of our retail stores and income
tax expense. 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
SUBSIDIARIESRECONCILIATION OF FORECASTED AND ACTUAL NET
INCOME TO NON-GAAP NET INCOME(In thousands)
Forecasted Three Actual Three Forecasted
Twelve Actual Twelve Months Ending Months
Ended Months Ended Months Ended July 31,
2019 July 31, 2018 January 31, 2020 January
31, 2019 (Unaudited) Net income $ 8,000 - 13,000 $
10,077 $ 163,000 - 168,000 $ 138,067 Excluded from non-GAAP:
Non-cash imputed interest 1,300 1,240 5,400 4,951 Gain on lease
terminations — — (829) — Asset impairment charges — — — 2,813
Income tax impact of non-GAAP adjustments (300) (335) (571) (1,932)
Non-GAAP
net income, as defined $ 9,000 - 14,000 $ 10,982 $ 167,000 -
172,000 $ 143,899
Non-GAAP net income is a “non-GAAP financial measure” that
excludes non-cash imputed interest, gain on lease terminations and
asset impairment charges primarily related to leasehold
improvements and furniture and fixtures at certain of our retail
stores. The income tax impact of non-GAAP adjustments is calculated
using the effective tax rates for the respective periods.
Management believes that this non-GAAP financial measure provides
meaningful supplemental information regarding our performance by
excluding items that are 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
SUBSIDIARIESRECONCILIATION OF FORECASTED AND ACTUAL NET
INCOME PER SHARE TOFORECASTED 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, 2019
July 31, 2018 January 31, 2020 January 31,
2019 (Unaudited) GAAP diluted net income per common
share $ 0.15 - 0.25 $ 0.20 $ 3.19 - 3.29 $ 2.75 Excluded
from non-GAAP: Non-cash imputed interest 0.02 0.02 0.08 0.10 Gain
on lease terminations — — (0.01) 0.00 Asset impairment charges — —
— 0.05 Income tax impact of non-GAAP adjustments — — (0.01) (0.04)
Non-GAAP diluted net income per common
share, as defined
$ 0.17 - 0.27 $ 0.22 $ 3.25 - 3.35 $ 2.86
Non-GAAP diluted net income per common share is a “non-GAAP
financial measure” that excludes non-cash imputed interest, gain on
lease terminations and asset impairment charges primarily related
to leasehold improvements and furniture and fixtures at certain of
our retail stores. The income tax impact of non-GAAP adjustments is
calculated using the effective tax rates for the respective
periods. Management believes that this non-GAAP financial measure
provides meaningful supplemental information regarding our
performance by excluding items that are 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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190605005091/en/
G-III Apparel Group, Ltd.Company:Priya TrivediVP
of Investor Relations and Treasurer(646) 473-5157
Investor Relations:Tom FilandroICR, Inc.(646)
277-1235
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