— Issued Senior Secured Notes Due 2025,
Enhancing Financial Flexibility and Liquidity —
— Commenced Store Liquidations Associated
with Closing of Wilsons Leather and G.H Bass Stores —
— GAAP Loss Per Share of $(0.31) is
inclusive of $(0.53) Per Share Losses Related to Wilsons Leather
and G.H. Bass Store Operations —
— Expects Net Sales to Decline in the Range
of 28% - 33% in the Second Half of the Fiscal Year Compared to the
Same Period Last Year —
G-III Apparel Group, Ltd. (NasdaqGS: GIII) today announced
operating results for the second quarter of fiscal 2021 ended July
31, 2020.
Morris Goldfarb, G-III’s Chairman and Chief Executive Officer,
said, “The pandemic has had a major impact on the fashion industry
and our second quarter results. Our customers now prefer casual,
comfortable and functional attire. Through our broad range of
brands and product categories, G-III is able to capitalize on these
changing trends. We have reset our order book for the balance of
the year and shifted our product assortment to athleisure, jeans,
casual sportswear and coats.”
Mr. Goldfarb concluded, “We refinanced our balance sheet and
extended the maturity of our revolving credit facility and term
debt to 2025. In addition, the closure of Wilsons Leather and G.H.
Bass stores, expected to be completed by the end of this fiscal
year, will result in the elimination of significant operating
losses. I am confident that as we navigate through the pandemic,
our financial strength and dedicated management team will further
advance our leadership position and set the stage for future market
share gains.”
Net sales for the second quarter ended July 31, 2020 decreased
53.8% to $297.2 million from $643.9 million in the same period last
year. The Company reported a net loss for the second quarter of
$15.0 million, or $(0.31) per share, compared to net income of
$11.1 million, or $0.23 per diluted share, in the prior year’s
comparable period.
As previously announced, the Company is restructuring its retail
operations segment, which includes permanently closing 110 Wilsons
Leather and 89 G.H. Bass stores. Like most retail stores, these
stores were closed in mid-March in connection with the COVID-19
pandemic and did not begin to reopen until June. Net sales for the
second quarter ended July 31, 2020 for the Wilsons Leather and G.H.
Bass portion of our retail operations segment were $19.7 million
compared to $53.6 million in the same period last year.
Included in the Company’s net loss for the quarter are net
losses from the Wilsons Leather and G.H. Bass operations of $25.6
million, or $(0.53) per share, compared to $6.3 million, or $(0.13)
per share, in the prior year’s comparable period. The results for
each period reflect direct store operations including impairment
charges, but do not include any allocated corporate overhead
charges, shared administrative expenses or shared distribution
expenses. The results for the current period also include the
impact of the pandemic and the commencement of the liquidation of
the Wilsons Leather and G.H. Bass stores. These operating results
for Wilsons Leather and G.H. Bass are presented solely to provide
the historical operating results of the portion of the Company’s
retail operations segment that is being restructured and are not
intended to be used to develop expectations for future results of
the Company or to indicate any future level of profitability of the
Company.
Outlook
The Company expects net sales to decline in the range of 28% -
33% in the second half of its fiscal year compared to the same
period last year. As the developments associated with the COVID-19
pandemic continue to be fluid and there is significant uncertainty
related to the impact of the pandemic, the Company is not currently
providing any additional guidance.
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, Eliza J, Jessica
Howard, Andrew Marc and Marc New York. 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. Through its retail subsidiaries, G-III
operates retail stores under the DKNY, Wilsons Leather, G.H. Bass,
Vilebrequin, Karl Lagerfeld Paris and Calvin Klein Performance
names. Subsequent to completion of the restructuring of its retail
operations segment, G-III will, through two of its wholly-owned
subsidiaries, continue to operate stores under the DKNY and Karl
Lagerfeld Paris names. G-III, through wholly owned foreign
subsidiaries, will also continue to operate stores under the
Vilebrequin name.
