- Third Quarter GAAP and Non-GAAP Net Income Per Diluted Share
Exceed Guidance
- Net Sales of $1.07 Billion for the Third Quarter Compared to
$1.08 Billion Last Year
- Net Income Per Diluted Share of $2.74 for the Third Quarter
Compared to $1.26 Last Year
- Non-GAAP Net Income Per Diluted Share of $2.78 for the Third
Quarter Compared to $1.35 Last Year
- Raises GAAP and Non-GAAP Net Income Per Diluted Share
Guidance for Fiscal Year 2024
- Appoints Dana Perlman as Chief Growth and Operations
Officer
G-III Apparel Group, Ltd. (NasdaqGS: GIII), a global leader in
fashion with expertise in design, sourcing, and manufacturing,
today announced results for the third quarter of fiscal 2024, ended
October 31, 2023.
Morris Goldfarb, G-III’s Chairman and Chief Executive Officer,
said, “For the third quarter of fiscal 2024, we delivered strong
profitability, well exceeding our earnings per diluted share
guidance, driven by strength across our wholesale segment, our
prudent inventory management and our financial discipline. Our
solid year-to-date results showcase G-III’s ability to successfully
navigate challenging market conditions and gives us the confidence
to raise our full year earnings per share guidance.”
Mr. Goldfarb concluded, “Over the last twelve months, we have
made significant progress accelerating our strategic priorities. We
are developing and are on track with four new growth initiatives to
drive our business including the expansion of our owned Donna Karan
brand, a long-term license for Nautica in North America, a master
global licensing agreement for Halston, and a multi-year outerwear
license for Champion. The strength of our balance sheet affords us
tremendous financial flexibility to invest in our business and
consider additional opportunities.”
Results of Operations
Net sales for the third quarter ended October 31, 2023 decreased
1.0% to $1.07 billion from $1.08 billion in the prior year’s
quarter. The Company reported net income for the third quarter of
$127.6 million, or $2.74 per diluted share, compared to $61.1
million, or $1.26 per diluted share, in the prior year’s
quarter.
Non-GAAP net income per diluted share was $2.78 for the third
quarter of this year compared to $1.35 in the same period last
year. Non-GAAP net income per diluted share excludes (i) non-cash
imputed interest expense of $0.7 million in this quarter related to
the note issued to seller (the “Seller Note”) as part of the
consideration for the acquisition of Donna Karan International
compared to $1.8 million in the third quarter last year, (ii)
expenses related to the Karl Lagerfeld transaction of $1.8 million
in this year’s quarter that include incentive compensation and $3.8
million in last year’s third quarter that include incentive
compensation, professional fees and amortization of inventory
valuation adjustments and (iii) asset impairment and gain on lease
terminations of $0.2 million in this quarter compared to $0.3
million in the third quarter last year. The aggregate effect of
these exclusions was equal to $0.04 per diluted share in the third
quarter of this year and $0.09 per diluted share in the third
quarter of fiscal 2023.
C-Suite Hire
G-III announced today that it has appointed Dana Perlman as its
new Chief Growth and Operations Officer, effective January 8, 2024.
In the newly created role, Ms. Perlman will oversee Strategy,
Finance, Communications, Information Technology, and other
Operating functions. Previously, she spent 10 years at PVH Corp.
and before that, held several roles in investment banking at
Barclays Capital, Lehman Brothers and Credit Suisse First Boston.
She is a Director of O’Reilly Automotive Inc.
Outlook
The Company today raised its GAAP and Non-GAAP net income per
diluted share guidance for the fiscal year ending January 31,
2024.
For fiscal 2024, the Company expects net sales of approximately
$3.15 billion and net income between $175 million and $180 million,
or between $3.75 and $3.85 per diluted share. This compares to net
sales of $3.23 billion and a net loss of $(133.1) million, or
$(2.79) per share, for fiscal 2023. Fiscal 2023 results included a
$291.5 million non-cash goodwill impairment charge, net of tax.
