G-III Apparel Group, Ltd. raised its outlook for sales and earnings for the year after reporting first-quarter results came in well above its guidance. The company also announced a new long-term license for the Halston brand.

Sales in the first quarter ended April 30 of $606.6 million easily topped company guidance calling for sales of approximately $560.0 million. Non-GAAP EPS of 13 cents compared with guidance calling for a non-GAAP loss in the range of 15 cents to 5 cents.

Morris Goldfarb, G-III’s chairman and chief executive officer, said, “For the first quarter of fiscal 2024, we exceeded both our top and bottom line guidance with non-GAAP net income per diluted share of $0.13, exceeding the high end of our guidance. We made progress rightsizing our inventory position, which sequentially decreased by $80 million, while our gross margins were significantly better than last year’s first quarter. I am proud of how our team successfully navigated what remains a challenging environment.”

Goldfarb continued, “Aligned with our initiative to direct resources toward new growth opportunities, we are pleased to announce a licensing agreement with Xcel Brands for the American heritage fashion brand, Halston. This 25-year master licensing agreement allows G-III to design and produce all categories of products for Halston and provides an option to buy the brand at the end of the licensing term. This agreement represents our third substantial growth opportunity announced this year alongside the re-positioning and global expansion of Donna Karan and a long-term license for Nautica in North America. Development of our Donna Karan and Nautica initiatives is well underway.”

Goldfarb concluded, “G-III continues to deliver positive results and we are off to a good start to the new fiscal year. Looking ahead, we are optimistic about our business and, as a result, are raising our guidance. We remain focused on driving our key strategic priorities and continuing to develop new growth opportunities.”

Results Of Operations
Net sales for the first quarter ended April 30, 2023 decreased 11.9 percent to $606.6 million from $688.8 million in the prior year’s quarter. The company reported net income for the first quarter of $3.2 million, or $0.07 per diluted share, compared to $30.6 million, or $0.62 per diluted share, in the prior year’s quarter.

Non-GAAP net income per diluted share was $0.13 for the first quarter of this year compared to $0.72 in the same period last year. Non-GAAP net income per diluted share excludes (i) non-cash imputed interest expense of $1.8 million in this quarter related to the note issued to the seller (the “Seller Note”) as part of the consideration for the acquisition of Donna Karan International compared to $1.7 million in the first quarter last year and (ii) expenses related to the Karl Lagerfeld transaction that include incentive compensation, professional fees and, in fiscal 2023, foreign currency losses of $1.8 million in this quarter compared to $4.2 million in the first quarter last year. The aggregate effect of these exclusions was equal to $0.06 per diluted share in the first quarter of this year and $0.10 per diluted share in the first quarter of fiscal 2023.

Halston License
G-III has signed a global twenty-five-year master license agreement with Xcel Brands to design and produce all categories of men’s and women’s products for the Halston brand. The agreement provides for an initial term of five years, followed by a twenty-year period, as well as a purchase option at the end of the twenty-five-year term. First deliveries of Halston products are expected for the Fall 2024 season. The products will be distributed globally through better department stores and digital channels. G-III believes that a significant opportunity exists in the better women’s apparel space where G-III has significant expertise. The Halston brand joins G-III’s portfolio of some of the largest American brands in the world.

Outlook
G-III, today, raised its guidance for the fiscal year ending January 31, 2024. The company’s fiscal year 2024 guidance anticipates the expected impact from current levels of inflationary pressure on consumers and on the company’s operations, as well as incremental costs associated with managing higher levels of inventory.

For fiscal 2024, the company expects net sales of approximately $3.29 billion and net income between $125.0 million and $130.0 million, or between $2.65 and $2.75 per diluted share. This compares to net sales of $3.23 billion and a net loss of $(133.1) million, or $(2.79) per share, for fiscal 2023. Fiscal 2023 results include a $291.5 million non-cash goodwill impairment charge, net of tax.

The company is anticipating non-GAAP net income for fiscal 2024 between $132.0 million and $137.0 million, or between $2.80 and $2.90 per diluted share. This compares to non-GAAP net income of $138.8 million, or $2.85 per diluted share, for fiscal 2023.

The company is projecting full-year adjusted EBITDA for fiscal 2024 between $267.0 million and $272.0 million compared to adjusted EBITDA of $266.1 million in fiscal 2023.

G-III’s prior guidance called for sales of approximately $3.23 billion, net income between $2.40 and $2.50 per share, and non-GAAP net income between $2.55 and $2.65 per share.

For the second quarter of fiscal year 2024, the company expects net sales of approximately $595.0 million compared to $605.2 million in the same period last year. The company expects a net loss for the second quarter of fiscal 2024 in the range $(5.0) million and break even or between $(0.10) and $0.00 per share. This compares to net income of $36.3 million, or $0.74 per diluted share, in last year’s second quarter.

The company is anticipating non-GAAP results for the second quarter of fiscal 2024 between a net loss of $(3.0) million and net income of $2.0 million, or between $(0.06) and $0.04 per diluted share. This compares to non-GAAP net income of $19.0 million, or $0.39 per diluted share, in last year’s second quarter.

G-III’s owned brands also include DKNY, Donna Karan, Karl Lagerfeld, Vilebrequin, G.H. Bass, Eliza J, Jessica Howard, Andrew Marc, Marc New York, Wilsons Leather, and Sonia Rykiel. G-III has fashion licenses under the Calvin Klein, Tommy Hilfiger, Nautica, Halston, Kenneth Cole, Cole Haan, Guess?, Vince Camuto, Levi’s, and Dockers brands. Through its team sports business, G-III has licenses with the NBA, NFL, MLB, NHL, and over 150 U.S. colleges and universities. 

Photo courtesy G-III/Halston