G-III Apparel Group dropped $40 million in revenue in its sports licensed end of their business in fiscal 2005, a decline that pushed total sales down 4.8% for the year to $214.3 million, compared to $225.1 million in the prior year. Excluding the elimination of that fashion end of the business, sales for the ongoing businesses would have risen nearly 16% for the year. Fourth quarter sales rebounded as the company shifted its focus, increasing 10.7% for the quarter to $38.4 million from $34.7 million in the year-ago quarter.
The core sports business reported a 20% increase in bookings.
Net income for the year amounted to just $703,000, or 9 cents per diluted share, compared to net income of $8.4 million, or $1.14 per diluted share, in fiscal 2004. The company pared headcount, eliminating about 5% of the total workforce, and shut down its Korea office while expanding its two offices in China.
Still, these efforts were offset in fiscal 2005 by a sharp decline in gross margin caused primarily by the contraction of the fashion sports licensed business and unseasonably warm winter weather in Q4 that hurt full-price sales. Gross margin fell 330 basis points to 24.6% of sales, compared to 27.9% in the prior year.
GIII started to recover a bit in Q4 as heavy close-out sales last year enabled the company to improve gross margin in Q4 this year to 16.5% of sales from 13.5% in the year-ago period. The resulting net loss narrowed a bit to $2.7 million, or a loss of 37 cents per share, compared to a net loss of $3.1 million, or 44 cents per share, during the same period last year.