The Company is anticipating non-GAAP net income for fiscal 2024
between $182 million and $187 million, or between $3.90 and $4.00
per diluted share. This compares to non-GAAP net income of $138.8
million, or $2.85 per diluted share, for fiscal 2023.
The Company is projecting full-year adjusted EBITDA for fiscal
2024 between $317 million and $322 million compared to adjusted
EBITDA of $266.1 million in fiscal 2023.
Non-GAAP Financial
Measures
Reconciliations of GAAP net income (loss) to non-GAAP net
income, GAAP net income (loss) per diluted share to non-GAAP net
income per diluted share and GAAP net income (loss) to adjusted
EBITDA are presented in tables accompanying the financial
statements included in this release and provide useful information
to evaluate the Company’s operational performance. A description of
the amounts excluded on a non-GAAP basis are provided in
conjunction with these tables. Non-GAAP net income, non-GAAP net
income per diluted 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 substantial
portfolio of more than 30 licensed and proprietary brands is
anchored by its global power brands: DKNY, Donna Karan, Karl
Lagerfeld, Calvin Klein and Tommy Hilfiger. G-III’s owned brands
include DKNY, Donna Karan, Karl Lagerfeld, Vilebrequin, G.H. Bass,
Eliza J, Jessica Howard, Andrew Marc, Marc New York, Wilsons
Leather and Sonia Rykiel. G-III has fashion licenses under the
Calvin Klein, Tommy Hilfiger, Nautica, Halston, Kenneth Cole, Cole
Haan, Guess?, Vince Camuto, Levi’s, Dockers and Champion 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 distributes directly to consumers
through its DKNY, Karl Lagerfeld, Karl Lagerfeld Paris and
Vilebrequin stores and its digital channels for the DKNY, Donna
Karan, Vilebrequin, Karl Lagerfeld, Karl Lagerfeld Paris, Wilsons
Leather and G.H. Bass brands.
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, risks related to the impact from
COVID-19, reliance on licensed product, risks relating to G-III’s
ability to increase revenues from sales of its other products, new
acquired businesses or new license agreements as licenses for
Calvin Klein and Tommy Hilfiger product expire on a staggered
basis, reliance on foreign manufacturers, risks of doing business
abroad, supply chain disruptions, 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 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, including inflation and higher interest rates,
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 October
31,
Nine Months Ended October
31,
2023
2022
2023
2022
(Unaudited)
Net sales
$
1,067,110
$
1,078,299
$
2,333,460
$
2,372,300
Cost of goods sold
633,697
733,672
1,373,594
1,552,708
Gross profit
433,413
344,627
959,866
819,592
Selling, general and administrative
expenses
236,308
239,893
703,476
616,351
Depreciation and amortization
6,595
7,270
19,130
20,021
Asset impairments and gain on lease
terminations
222
250
222
212
Operating profit
190,288
97,214
237,038
183,008
Other (loss) income
(3,129
)
(2,795
)
(1,964
)
24,823
Interest and financing charges, net
(11,024
)
(16,052
)
(32,666
)
(40,805
)
Income before income taxes
176,135
78,367
202,408
167,026
Income tax expense
48,755
17,521
55,651
39,489
Net income
127,380
60,846
146,757
127,537
Less: Loss attributable to noncontrolling
interests
(260
)
(257
)
(557
)
(519
)
Net income attributable to G-III Apparel
Group, Ltd.
