— GAAP Net Income Per Diluted Share of $1.29
is Inclusive of $(0.25) Per Diluted Share of Losses Related to
Wilsons Leather and G.H. Bass Store Operations —
— On Track to Close All Wilsons Leather and
G.H. Bass Stores by January 31, 2021 —
— Ends Third Quarter With Cash and Credit
Facility Availability of Approximately $800 Million —
G-III Apparel Group, Ltd. (NasdaqGS: GIII) today announced
operating results for the third quarter of fiscal 2021 ended
October 31, 2020.
Morris Goldfarb, G-III’s Chairman and Chief Executive Officer,
said, “Our results reflect a significant sequential improvement in
the third quarter as we effectively developed product lines that
aligned with the shift in consumer demand towards casual,
comfortable and functional clothing. We believe our product
assortments for our portfolio of global brands are responsive to
today’s market trends as we continue to gain market share.”
Mr. Goldfarb concluded, “We are very fortunate and appreciative
to have an experienced and talented global team at G-III that has
proactively met the extraordinary challenges presented by the
pandemic. We ended the quarter with a strong financial position,
with approximately $800 million of cash and availability under our
revolving credit facility. We are well positioned to complete the
year in line with our expectations.”
Net sales for the third quarter ended October 31, 2020 decreased
26.7% to $826.6 million from $1.13 billion in the same period last
year. The Company reported net income for the third quarter of
$63.2 million, or $1.29 per diluted share, compared to $95.4
million, or $1.97 per diluted share, in the prior year’s comparable
period. Net income per diluted share includes non-cash imputed
interest expense related to the note issued to the seller as part
of the consideration for the acquisition of Donna Karan
International of $1.4 million in this quarter and in the third
quarter last year and a $6.5 million write-off in this quarter of
deferred financing costs primarily related to the Company’s prior
term loan facility which was refinanced in August 2020. The
aggregate effect of these charges was equal to $0.11 per diluted
share in the third quarter of this year and $0.02 per diluted share
in the third quarter of fiscal 2020.
As previously announced, the Company is restructuring its retail
operations segment, which includes permanently closing 110 Wilsons
Leather and 89 G.H. Bass stores. Net sales for the third quarter
ended October 31, 2020 for the Wilsons Leather and G.H. Bass
stores’ portion of our retail operations segment were $38.2 million
compared to $59.8 million in the same period last year. The Company
remains on track to complete the closing of these stores by the end
of fiscal 2021.
Included in the Company’s results for the quarter are net losses
from the Wilsons Leather and G.H. Bass store operations of $12.0
million, or $(0.25) per diluted share, compared to $4.1 million, or
$(0.08) per diluted 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 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 approximately 30% in
the fourth quarter 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 its impact, 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 INCOME
(In thousands, except per share
amounts)
Three Months Ended October
31,
Nine Months Ended October
31,
2020
2019
2020
2019
(Unaudited)
Net sales
$
826,561
$
1,128,403
$
1,528,904
$
2,405,847
Cost of goods sold
528,806
729,384
972,055
1,538,995
Gross profit
297,755
399,019
556,849
866,852
Selling, general and administrative
expenses
177,625
246,580
454,347
644,887
Depreciation and amortization
10,187
9,701
29,745
28,963
Asset impairments, net of loss (gain) on
lease modifications
(117
)
(124
)
17,372
(2,346
)
Operating profit
110,060
142,862
55,385
195,348
Other income (loss)
225
677
112
(722
)
Interest and financing charges, net
(18,681
)
(12,518
)
(38,237
)
(33,623
)
Income before income taxes
91,604
131,021
17,260
161,003
Income tax expense
28,430
35,634
8,357
42,454
Net income
$
63,174
$
95,387
$
8,903
$
118,549
Net income per common share:
Basic
$
1.31
$
2.00
$
0.18
$
2.45
Diluted
$
1.29
$
1.97
$
0.18
$
2.42
Weighted average shares outstanding:
Basic
48,359
47,768
48,201
48,333
Diluted
48,809
48,356
48,589
49,056
Selected Balance Sheet Data (in
thousands):
At October 31,
2020
2019
(Unaudited)
Cash and cash equivalents
$
149,745
$
55,801
Working capital
889,722
972,484
Inventories
461,769
650,633
Total assets
2,469,416
2,928,607
Long-term debt
508,411
675,396
Operating lease liabilities
223,537
326,860
Total stockholders' equity
1,310,267
1,260,302
SELECT STATEMENT OF OPERATIONS
DATA OF WILSONS LEATHER AND G.H. BASS STORES
(In thousands, except per share
amounts)
Three Months Ended October
31,
Nine Months Ended October
31,
2020
2019
2020
2019
(Unaudited)
Net sales
$
38,175
$
59,848
$
77,135
$
166,032
Operating loss (1)
(17,408
)
(5,588
)
(73,774
)
(24,436
)
Operating loss before income taxes
(17,408
)
(5,588
)
(73,774
)
(24,436
)
Operating loss, net of taxes
$
(12,005
)
$
(4,068
)
$
(38,054
)
$
(17,993
)
Operating loss per common share:
Basic
$
(0.25
)
$
(0.09
)
$
(0.79
)
$
(0.37
)
Diluted
$
(0.25
)
$
(0.08
)
$
(0.78
)
$
(0.37
)
The table above reflects the four wall operations of Wilsons
Leather and G.H. Bass stores, which are included in the condensed
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 by January
31, 2021. 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 condensed 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 condensed
consolidated operating results of the Company.
(1)
Includes $(0.1) million, $16.9
million, and $(2.3) million of impairment charges, net of gains on
lease modifications, recorded during the quarter ended October 31,
2019, and the nine month periods ended October 31, 2020 and 2019,
respectively.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20201208005247/en/
G-III Apparel Group, Ltd. Company Contact: Priya
Trivedi VP of Investor Relations and Treasurer (646) 473-5228
Investor Relations Contact: Tom Filandro ICR, Inc. (646) 277-1235
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