G-III Apparel Ltd. reported fourth-quarter earnings per share on an adjusted basis vaulted 112 percent as revenues expanded 7.3 percent. Results easily topped Wall Street’s consensus targets.

Net sales for the fiscal year ended January 31, 2019 increased 9.6 percent to $3.08 billion from $2.81 billion in the prior year. The company reported GAAP net income for the fiscal year ended January 31, 2019 of $138.1 million, or $2.75 per diluted share, compared to $62.1 million, or $1.25 per diluted share, in the prior year.

Non-GAAP net income per diluted share was $2.86 for the fiscal 2019 year compared to $1.60 in the prior fiscal year. Non-GAAP net income per diluted share excludes (i) non-cash imputed interest expense related to the note issued to seller (the “Seller Note”) as part of the consideration for the acquisition of Donna Karan International (“DKI”) of $5.0 million in fiscal 2019 and $5.7 million in fiscal 2018, (ii) transitional expenses related to the acquisition of DKI of $2.1 million in fiscal 2018, (iii) asset impairments primarily related to leasehold improvements and furniture and fixtures at certain of our retail stores of $2.8 million in fiscal 2019 and $7.9 million in fiscal 2018 and (iv) income tax charges of $7.5 million related to the one-time effect of the enactment of the Tax Cuts and Jobs Act in fiscal 2018. These income tax charges primarily relate to a reduction of deferred tax assets and taxes due on foreign earnings. The aggregate effect of these exclusions was equal to $0.11 per diluted share in fiscal 2019 and $0.35 per diluted share in fiscal 2018.

For the fourth quarter ended January 31, 2019, net sales increased by 7.3 percent to $766.8 million from $714.9 million in the fourth quarter last year. The company reported a fourth quarter GAAP net income of $24.1 million, or $0.48 per diluted share, compared to a net loss of $0.5 million, or $(0.01) per share, in the fourth quarter last year.

Non-GAAP net income per diluted share was 55 cents a share. for the fourth quarter of fiscal 2019 compared to $0.26 per share in the fourth quarter last year. Wall Street’s consensus estimate had been 38 cents.

Non-GAAP net income per diluted share excludes (i) non-cash imputed interest expense related to the Seller Note of $1.3 million in the fourth quarter of fiscal 2019 and $1.4 million in the fourth quarter of fiscal 2018, (ii) transitional expenses related to the acquisition of DKI of $0.3 million in the fourth quarter of fiscal 2018, (iii) asset impairments primarily related to leasehold improvements and furniture and fixtures at certain of our retail stores of $2.8 million in the fourth quarter of fiscal 2019 and $7.9 million in the fourth quarter of fiscal 2018 and (iv) income tax charges of $7.5 million related to the one-time effect of the enactment of the Tax Cuts and Jobs Act in the fourth quarter of fiscal 2018. These income tax charges primarily relate to a reduction of deferred tax assets and taxes due on foreign earnings. The aggregate effect of these exclusions was equal to $0.07 per diluted share in the fourth quarter of 2019 and $0.27 per diluted share in the fourth quarter of 2018.

Morris Goldfarb, G-III’s chairman and chief executive officer, said, “We are pleased to have reported fourth quarter results that capped off a record year for G-III in which we surpassed $3.0 billion in annual net sales and achieved record profits fueled by our five global power brands, DKNY, Donna Karan, Calvin Klein, Tommy Hilfiger and Karl Lagerfeld. This was also a transformative year for our company as it was the first full year in which products for DKNY and Donna Karan were created and developed by us.”

Goldfarb concluded, “In this ever-changing retail landscape, our consistent execution positions us to be a global provider of fashion product. With the current power brands we have today, we believe we can continue to achieve significant organic growth opportunities over the next several years. In addition, the strength of our balance sheet allows us to capitalize on the right acquisition opportunity.”

Outlook

G-III Apparel Group issued guidance for the fiscal year ending January 31, 2020. For fiscal 2020, the company is forecasting net sales of approximately $3.28 billion and net income between $162.0 million and $167.0 million, or between $3.18 and $3.28 per diluted share.

The company is anticipating non-GAAP net income for fiscal 2020 between $167.0 million and $172.0 million, or between $3.25 and $3.35 per diluted share. Non-GAAP guidance excludes non-cash imputed interest expense of approximately $5.4 million, or $0.07 per diluted share, related to the Seller Note.

The company is projecting full-year adjusted EBITDA for fiscal 2020 between $307.0 million and $313.0 million compared to adjusted EBITDA of $269.4 million in fiscal 2019.

For the first fiscal quarter ending April 30, 2019, the company is forecasting net sales of approximately $650.0 million and net income between $7.0 million and $12.0 million, or between $0.13 and $0.23 per diluted share. This forecast compares to net sales of $611.7 million and net income of $9.9 million, or $0.20 per diluted share, reported in the first quarter of fiscal 2019. Non-GAAP guidance excludes non-cash imputed interest expense related to the Seller Note of approximately $1.3 million, or $0.02 per share in the first quarter of fiscal 2020, and $1.2 million, or $0.02 per share in the first quarter of prior year. On an adjusted basis, excluding non-cash imputed interest, the company is forecasting a non-GAAP net income between $0.15 and $0.25 per diluted share. This compares to net income of $0.22 per diluted share in first quarter of fiscal year 2019.

G-III designs, sources and markets apparel and accessories under owned, licensed and private label brands. G-III’s owned brands include DKNY, Donna Karan, Vilebrequin, G. H. Bass, Andrew Marc, Marc New York, Eliza J and Jessica Howard. G-III has fashion licenses under the Calvin Klein, Tommy Hilfiger, Karl Lagerfeld Paris, Kenneth Cole, Cole Haan, Guess?, Vince Camuto, Levi’s and Dockers brands. Through our team sports business, G-III has licenses with the National Football League, National Basketball Association, Major League Baseball, National Hockey League, and over 150 U.S. colleges and universities. G-III also operates retail stores under the DKNY, Wilsons Leather, G. H. Bass, Vilebrequin, Karl Lagerfeld Paris and Calvin Klein Performance names.