$
127,640
$
61,103
$
147,314
$
128,056
Net income attributable to G-III Apparel
Group, Ltd. per common share:
Basic
$
2.79
$
1.29
$
3.21
$
2.68
Diluted
$
2.74
$
1.26
$
3.13
$
2.62
Weighted average shares outstanding:
Basic
45,723
47,488
45,904
47,832
Diluted
46,560
48,475
46,992
48,866
Selected Balance Sheet Data (in
thousands):
As of October 31,
2023
2022
(Unaudited)
Cash and cash equivalents
$
197,391
$
150,719
Working capital
1,110,793
1,341,367
Inventories
591,530
900,987
Total assets
2,749,333
3,290,221
Total debt
461,945
879,505
Operating lease liabilities
239,419
235,816
Total stockholders' equity
1,503,220
1,622,258
G-III APPAREL GROUP, LTD. AND
SUBSIDIARIES
RECONCILIATION OF GAAP NET
INCOME TO NON-GAAP NET INCOME
(In thousands)
Three Months Ended
Nine Months Ended
October 31, 2023
October 31, 2022
October 31, 2023
October 31, 2022
(Unaudited)
GAAP net income attributable to G-III
Apparel Group, Ltd.
$
127,640
$
61,103
$
147,314
$
128,056
Excluded from non-GAAP:
Karl Lagerfeld investment gain
—
—
—
(30,925
)
Expenses related to Karl Lagerfeld
acquisition
1,847
3,769
5,517
13,642
Non-cash imputed interest
682
1,750
3,585
5,160
Asset impairments and gain on lease
terminations
222
250
222
212
Income tax impact of non-GAAP
adjustments
(761
)
(1,289
)
(2,563
)
2,816
Non-GAAP net income attributable to G-III
Apparel Group, Ltd., as defined
$
129,630
$
65,583
$
154,075
$
118,961
Non-GAAP net income is a “non-GAAP financial measure” that
excludes (i) in fiscal 2023 only, the gain in the fair value of the
Company’s minority ownership in Karl Lagerfeld that it held prior
to the Company becoming the sole owner of the Karl Lagerfeld
entities, (ii) in both fiscal 2023 and 2024, expenses related to
the Karl Lagerfeld transaction that include incentive compensation
and, in fiscal 2023 only, professional fees, amortization of
inventory valuation adjustments and foreign currency losses, (iii)
in both fiscal 2023 and 2024, non-cash imputed interest expense,
and (iv) in both fiscal 2023 and 2024, asset impairments and gain
on lease terminations. For fiscal 2024 and 2023, the income tax
impact of non-GAAP adjustments is calculated using an effective tax
rate derived from our results of operations excluding the non-GAAP
adjustments. Management believes that these non-GAAP financial
measures provide meaningful supplemental information regarding our
performance by excluding items that are not indicative of our core
business operating results. Management uses these non-GAAP
financial measures to assess our performance on a comparative basis
and believes that they are 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 GAAP NET
INCOME PER SHARE TO NON-GAAP NET INCOME PER SHARE
Three Months Ended
Nine Months Ended
October 31, 2023
October 31, 2022
October 31, 2023
October 31, 2022
(Unaudited)
GAAP diluted net income attributable to
G-III Apparel Group, Ltd. per common share
$
2.74
$
1.26
$
3.13
$
2.62
Excluded from non-GAAP:
Karl Lagerfeld investment gain
—
—
—
(0.63
)
Expenses related to Karl Lagerfeld
acquisition
0.04
0.07
0.12
0.27
Non-cash imputed interest
0.01
0.04
0.08
0.11
Asset impairments and gain on lease
terminations
0.01
0.01
—
0.00
Income tax impact of non-GAAP
adjustments
(0.02
)
(0.03
)
(0.05
)
0.06
Non-GAAP diluted net income attributable
to G-III Apparel Group, Ltd. per common share, as defined
$
2.78
$
1.35
$
3.28
$
2.43
Non-GAAP diluted net income per common share is a “non-GAAP
financial measure” that excludes (i) in fiscal 2023 only, the gain
in the fair value of the Company’s minority ownership in Karl
Lagerfeld that it held prior to the Company becoming the sole owner
of the Karl Lagerfeld entities, (ii) in both fiscal 2023 and 2024,
expenses related to the Karl Lagerfeld transaction that include
incentive compensation and, in fiscal 2023 only, professional fees,
amortization of inventory valuation adjustments and foreign
currency losses, (iii) in both fiscal 2023 and 2024, non-cash
imputed interest expense, and (iv) in both fiscal 2023 and 2024,
asset impairments and gain on lease terminations. For fiscal 2024
and 2023, the income tax impact of non-GAAP adjustments is
calculated using an effective tax rate derived from our results of
operations excluding the non-GAAP adjustments. Management believes
that these non-GAAP financial measures provide meaningful
supplemental information regarding our performance by excluding
items that are not indicative of our core business operating
results. Management uses these non-GAAP financial measures to
assess our performance on a comparative basis and believes that
they are 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 (LOSS) TO FORECASTED AND ACTUAL ADJUSTED
EBITDA
(In thousands)
Forecasted Twelve
Actual Twelve
Three Months Ended
Months Ended
Months Ended
October 31, 2023
October 31, 2022
January 31, 2024
January 31, 2023
(Unaudited)
Net income (loss) attributable to G-III
Apparel Group, Ltd.
