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Wilsons and Bass Stores Shed, G-III Forecasts First-Quarter Gains

With its CEO suggesting potential acquisitions, G-III Apparel Group still posted declines in fourth quarter sales and income.

In a Nutshell: G-III Apparel Group Ltd.–with a portfolio anchored by “power brands” DKNY, Donna Karan, Calvin Klein, Tommy Hilfiger and Karl Lagerfeld Paris–said it has completed the restructuring of its retail operations segment and has permanently closed the Wilsons Leather and G.H. Bass stores.

While reporting operating results for the fourth quarter and 2021 fiscal year, the company, which also has the owned brands Vilebrequin, G.H. Bass, Eliza J, Jessica Howard, Andrew Marc and Marc New York, said with continued uncertainty associated with the Covid-19 pandemic, it was only providing guidance for the first quarter ending April 30.

The company finished the reporting period with cash and cash equivalents of $351.93 million and working capital of $925.45 million, compared to $197.37 million and $754.73 million, respectively, in the year-ago period. Inventory was down to $416.50 million from $551.92 million a year earlier.

For the first quarter of fiscal year 2022, G-III said it expect net sales of approximately $460 million, which compares to $405.1 million in the same period last year. Last year’s net sales for the first quarter include $19.3 million for the Wilsons Leather and G.H. Bass stores.

Net income for the first quarter is expected to be in the range of 5 cents and 15 cents per diluted share. This compares to a net loss of 82 cents per share in last year’s first quarter, which includes a net loss per share of 3 cents associated with the Wilsons Leather and G.H. Bass store operations.

Sales: For the fourth quarter ended Jan. 31, net sales declined 30.3 percent to $526.2 million from $754.6 million in the fourth quarter last year.

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For the year, net sales decreased 35 percent to $2.06 billion from $3.16 billion in the prior year.

Earnings: Net income for the fourth quarter fell 42.3 percent to $14.6 million, or 30 cents per diluted share, compared to $25.3 million, or 52 cents per diluted share, in the fourth quarter last year.

Included in the fourth quarter results were net losses from the Wilsons Leather and G.H. Bass store operations of $8.6 million compared to $15.9 million in the prior year’s comparable period.

The company reported net income for the fiscal year of $23.5 million, or 48 cents per diluted share, compared to $143.8 million, or $2.94 per diluted share, in the prior year. Included in the company’s results for the fiscal year were net losses from the Wilsons Leather and G.H. Bass store operations of $55.7 million compared to $31.7 million 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.

CEO’s Take: Morris Goldfarb, chairman and CEO, said: “Our entrepreneurial culture, with a merchant led focus, proved to be invaluable as we responded to the casual trend by designing the right merchandise for our retail partners…We ended fiscal year 2021 with continued improvement in our wholesale operations and completed the restructuring of our retail operations. We enter fiscal year 2022 in a good inventory position, which is weighted toward casual product that remains in high demand.”

“As the year progresses, we believe there will be an increasing desire for dressier apparel and accessories. We are working closely with our retail and vendor partners to be in a position to bring these products to market in a timely manner. Our strong financial position and liquidity enables us to continue to fund our operations, as well as consider acquisitions.”