Driven by sales more than doubling for Donna Karen/DKNY and 60 percent growth for Tommy Hilfiger, G-III Apparel Group Ltd. reported second-quarter results that came out well ahead of guidance.

In the quarter ended July 31, revenues grew 16.1 percent to $624.7 million. G-III had forecast sales of $590 million.

Earnings arrived at $10.1 million, or 20 cents a share, compared to a net loss of $8.6 million, or 18 cents, in the prior year’s comparable period. On an adjusted basis excluding charges related to the company’s acquisition of Donna Karan, non-GAAP earnings improved to a profit of 22 cents a share against a loss of 15 cents.

Guidance had called for adjusted earnings in the range of a loss of 7 cents to net income of 3 cents.

Net wholesale sales increased 16.4 percent to $545 million.

On a conference call with analysts, Morris Goldfarb, chairman and CEO, said Calvin Klein “continues to perform well, led by particular strength in dresses and suit separates.”

Tommy Hilfiger’s more than 60 gain was led by sportswear and dresses. Karl Lagerfeld had another strong quarter with sales up approximately 30 percent, driven by sportswear dresses and shoes.

The DKNY and Donna Karan businesses, acquired in December 2016, continued to grow as sales doubled. Goldfarb said the DKNY has “tremendous potential for growth” internationally as sales outside of North America are less than $100 million. Licensing also remains an untapped opportunity. A DKNY fragrance was launched with Estée Lauder in July, a DKNY underwear line with 2(X)IST will launch this holiday, and Marchon Eyewear will launch eyewear next spring.

Vilebrequin, the status swimwear and resort brand, had year-to-date worldwide positive comparable sales in the low single-digits.

G-III also produces fan apparel under the Touch by Alyssa Milano, Hands High, Starter, GIII for Her and GIII Sports by Carl Banks.

Goldfarb said the wholesale outerwear businesses are well-positioned for the upcoming fall and holiday season. He said, “Our order book is set up well, and we’re bringing in some really great products for our retail partners.”

The company’s outerwear offerings include Calvin Klein, DKNY, Donna Karan, Tommy Hilfiger, Karl Lagerfeld Paris and Andrew Marc.

Net sales of retail operations segment were flat to last year at $106 million. Same-store sales increased 2.5 percent at Wilsons stores while G.H. Bass showed a 2.8 percent decline.

Gross margin was 37.1 percent in the period, down from 37.7 percent in the prior year’s period. Wholesale gross margins declined to 33.4 percent compared to 32.4 percent due to increased licensing income and more favorable product mix. Retail segment gross margin fell to 46.6 percent, compared to 48.5 percent, due to lower gross margins at the company’s DKNY stores. The prior year gross margins for Donna Karan reflected the reversal of valuation reserves from the acquisition accounting. Gross margins for Wilsons and G. H. Bass stores was higher than last year.

Total SG&A expenses increased $199 million in the quarter from $196 million in the previous year, primarily related to increased bonus expense and salaries. As a percent of sales, SG&A was reduced to 31.8 percent from 36.4 percent.

The company increased prior guidance for the full fiscal year ending January 31, 2019. Sales are now expected to reach $3.06 billion and net income between $2.45 and $2.55 per diluted share. The company previously forecasted net sales of approximately $2.97 billion and net income between $2.20 and $2.30. This compares to net sales of $2.81 billion and net income of $1.25 for fiscal 2018.

The company is anticipating non-GAAP net income for fiscal 2019 between $2.52 and $2.62 per diluted share compared to previous guidance of between $2.27 and $2.37. The guidance compares to non-GAAP net income $1.60 a year ago.

Photo courtesy G-III Apparel