$
127,640
$
61,103
$
175,000 - 180,000
$
(133,061
)
Karl Lagerfeld investment gain
—
—
—
(27,071
)
Expenses related to Karl Lagerfeld
acquisition
1,847
3,769
6,124
13,895
Asset impairments and gain on lease
terminations
222
250
222
349,686
Bonus accrual expense reversed due to
goodwill impairment charge
—
—
—
(17,900
)
Depreciation and amortization
6,595
7,270
27,433
27,762
Interest and financing charges, net
11,024
16,052
42,238
56,602
Income tax expense
48,755
17,521
65,983
(3,788
)
Adjusted EBITDA, as defined
$
196,083
$
105,965
$
317,000 - 322,000
$
266,125
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)
in fiscal 2023 only, the gain in the fair value of the Company’s
minority ownership in Karl Lagerfeld that it held prior to the
Company becoming the sole owner of the Karl Lagerfeld entities,
(ii) in both fiscal 2023 and 2024, expenses related to the Karl
Lagerfeld acquisition that included incentive compensation and, in
fiscal 2023 only, professional fees, amortization of inventory
valuation adjustments and foreign currency losses, (iii) in both
fiscal 2023 and 2024, asset impairments, including the goodwill
write-down of $347.2 million, and gain on lease terminations and
(iv) in fiscal 2023 only, bonus accrual expense reversed due to the
goodwill impairment recognized in that fiscal year. 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 (loss), 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
SUBSIDIARIES
RECONCILIATION OF FORECASTED
AND ACTUAL GAAP NET INCOME (LOSS) TO FORECASTED AND ACTUAL NON-GAAP
NET INCOME
(In thousands)
Forecasted Twelve
Actual Twelve
Months Ended
Months Ended
January 31, 2024
January 31, 2023
Net income (loss) attributable to G-III
Apparel Group, Ltd.
$
175,000 - 180,000
$
(133,061
)
Excluded from non-GAAP:
Karl Lagerfeld investment gain
—
(27,071
)
Expenses related to Karl Lagerfeld
acquisition
6,124
13,895
Non-cash imputed interest
3,798
6,947
Asset impairments and gain on lease
terminations
222
349,686
Bonus accrual expense reversed due to
goodwill impairment charge
—
(17,900
)
Income tax impact of non-GAAP
adjustments
(3,144
)
(53,737
)
Non-GAAP net income attributable to G-III
Apparel Group, Ltd., as defined
$
182,000 - 187,000
$
138,759
Non-GAAP net income is a “non-GAAP financial measure” that
excludes (i) for fiscal 2023 only, the gain in the fair value of
the Company’s minority ownership in Karl Lagerfeld that it held
prior to the Company becoming the sole owner of the Karl Lagerfeld
entities, (ii) for both fiscal 2023 and 2024, expenses related to
the Karl Lagerfeld transaction that include incentive compensation
and, in fiscal 2023 only, professional fees, amortization of
inventory valuation adjustments and foreign currency losses, (iii)
in both fiscal 2023 and 2024, non-cash imputed interest expense,
(iv) in both fiscal 2023 and 2024, asset impairments, including the
goodwill write-down of $347.2 million, and gain on lease
terminations and (v) in fiscal 2023 only, bonus accrual expense
reversed due to the goodwill impairment recognized in that fiscal
year. The income tax impact of non-GAAP adjustments is calculated
using the effective tax rate for the period, except for the year
ended January 31, 2023, where the income tax impact of non-GAAP
adjustments is calculated using an effective tax rate derived from
our results of operations excluding the non-GAAP adjustments.
