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DKNY, Lagerfeld Owner Scores 89% Q2 Net Income Gain

G-III reported net sales for the second quarter ended July 31 increased 25 percent to $605.2 million.

In a Nutshell: G-III Apparel Group, anchored by its five global power brands–DKNY, Donna Karan, Karl Lagerfeld, Calvin Klein and Tommy Hilfiger–while announcing operating results for the second quarter, updated its guidance for the fiscal year ending Jan. 31, with net sales expected to reach approximately $3.15 billion and net income between $182 million and $187 million, or between $3.69 and $3.79 per diluted share.

This compares to net sales of $2.77 billion and net income of $200.6 million, or $4.05 per diluted share, last year. This guidance includes approximately $130 million in net sales and net income of approximately 10 cents per diluted share in connection with the operations of the Karl Lagerfeld business for the seven months in this fiscal year subsequent to Karl Lagerfeld becoming a wholly owned subsidiary.

The company said its fiscal year 2023 guidance anticipates the expected impact from current levels of inflationary pressure on consumers and incremental costs associated with the supply chain conditions, including the timing of receipts of goods.

G-III projected full-year adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) for fiscal 2023 between $318 million and $323 million, compared to adjusted EBITDA of $350.2 million in fiscal 2022.

For the third quarter of this year, the company forecast net sales of around $1.07 billion compared to $1.02 billion in the same period last year. Net income for the third quarter is expected to be between $83 million and $88 million, or $1.70 and $1.80 per diluted share. This compares to net income of $106.7 million, or $2.16 per diluted share, in last year’s third quarter.

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Sales: G-III, with a portfolio of proprietary brands that also includes Vilebrequin, G.H. Bass, Eliza J, Jessica Howard, Andrew Marc, Marc New York and Sonia Rykiel, reported net sales for the second quarter ended July 31 increased 25 percent to $605.2 million from $483.1 million in the prior year’s quarter.

Earnings: Net income for the quarter rose 89 percent to $36.3 million, or 74 cents per diluted share, compared to $19.2 million, or 39 cents per diluted share, in the prior-year period.

CEO’s Take: Morris Goldfarb, G-III chairman and CEO, said: “We are pleased to have completed our previously announced acquisition of the remaining 81 percent of the iconic Karl Lagerfeld brand, further expanding our global reach. In the second quarter of fiscal 2023, we continued to see significant year-over-year sales growth across our power brands. We are managing the business prudently with a keen eye toward gaining market share and building on our strengths while further expanding our global reach. Looking ahead, we are in a good position for the Fall season and our order book remains strong.”

“Given the challenging environment that has rapidly developed over the last few months, we are taking a more conservative view for the balance of the year,” Goldfarb added. “We have a strong track record of managing through difficult business conditions and remain confident in our strategy and in our ability to deliver on our updated full year expectations, as the overall fundamentals of our business remain solid.”