Statements concerning G-III's business outlook or future
economic performance, anticipated revenues, expenses or other
financial items; restructuring plans; 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 COVID-19 outbreak, reliance on licensed
product, reliance on foreign manufacturers, risks of doing business
abroad, 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 associated with the restructuring of our retail
operations segment, 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, 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 OPERATIONS
(In thousands, except per share
amounts)
Three Months Ended July
31,
Six Months Ended July
31,
2020
2019
2020
2019
(Unaudited)
Net sales
$
297,212
$
643,892
$
702,343
$
1,277,444
Cost of goods sold
162,519
412,123
443,249
809,611
Gross profit
134,693
231,769
259,094
467,833
Selling, general and administrative
expenses
122,102
196,448
276,722
398,307
Depreciation and amortization
9,691
9,789
19,558
19,262
Asset impairments, net of loss (gain) on
lease modifications
14,302
(1,393)
17,489
(2,222)
Operating profit (loss)
(11,402)
26,925
(54,675)
52,486
Other income (loss)
1,943
(751)
(113)
(1,399)
Interest and financing charges, net
(9,177)
(10,785)
(19,556)
(21,105)
Income (loss) before income taxes
(18,636)
15,389
(74,344)
29,982
Income tax expense (benefit)
(3,660)
4,270
(20,073)
6,820
Net income (loss)
$
(14,976)
$
11,119
$
(54,271)
$
23,162
Net income (loss) per common share:
Basic
$
(0.31)
$
0.23
$
(1.13)
$
0.48
Diluted
$
(0.31)
$
0.23
$
(1.13)
$
0.47
Weighted average shares outstanding:
Basic
48,214
48,450
48,121
48,619
Diluted
48,214
49,116
48,121
49,436
Selected Balance Sheet Data (in
thousands):
At July 31,
2020
2019
(Unaudited)
Cash and cash equivalents
$
252,798
$
39,568
Working capital
701,305
754,992
Inventories
574,767
842,136
Total assets
2,269,814
2,712,436
Long-term debt
408,720
553,118
Operating lease liabilities
231,983
346,929
Total stockholders' equity
1,237,749
1,167,820
SELECT STATEMENT OF OPERATIONS
DATA OF WILSONS LEATHER AND G.H. BASS STORES
(In thousands, except per
share amounts)
Three Months Ended July
31,
Six Months Ended July
31,
2020
2019
2020
2019
(Unaudited)
Net sales
$
19,667
$
53,596
$
38,961
$
106,184
Operating loss (1)
(35,128)
(8,585)
(56,366)
(18,848)
Loss before income tax benefit
(35,128)
(8,585)
(56,366)
(18,848)
Net loss, net of income tax benefit
$
(25,643)
$
(6,267)
$
(41,147)
$
(13,759)
Net loss per common share:
Basic
$
(0.53)
$
(0.13)
$
(0.86)
$
(0.28)
Diluted
$
(0.53)
$
(0.13)
$
(0.86)
$
(0.28)
The table above reflects the four wall operations of Wilsons
Leather and G.H. Bass stores, which are included in the
consolidated operating results of the Company. As part of our
retail restructuring, we are in the process of closing all of these
stores. The operations of these stores currently consist of
liquidation sales that we anticipate will be completed before the
end of the current fiscal year. The results for this portion of our
retail segment include impairment charges, but do not include any
allocated corporate overhead charges, shared administrative
expenses or shared distribution center expenses. Corporate overhead
charges, shared administrative expenses and shared distribution
center expenses have been excluded as these expenses will continue
to be incurred by the Company notwithstanding the restructuring of
its retail operations segment. The Company continues to evaluate to
what extent these expenses might be able to be reduced upon the
completion of the restructuring. No interest expense has been
allocated in calculating these operating results. The tax rate used
assumes the same overall effective rate that is reflected in the
Company’s consolidated financial statements. The table above also
reflects the results of operations of the Company’s four Calvin
Klein Performance stores that are being closed as part of the
retail restructuring. The operating results of the four Calvin
Klein Performance stores are also included in the consolidated
operating results of the Company.
(1)
Includes $17.9 million, $(1.4) million, $16.9 million, and
$(2.2) million of impairment charges, net of gains on lease
modifications, recorded during the quarters ended July 31, 2020 and
2019, and the six month periods ended July 31, 2020 and 2019,
respectively.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200909005251/en/
G-III Apparel Group, Ltd. Company: Priya Trivedi
VP of Investor Relations and Treasurer (646) 473-5157 Investor
Relations: Tom
Filandro ICR, Inc.
(646) 277-1235
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