G-III Apparel Lifts Outlook On Improved Q3

G-III Apparel Group, Ltd. reported earnings rose 15.6 percent in the third quarter on a 4.7 percent revenue gain.

For the third quarter ended October 31, 2018, G-III reported that net sales increased 4.7 percent to $1.07 billion from $1.02 billion in the year-ago period. The company reported net income for the third quarter of $94.0 million, or $1.86 per diluted share, from $81.6 million, or $1.65 per diluted share, in the prior year’s comparable period.

Non-GAAP net income per diluted share was $1.88 for the third quarter of this year compared to $1.67 per share in the same period last year. Results topped Wall Street’s consensus estimate of $1.82.

Non-GAAP net income 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 (“DKI”) of $1.2 million in this quarter and $1.4 million in the third quarter of last year.

Morris Goldfarb, G-III’s chairman and chief executive officer, said, “In our largest shipping quarter, the continued momentum in our wholesale business enabled us to surpass our third quarter earnings guidance. We again demonstrated great ability to successfully leverage our five global power brands. Our products are set-up well across our channels of distribution for the important holiday season and we believe we will have a strong finish to the year.”

Outlook

The company raised its guidance for the full fiscal year ending January 31, 2019. The company expects net sales of approximately $3.08 billion and net income between $132 million and $137 million, or between $2.59 and $2.69 per diluted share. The company previously forecasted net sales of approximately $3.06 billion and net income between $125 million and $130 million, or between $2.45 and $2.55 per diluted share, for fiscal 2019. This compares to net sales of $2.81 billion and net income of $62.1 million, or $1.25 per diluted share, for fiscal 2018.

The company is anticipating non-GAAP net income for fiscal 2019 between $136 million and $141 million, or between $2.67 and $2.77 per diluted share, compared to our previous guidance of non-GAAP net income for fiscal 2019 between $129 million and $134 million, or between $2.52 and $2.62 per diluted share. Non-GAAP results for fiscal 2019 exclude non-cash imputed interest expense of approximately $5.0 million, or $0.08 per diluted share, related to the note issued to the seller as part of the consideration for the DKI acquisition. This guidance compares to non-GAAP net income of $79.5 million, or $1.60 per diluted share, for fiscal 2018. Non-GAAP results for fiscal 2018 exclude (i) non-cash imputed interest expense related to the note issued to the seller as part of the consideration for the acquisition of DKI of $5.7 million, (ii) transitional expenses related to the acquisition of DKI of $2.1 million, (iii) asset impairments primarily related to leasehold improvements and furniture and fixtures at certain of our retail stores of $7.9 million and (iv) income tax charges of $7.5 million related to the one-time effect of the enactment of the Tax Cuts and Jobs Act. The aggregate effect of these exclusions in fiscal 2018 was equal to $0.35 per diluted share.

The company is projecting full-year adjusted EBITDA for fiscal 2019 between $262 million and $269 million compared to its previous forecast of adjusted EBITDA between $250 million and $260 million. This compares to full-year adjusted EBITDA of $201.3 million in fiscal 2018.

G-III designs, sources and markets apparel and accessories under owned, licensed and private label brands. G-III’s owned brands include DKNY, Donna Karan, Vilebrequin, G. H. Bass, Andrew Marc, Marc New York, Eliza J and Jessica Howard. 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 our 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. G-III also operates retail stores under the DKNY, Wilsons Leather, G. H. Bass, Vilebrequin, Karl Lagerfeld Paris and Calvin Klein Performance names.