G-III Apparel Sees Double-Digit Growth In Q1

G-III Apparel Group, Ltd. reported sales for the first quarter ended April 30 increased 16 percent to a first quarter record of $611.7 million compared to $529.0 million in the year-ago period. Profits came well ahead of Wall Street’s targets and guidance was raised for the year.

The company reported net income for the first quarter of $9.9 million, or 20 cents per share, compared to a net loss of $10.4 million, or 21 cents per share, in the prior year’s comparable period.

Non-GAAP net income per diluted share was 22 cents for the first quarter of this year compared to a non-GAAP net loss of 18 cents per share in the same period last year. Wall Street’s consensus estimate had been 4 cents.

Non-GAAP net income per diluted share and net loss per share excludes (i) non-cash imputed interest expense related to the note issued to seller as part of the consideration for the acquisition of Donna Karan International (DKI) of $1.2 million in this quarter compared to $1.4 million in first quarter last year and (ii) professional fees related to the acquisition of DKI of $1.1 million in the first quarter of last year. The aggregate effect of these exclusions was equal to 2 cents per diluted share in the first quarter this year and $0.03 per diluted share in the first quarter last year.

Morris Goldfarb, G-III’s chairman and chief executive officer, said, “We are pleased to have begun the year with a solid quarter across the board. Strong brands, quality product, diversified distribution and great execution continue to be our winning formula. We are excited to see the momentum continue and have increased confidence in our outlook for the remainder of this year. We believe our long-term growth opportunities have never been more compelling and we remain focused on capturing market share, driving growth, improving profitability and creating exceptional value for our shareholders.”

Outlook

The company increased its prior guidance for the full fiscal year 2019 ending January 31, 2019. The company now expects net sales of approximately $2.97 billion and net income between $112 million and $117 million, or between $2.20 and $2.30 per diluted share, for fiscal 2019. The company previously forecasted net sales of approximately $2.94 billion and net income between $97 million and $102 million, or between $1.90 and $2.00 per diluted share, for fiscal 2019.

The company is anticipating non-GAAP net income for fiscal 2019 between $116 million and $121 million, or between $2.27 and $2.37 per diluted share compared to previous guidance of non-GAAP net income for fiscal year 2019 between $101 million and $106 million, or between $1.98 and $2.08 per diluted share. Non-GAAP guidance excludes non-cash imputed interest expense of approximately $5.0 million, or 7 cents per diluted share, related to the note issued to the seller as part of the consideration for the DKI acquisition.

The company is projecting full-year adjusted EBITDA for fiscal 2019 between $236 million and $246 million compared to its previous forecast of adjusted EBITDA between $218 million and $227 million.

For the second quarter of fiscal 2019 ending July 31, 2018, the company is forecasting net sales of approximately $590 million and net income or loss between a net loss of $3.5 million and net income of $1.5 million, or between a net loss of 7 cents per share and net income of 3 cents per diluted share. This forecast compares to net sales of $538.0 million and a net loss of $8.6 million, or 18 cents per share, reported for the second quarter of fiscal 2018.

The second quarter forecast includes non-cash imputed interest expense of $1.2 million related to the note issued to the seller as part of the consideration for the DKI acquisition. On an adjusted basis, excluding imputed interest expense, the company is forecasting a second quarter non-GAAP net income, or loss between a net loss of $2.6 million and net income of $2.4 million, or between a net loss of $(0.05) per share and net income of 5 cents per diluted share.

G-III’s owned brands include Donna Karan, DKNY, 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, Ivanka Trump, Kensie, Levi’s and Dockers brands. Through the 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, Calvin Klein Performance and Karl Lagerfeld Paris names.