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Pushed by Casual Demand, G-III Raises Guidance

Brand powerhouse G-III Apparel Group scored substantial gains in net sales and income in the second quarter.

In a Nutshell: G-III Apparel Group Ltd., with a portfolio of more than 30 licensed and proprietary brands anchored by five global power brands–DKNY, Donna Karan, Calvin Klein, Tommy Hilfiger and Karl Lagerfeld Paris–in reporting second-quarter financial results Thursday, raised its guidance for the fiscal year ending Jan. 31.

As the developments associated with the Covid-19 pandemic continue to be fluid, the company said its fiscal year 2022 guidance contemplates the anticipated impact on the current supply chain conditions, including expected increased shipping costs and delays in receipt of goods. However, the guidance does not contemplate any reimposition of government-mandated store closures or other governmental restrictions as a result of the pandemic that could have a material impact on net sales, results of operations and supply chain during fiscal 2022.

For fiscal 2022, G-III, which owned brands also include Vilebrequin, G.H. Bass, Eliza J, Jessica Howard, Andrew Marc and Marc New York, expects net sales of approximately $2.7 billion and net income between $155 million and $165 million, or between $3.10 and $3.20 per diluted share. The company previously forecasted net sales of approximately $2.57 billion and net income between $125 million and $135 million, or between $2.60 and $2.70 per diluted share.

This compares to net sales of $2.06 billion and net income of $23.5 million, or 48 cents per diluted share, last year. Last fiscal year’s results included net sales of $91.8 million and a net loss of $1.14 per diluted share associated with the Wilsons Leather and G.H. Bass store operations.

For the third quarter of the current fiscal year, G-III, expects net sales of approximately $1 billion and net income between $80 million and $90 million, or $1.65 and $1.75 per diluted share. This compares to net sales of $826.6 million and net income of $63.2 million or $1.29 per diluted share in last year’s third quarter. The results for last year’s third quarter included net sales of $38.2 million and a net loss per diluted share of 25 cents associated with the Wilsons Leather and G.H. Bass store operations.

G-III ended the quarter with cash and credit facility availability of approximately $900 million. Year-over-year inventories dipped 13.1 percent to $499.34 million from $574.77 million.

Sales: Net sales for the second quarter ended July 31 increased 62.5 percent to $483.1 million from $297.2 million in the prior year’s quarter.

Earnings: Net income for the quarter was $19.2 million, or 39 cents per diluted share, compared to a net loss of $15 million, or 31 cents per share, in the prior-year period.

Included in the results for the second quarter of last year were net losses from the Wilsons Leather and G.H. Bass store operations of $25.6 million, or 53 cents per diluted share.

CEO’s Take: Morris Goldfarb, G-III’s chairman and CEO, said: “We delivered outstanding second-quarter results that exceeded our guidance for both the top and bottom lines. Throughout the pandemic, we navigated through the challenges as our world class teams have remained focused on delivering positive results. We are encouraged by the strong consumer demand that we are seeing for apparel and accessories. Although some uncertainties remain, we feel good about our business, giving us the confidence to raise our guidance.”

“The strength in our casual categories continues,” Goldfarb added. “We are also pleased to see increased demand for broader lifestyle categories, including dresses and career wear. G-III’s diversified product categories ranging across our globally recognized power brands DKNY, Donna Karan, Calvin Klein, Tommy Hilfiger and Karl Lagerfeld Paris, position us well to meet the increasing demand for our products.”

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