Management believes that these non-GAAP financial measures provide
meaningful supplemental information regarding our performance by
excluding items that are not indicative of our core business
operating results. Management uses these non-GAAP financial
measures to assess our performance on a comparative basis and
believes that they are 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 GAAP NET INCOME (LOSS) PER SHARE TO FORECASTED AND
ACTUAL NON-GAAP NET INCOME PER SHARE
Forecasted Twelve
Actual Twelve
Months Ended
Months Ended
January 31, 2024
January 31, 2023
GAAP diluted net income (loss)
attributable to G-III Apparel Group, Ltd. per common share
$
3.75 - 3.85
$
(2.79
)
Adjustment from GAAP diluted shares to
Non-GAAP diluted shares(1)
—
0.06
Excluded from non-GAAP:
Karl Lagerfeld investment gain
—
(0.56
)
Expenses related to Karl Lagerfeld
acquisition
0.13
0.29
Non-cash imputed interest
0.08
0.14
Asset impairments and gain on lease
terminations
0.01
7.18
Bonus accrual expense reversed due to
goodwill impairment charge
—
(0.37
)
Income tax impact of non-GAAP
adjustments
(0.07
)
(1.10
)
Non-GAAP diluted net income attributable
to G-III Apparel Group, Ltd. per common share, as defined
$
3.90 - 4.00
$
2.85
Non-GAAP diluted shares(1)
46,900
48,694
(1)
Represents adjustment for shares used to
calculate diluted earnings per share. Due to our recording a GAAP
net loss for fiscal year 2023, diluted shares were the same as
basic shares for GAAP. When applying non-GAAP exclusions our
results moved from a net loss to net income position.
Non-GAAP diluted net income per common share is a “non-GAAP
financial measure” that excludes (i) for fiscal 2023 only, the gain
in the fair value of the Company’s minority ownership in Karl
Lagerfeld that it held prior to the Company becoming the sole owner
of the Karl Lagerfeld entities, (ii) for both fiscal 2023 and 2024,
expenses related to the Karl Lagerfeld transaction that include
incentive compensation and, in fiscal 2023 only, professional fees,
amortization of inventory valuation adjustments and foreign
currency losses, (iii) for both fiscal 2023 and 2024, non-cash
imputed interest expense, (iv) for both fiscal 2023 and 2024, asset
impairments, including the goodwill write-down of $347.2 million,
and gain on lease terminations and (v) for fiscal 2023 only, bonus
accrual expense reversed due to the goodwill impairment recognized
in that fiscal year. The income tax impact of non-GAAP adjustments
is calculated using the effective tax rate for the period, except
for the year ended January 31, 2023, where the income tax impact of
non-GAAP adjustments is calculated using an effective tax rate
derived from our results of operations excluding the non-GAAP
adjustments. Management believes that these non-GAAP financial
measures provide meaningful supplemental information regarding our
performance by excluding items that are not indicative of our core
business operating results. Management uses these non-GAAP
financial measures to assess our performance on a comparative basis
and believes that they are 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/20231205092047/en/
G-III Apparel Group, Ltd.
Company Contact: Priya Trivedi SVP of Investor Relations
and Treasurer (646) 473-5228
Investor Relations Contact: Tom Filandro ICR, Inc. (646)
277-1235
Company Media Contact: Andrew Blecher
andrew.blecher@g-iii.com
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