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G-III Counts on Power Brands to Survive Coronavirus ‘Shockwaves’

G-III’s CEO is confident the company’s solid wholesale business and a streamlined retail operation create a strong foundation in these troubled times.

In a Nutshell: G-III Apparel Group reported a record year of net sales and net income for fiscal 2020 ended Jan. 31.

However, like virtually every company reporting its financial results in recent weeks, G-III, which owns the DKNY, Donna Karan, Vilebrequin, G. H. Bass, Andrew Marc, Marc New York, Eliza J and Jessica Howard brands, said it’s closely monitoring the developments associated with the coronavirus outbreak and its impact on sales, operations and supply chain.

“It is difficult to forecast the effects of the outbreak on our fiscal 2021 results,” the company said. “As a result, the company is not currently providing any guidance and expects to provide additional information when it releases results for its first quarter of fiscal 2021.”

Sales: Net sales in the fourth quarter ended Jan. 31 decreased 1.6 percent to $754.6 million from $766.8 million in the prior-year period. Net sales for the fiscal year ended Jan. 31 increased 2.7 percent to $3.16 billion from $3.08 billion in the prior year.

Earnings: Net income in the fourth quarter was $25.3 million, or 52 cents per diluted share, compared to $24.1 million, or 48 cents per diluted share, in the same quarter last year. Operating profit in the fourth quarter declined 27.2 percent to $32.31 million compared to $44.39 million in the year-ago period.

The company, which also has fashion licenses under the Calvin Klein, Tommy Hilfiger, Karl Lagerfeld Paris, Kenneth Cole, Cole Haan, Guess, Vince Camuto, Levi’s and Dockers brands, reported net income for the fiscal year of $143.8 million, or $2.94 per diluted share, compared to $138.1 million, or $2.75 per diluted share, in the prior year.

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For the year, operating profit fell 13.3 percent to $227.75 million from $230.71 million the prior year.

CEO’s Take: Morris Goldfarb, G-III’s chairman and CEO, said: “The coronavirus outbreak has sent shockwaves through our industry and country. The health and welfare of our associates is of utmost importance to us. We have closed our retail stores and corporate offices and continue to work remotely or from safe spaces in order to remain operational. We currently have approximately $800 million of cash and availability under our bank facilities. This strong financial position is important as we move forward and strategically plan the balance of our year. We remain confident in our ability to adjust and adapt to the challenges and opportunities that lie ahead.

“We continue toward the restructuring of our retail operations” that include DKNY, Wilsons Leather, G. H. Bass, Vilebrequin, Karl Lagerfeld Paris and Calvin Klein Performance units, Goldfarb added. “We are focused on significantly reducing the number of stores we operate and remain committed to substantially reducing the losses from our retail operations as swiftly and efficiently as possible. We reported another year of growth driven by our wholesale segment. Our success remains anchored by our five global power brands: DKNY, Donna Karan, Calvin Klein, Tommy Hilfiger and Karl Lagerfeld. We are confident our solid wholesale business, along with a more streamlined retail operation, creates a strong foundation for continued growth.”