G-III Apparel Group, Ltd. reported sales declined 53.8 percent in the second quarter and warned that sales are expected to decline in the range of 28 percent to 33 percent in the second half.

Net sales for the second quarter ended July 31, 2020 decreased 53.8 percent to $297.2 million from $643.9 million in the same period last year. The company reported a net loss for the second quarter of $15.0 million, or 31 cents per share, compared to net income of $11.1 million, or 23 cents per diluted share, in the prior year’s comparable period.

As previously announced, the company is restructuring its retail operations segment, which includes permanently closing 110 Wilsons Leather and 89 G.H. Bass stores. Like most retail stores, these stores were closed in mid-March in connection with the COVID-19 pandemic and did not begin to reopen until June. Net sales for the second quarter ended July 31, 2020 for the Wilsons Leather and G.H. Bass portion of our retail operations segment were $19.7 million compared to $53.6 million in the same period last year.

Included in the company’s net loss for the quarter are net losses from the Wilsons Leather and G.H. Bass operations of $25.6 million, or 53 cents per share, compared to $6.3 million, or 13 cents per share, 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. The results for the current period also include the impact of the pandemic and the commencement of the liquidation of the Wilsons Leather and G.H. Bass stores. These operating results for Wilsons Leather and G.H. Bass are presented solely to provide the historical operating results of the portion of the company’s retail operations segment that is being restructured and are not intended to be used to develop expectations for future results of the company or to indicate any future level of profitability of the company.

Morris Goldfarb, G-III’s chairman and chief executive officer, said, “The pandemic has had a major impact on the fashion industry and our second-quarter results. Our customers now prefer casual, comfortable and functional attire. Through our broad range of brands and product categories, G-III is able to capitalize on these changing trends. We have reset our order book for the balance of the year and shifted our product assortment to athleisure, jeans, casual sportswear, and coats.”

Goldfarb concluded, “We refinanced our balance sheet and extended the maturity of our revolving credit facility and term debt to 2025. In addition, the closure of Wilsons Leather and G.H. Bass stores, expected to be completed by the end of this fiscal year, will result in the elimination of significant operating losses. I am confident that as we navigate through the pandemic, our financial strength and dedicated management team will further advance our leadership position and set the stage for future market share gains.”

Outlook
The company expects net sales to decline in the range of 28 percent – 33 percent in the second half of its fiscal year compared to the same period last year. As the developments associated with the COVID-19 pandemic continue to be fluid and there is significant uncertainty related to the impact of the pandemic, the company is not currently providing any additional guidance.

G-III’s owned brands include DKNY, Donna Karan, Vilebrequin, G.H. Bass, Eliza J, Jessica Howard, Andrew Marc, and Marc New York. 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 its 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. Through its retail subsidiaries, G-III operates retail stores under the DKNY, Wilsons Leather, G.H. Bass, Vilebrequin, Karl Lagerfeld Paris, and Calvin Klein Performance names.

Photo courtesy GIII Apparel