G-III Apparel Group Raises EPS Guidance on Q3 Beat

G-III Apparel Group, Ltd. raised its earnings guidance for the year after EPS in the third quarter ended October 31 came in well above plan, boosted by strength at wholesale channels. Sales eased 1 percent in the period.

Morris Goldfarb, G-III’s chairman and chief executive officer, said, “For the third quarter of fiscal 2024, we delivered strong profitability, well exceeding our earnings per diluted share guidance, driven by strength across our wholesale segment, our prudent inventory management and our financial discipline. Our solid year-to-date results showcase G-III’s ability to successfully navigate challenging market conditions and give us the confidence to raise our full-year earnings per share guidance.”

Goldfarb concluded, “Over the last twelve months, we have made significant progress accelerating our strategic priorities. We are developing and are on track with four new growth initiatives to drive our business including the expansion of our owned Donna Karan brand, a long-term license for Nautica in North America, a master global licensing agreement for Halston, and a multi-year outerwear license for Champion. The strength of our balance sheet affords us tremendous financial flexibility to invest in our business and consider additional opportunities.”

Operations Results
Net sales for the third quarter ended October 31, 2023 decreased 1.0 percent to $1.07 billion from $1.08 billion in the prior year’s quarter. The company reported net income for the third quarter of $127.6 million, or $2.74 per diluted share, compared to $61.1 million, or $1.26 per diluted share, in the prior year’s quarter.

Non-GAAP net income per diluted share was $2.78 for the third quarter of this year compared to $1.35 in the same period last year. Non-GAAP net income per diluted share excludes (i) non-cash imputed interest expense of $0.7 million in this quarter related to the note issued to seller (the Seller Note) as part of the consideration for the acquisition of Donna Karan International compared to $1.8 million in the third quarter last year, (ii) expenses related to the Karl Lagerfeld transaction of $1.8 million in this year’s quarter that include incentive compensation and $3.8 million in last year’s third quarter that include incentive compensation, professional fees and amortization of inventory valuation adjustments and (iii) asset impairment and gain on lease terminations of $0.2 million in this quarter compared to $0.3 million in the third quarter last year. The aggregate effect of these exclusions was equal to $0.04 per diluted share in the third quarter of this year and $0.09 per diluted share in the third quarter of fiscal 2023.

C-Suite Hire
G-III separately announced that it hired Dana Perlman as chief growth and operations Officer, effective January 8, 2024. In the newly created role, Perlman will oversee Strategy, Finance, Communications, IT, and other Operating functions. Previously, she worked for ten years at PVH Corp., and, before that, held several roles in investment banking at Barclays Capital, Lehman Brothers and Credit Suisse First Boston. She is a Director of O’Reilly Automotive, Inc.

Outlook
The company raised its GAAP and Non-GAAP net income per diluted share guidance for the fiscal year ending January 31, 2024.

For fiscal 2024, the company expects net sales of approximately $3.15 billion and net income between $175 million and $180 million, or between $3.75 and $3.85 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 included a $291.5 million non-cash goodwill impairment charge, net of tax.

Previously, the company projected sales of $3.30 billion and net income between $145 million and $150 million, or between $3.05 and $3.15 per diluted share

The company is anticipating non-GAAP net income for fiscal 2024 between $182 million and $187 million, or between $3.90 and $4.00 per diluted share. This compares to non-GAAP net income of $138.8 million, or $2.85 per diluted share, for fiscal 2023. Under its prior guidance, G-III expected non-GAAP net income for fiscal 2024 between $152 million and $157 million, or between $3.20 and $3.30 per diluted share

The company is projecting full-year adjusted EBITDA for fiscal 2024 between $317 million and $322 million compared to adjusted EBITDA of $266.1 million in fiscal 2023. Under the prior guidance, G-III expected adjusted EBITDA for fiscal 2024 between $284 million and $289 million.

G-III’s four major brands are DKNY/Donna Karan, Karl Lagerfeld, Calvin Klein and Tommy Hilfiger. G-III’s owned brands 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, Dockers and Champion 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.