There have been few times in history were the ability to adapt and be flexible has been as vital as in the past year during the global coronavirus pandemic.
Morris Goldfarb, chairman and CEO of G-III Apparel Group, with owned and licensed brands under its umbrella including Donna Karan, Karl Lagerfeld Paris, Calvin Klein Jeans, Tommy Hilfiger Jeans and outerwear licenses for major sports leagues, has steered his company with that strategy.
“The casual way of life is a way of life, the outdoor living is a way of life and we’re geared up for the prom as we are for the mountains,” Goldfarb told analysts on a conference call discussing fourth-quarter and year-end results. “We saw a demand for athleisure continue to accelerate across our brands throughout the fourth quarter. This is exactly what our customer is wearing on a day-in-day-out basis, as she works from home or spends time outdoors. With that in mind, we designed our athleisure collections to provide a wide range of design choices in a variety of looks and functionality. For example, our expanded sweatshirt collections included fashionable styles for the important virtual meeting, as well as styles that incorporated technical functionality to support the active and outdoor lifestyle.”
For the fourth quarter ended Jan. 31, net sales declined 30.3 percent to $526.2 million. Net income in the period fell 42.3 percent to $14.6 million. However, the company said it expected net sales in the first quarter of approximately $460 million, which compares to $405.1 million in the same period last year. Net income for the first quarter is forecast to be in the range of 5 cents and 15 cents per diluted share.
The port problem
“We’ve moved a lot of our receipts into the East Coast, which is working much better than the West Coast,” he said. “We’ve accommodated for traffic on the West Coast by taking on another port and we’ve put some of the liability of timing on our vendor base, which is not the norm, generally they’re not responsible for the logistics part of how we handle life.”
But Goldfarb said the company saw the gridlock coming and “we made them play an active role in how product and when product left ports. So, we were malleable.”
He said G-III incurred some additional costs and had contracted for much of its entire year’s needs for containers and traffic and “we had to modify that.”
“We either stood firm and said they can’t deviate from our contract and face the reality of life, which would have been further delays, or supplemented the contract and enabled our people to get product on board and here on time,” Goldfarb said. “So internally I would say we’re really in good shape and we are clearly aware of the issues. We’re not faced with the drama that’s around us.”
At the same time, Goldfarb said the merchandising team adapted to react to consumer needs.
“Our casual offerings continue to drive the sportswear category,” he said. “Our knit product lines have remained strong sellers. We also saw growth in casual bottoms featuring some great stretch fabrics that offered functionality and variety. Sneaker dresses, which are essentially extended knit T-shirts that are easy to wear and comfortable, also performed well.”
Goldfarb announced on the call that the company launched the Karl Lagerfeld Paris women’s brand in 75 new Macy’s doors just weeks ago.
“We’ve developed a casual collection that works well with the brand’s Parisian chic DNA,” he said. “The early results of selling have been really good. In Karl Lagerfeld men’s, where we began with just outerwear, we have now expanded the collection to include sportswear and footwear. These collections have gained good traction and have quickly found distribution at Macy’s, Bloomingdale’s, Nordstrom’s online and Neiman Marcus. We look forward to continuing to grow the brand’s distribution in both women’s and men’s apparel and accessories.”
Jamming for jeans
In jeans, he noted that the recent launch for three of its “global power brands”–Calvin Klein, Tommy Hilfiger and DKNY–happened at an opportune time, as significant entry into the jeans category enabled the company to negotiate some prime placements on retailers’ sales floors, as well as their digital sites.
“The jeans category lends itself perfectly to casual and comfortable fashion,” Goldfarb said. “Our offerings span a wide variety of woven and knit tops, as well as relaxed bottoms. These lines are off to a very good start and expected to garner much more success in 2022. We are a dominant player in jeans and are well-positioned to capture greater market share.”
The outside lines
As the fourth quarter progressed and the weather turned cooler, G-III saw good sell-throughs in its outerwear business, as well. The business was driven by mid-weight styles featuring packable puffer and layered jackets.
“We believe consumers will maintain active outdoor lifestyles for the foreseeable future and we will continue to provide trend-right products to meet that demand,” he said.
The swimwear brand Vilebrequin is celebrating its 50th anniversary this year and “has an incredible slate of innovative product launches and collaborations planned,” he said. Vilebrequin incorporates sustainable fabrics developed from recycled plastic bottles and plastics removed from the oceans. This coming year, 60 percent of its swimsuits will incorporate these sustainable materials with the goal to get to 80 percent of products made with sustainable fabrics in 2025.
Goldfarb believes G-III is well diversified and prepared for whatever lies ahead.
“I believe we’re profiled as a wartime company and we’ve done it,” Goldfarb said, noting how an acquaintance would describe CEOs as operating with wartime or peacetime mindsets. “We believe we’ve come out on the other side and we’re positioned for growth in the future and prosperity that comes with it.”