G-III Apparel Group announced plans to close its 110 Wilsons Leather and 89 G.H. Bass stores. Separately, the company reported a first-quarter loss amid COVID-19-related revenue declines.

In connection with the restructuring of its retail operations, the company expects to incur an aggregate charge of approximately $100 million related to landlord termination fees, severance costs, store liquidation and closing costs, write-offs related to right-of-use assets and legal and professional fees. A significant portion of these charges will be incurred during its second fiscal quarter ending July 31, 2020. G-III expects the cash portion of this charge to be approximately $65 million.

After completion of the restructuring, the Company’s retail operations segment will initially consist of 41 DKNY and 13 Karl Lagerfeld Paris stores, as well as the e-commerce sites for DKNY, Donna Karan, Karl Lagerfeld Paris, Andrew Marc, Wilsons Leather, and G.H. Bass.

The company has hired Hilco Global to assist in the liquidation of these stores, which will begin immediately, or as stores reopen.

Morris Goldfarb, G-III’s chairman and chief executive officer, said, “We have completed a comprehensive review of our retail operations segment. With a focus on enhancing shareholder value, we have made the difficult decision to close all of the Wilsons Leather and G. H. Bass stores and have entered into agreements for the early lease termination of a significant majority of these stores. We believe that this restructuring plan will enable us to greatly reduce our retail losses and to ultimately have this segment become profitable. I am appreciative of all members of the retail team for their hard work and dedication over the years.”

Goldfarb concluded, “Our wholesale business, anchored by our five global power brands: DKNY, Donna Karan, Calvin Klein, Tommy Hilfiger, and Karl Lagerfeld, will continue to be the primary growth and profit engine for the Company. We have a great base of business which we believe creates a strong foundation for our future.”

Net sales for the first quarter ended April 30, 2020, decreased 36.1 percent to $405.1 million from $633.6 million in the same period last year. The company reported GAAP net loss for the first quarter of $39.3 million, or 82 cents per share, compared to net income of $12.0 million, or 24 cents per share, in the prior year’s comparable period.

The non-GAAP net loss per share was 75 cents per share for the first quarter of this year compared to non-GAAP net income per diluted share of 25 cents in the same period last year. Non-GAAP net income (loss) per diluted share excludes non-cash imputed interest expense related to the note issued to the seller as part of the consideration for the acquisition of Donna Karan International of $1.4 million in this quarter and $1.3 million in the first quarter last year and a $3.2 million loss on lease terminations in this quarter compared to a $0.8 million gain in the first quarter last year. The aggregate effect of these exclusions was equal to 7 cents per share in the first quarter of this year and 1 cent per diluted share in the first quarter of fiscal 2020.

Goldfarb said, “These are challenging times for so many throughout our industry and country. G-III is an adaptive and agile organization with an entrepreneurial culture that keeps us flexible. These traits have allowed us to quickly make prudent decisions to preserve our liquidity. We took proactive steps in response to the COVID-19 outbreak. We reduced our inventory exposure, furloughed a large portion of our employee base and implemented significant temporary reductions in pay for our senior management and employees. We are in a strong financial position. We believe we will demonstrate our leadership position in the fashion industry as we emerge from this crisis. I want to thank our employees throughout the world for working remotely and harder than ever with incredible dedication, drive, compassion and care in order to keep us operational. They are the heart and soul of our company and our greatest asset.”

As the developments associated with the pandemic continue to be fluid, it is difficult for the Company to forecast the impact on net sales, results of operations and supply chain for fiscal 2021. As a result, the company is not currently providing any 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.

Photo courtesy DKNY/G-III Apparel