On the company’s second-quarter analyst call, Morris Goldfarb, G-III Apparel’s longtime chairman and CEO, said he sees G-III’s new multi-year license to produce outerwear under the Champion brand presenting opportunities to reach Dick’s Sporting Goods, Foot Locker and other athletic retailers.
“There is demand in the athletic stores for the brand in the outerwear sector,” said Goldfarb. “Dick’s and Foot Locker are potential opportunities for us, where our fashion brands really don’t have that audience in those venues.”
He suspects the Champion outerwear line has the potential to reach the same volume as its other fashion-oriented outerwear licenses, including Calvin Klein, Tommy Hilfiger, Levi’s, DKNY, and Karl Lagerfeld. He said, “It’s in this same scope, same scale. That’s the plan.”
As reported, G-III Apparel entered into a strategic multi-year license agreement for the design, production and distribution of outerwear for the Champion and C9 Champion brands in North America, including exploring opportunities across Champion’s global network as a key partner.
Vanessa LeFebvre, president of global activewear, at Hanesbrands, stated, “G-III’s proven track record in category expansion and their best-in-class global infrastructure will enable us to reach a wider consumer base who already are, or will soon become, loyal to the Champion brand for generations. Champion is an inspirational lifestyle brand born from sport with a vision to be defined not by what we make, but by what we do. This partnership creates a significant opportunity to leverage G-III’s expertise in the outerwear category and their diversified distribution network, which will enable us to extend our offerings and support the brand’s lifestyle proposition.”
Goldfarb on the analyst call said, “We will create quality heritage pieces that expand Champions’ lifestyle offering. This license aligns perfectly with our core competencies and will fit seamlessly into our already well-developed outerwear divisions. The product will be distributed through our diverse channels in North America as well as Champions’ global network with first deliveries available for fall of 2024.”
Companywide, G-III Apparel reported second-quarter results that came in well above analyst targets. G-III’s shares on Thursday jumped $4.68, or 24.3 percent, to $23.98 following the morning’s release of results.
Sales in the quarter rose 9.0 percent to $659.8 million, easily beating the analyst consensus at $592.3 million. G-III Apparel forecast sales of $595.0 million.
On an adjusted basis, non-GAAP EPS was 40 cents a share, up from adjusted EPS of 39 cents a year ago and also far ahead of analyst expectations at 1 cent. G-III had projected EPS in the range of a loss of 10 cents a share to break even.
Net income was $16.4 million, or 35 cents, in the latest quarter, down from $36.3 million, or 74 cents, in the prior year’s quarter. Both periods include expenses related to Karl Lagerfeld’s acquisition with the year-ago period boosted by a Karl Lagerfeld investment gain.
“Our results continue to be led by strength in outerwear as well as dressier categories including sportswear, dresses, and suit separates across our key brands DKNY, Karl Lagerfeld, Calvin Klein, Tommy Hilfiger, and Levi’s. We also saw strength across denim, footwear and team sports,” said Goldfarb on the call.
The Team Sports division includes the production of outerwear and fan apparel under licenses with the NFL, NBA, MLB, NHL and over 150 U.S. colleges. The segment includes the Starter and G-III Sports by Carl Banks labels.
Looking ahead, G-III raised its guidance for the year. Sales are now expected to be approximately $3.3 billion, up from $3.29 billion previously. Sales under the updated guidance are expected to be up 2.2 percent against $3.23 billion a year ago.
Non-GAAP earnings for the year are now expected in the range of $132.0 million and $137.0 million, or between $2.80 and $2.90 per share, up from previous guidance between $125.0 million and $130.0 million, or $2.65 to $2.75. The prior year showed a net loss of $133.1 million, or $2.79.
For the third quarter, sales are expected to be $1.13 billion, up 4.6 percent from $1.08 billion in the same period last year. EPS is expected in the range of $1.99 and $2.09 against $1.26 a year ago.
Photo courtesy Champion
