G-III Apparel Group, Inc. saw net sales for the fiscal fourth quarter decrease 10.5 percent to $764.8 million for the period ended January 31, compared to $854.4 million in the prior-year quarter.

Net income for the fourth quarter was $28.9 million, or 61 cents per diluted share, compared to a net loss of $261.1 million, or a loss of $5.54 per share, in the prior-year quarter. The prior year fourth quarter included a $291.5 million non-cash goodwill impairment charge, net of tax, or $6.19 per share.

Non-GAAP net income per diluted share was 76 cents for the fourth quarter compared to a loss of 41 cents in the prior-year quarter. Non-GAAP net income per diluted share excludes 

  1. Asset impairments of $6.5 million in the fourth quarter compared to $349.5 million in the prior year’s fourth quarter,  
  2. Expenses related to the Karl Lagerfeld transaction that include incentive compensation of $0.6 million in the fourth quarter and incentive compensation, professional fees and amortization of inventory adjustments of $0.3 million in the prior year’s fourth quarter, 
  3. Non-cash imputed interest expense of $0.2 million in the fourth quarter related to the note issued to the seller as part of the consideration for the acquisition of Donna Karan International compared to $1.8 million in the prior year’s fourth quarter, 
  4. One-time expenses, primarily related to our DKNY business in China, of $3.1 million in the fourth quarter, 
  5. The gain recorded from the reduction of the earnout liability related to our Sonia Rykiel acquisition of ($1.0) million in the fourth quarter,
  6. The adjustment to the investment gain in the fair value of the company’s minority ownership in Karl Lagerfeld that it held before the company became the sole owner of the Karl Lagerfeld entities of $3.9 million in the prior year’s fourth quarter, and 
  7. Bonus accrual expense reversed due to the goodwill impairment recognized of $17.9 million in the prior year’s fourth quarter only. The aggregate effect of these exclusions was equal to $0.15 per diluted share in this year’s fourth quarter and $5.95 per diluted share in the same period last year.

Morris Goldfarb, G-III’s chairman and CEO, said, “This year was important for G-III as we began to execute on our path for the future while delivering strong profitability. We delivered strong growth with DKNY, Karl Lagerfeld and Vilebrequin, increasing penetration of our higher margin, owned brands to 47 percent of fiscal 2024 net sales, up from 40 percent last year. Our diverse business model and disciplined operating approach have allowed us to further strengthen our credit profile as we ended the year in a net cash position, with over a billion dollars in liquidity. We began to implement our new growth initiatives with the successful launch of our Donna Karan brand and the development of three new additions to our portfolio, Nautica, Halston, and Champion outerwear, all of which we have recently brought to market with first deliveries in fiscal 2025.”

Goldfarb concluded, “Looking ahead, we are optimistic about fiscal year 2025, with the launches of our new initiatives and the continued organic growth of our owned brands. As we build new brands, we will invest in high-impact global marketing to support our brands and their launches, as well as in talent and technology to enhance our operational capabilities. We have the financial flexibility to invest in our growth and in our new initiatives as well as to explore strategic opportunities. I am confident in our path forward and our ability to deliver long-term growth.”

Fiscal 2024
Net sales for the fiscal year ended January 31, 2024 decreased 4.0 percent to $3.10 billion from $3.23 billion in the prior year. The company reported net income for the fiscal year of $176.2 million, or $3.75 per diluted share, compared to a net loss of $(133.1) million, or $(2.79) per share, in the prior year. The preceding year’s results include a $291.5 million non-cash goodwill impairment charge, net of tax, or $6.12 per share.

Non-GAAP net income per diluted share was $4.04 compared to $2.85 in the prior year. Non-GAAP net income per diluted share excludes

  1.  Asset impairments of $6.8 million this year compared to $349.7 million in the prior year, 
  2. Expenses related to the Karl Lagerfeld transaction that include incentive compensation of $6.1 million this year and incentive compensation, professional fees, amortization of inventory adjustments and foreign currency losses of $13.9 million in the prior year, 
  3. Non-cash imputed interest expense of $3.8 million this year related to the Seller Note compared to $6.9 million in the prior year, 
  4. One-time expenses, primarily related to our DKNY business in China, of $3.1 million in the current year, 
  5. The gain recorded from the reduction of the earnout liability related to our Sonia Rykiel acquisition of $(1.0) million in the current year,
  6. The investment gain in the fair value of the company’s minority ownership in Karl Lagerfeld that it held before the company became the sole owner of the Karl Lagerfeld entities of $27.1 million in the prior year, and 
  7. Bonus accrual expense reversed due to the goodwill impairment recognized of $(17.9) million in the prior year only. The aggregate effect of these exclusions was $0.29 per diluted share this year and $5.64 per diluted share for the previous year.

Outlook
Today, the company issued its outlook for the fiscal year ending January 31, 2025. This outlook anticipates approximately $60.0 million in incremental expenses, primarily associated with the launches of Donna Karan, Nautica and Halston. Roughly 65 percent of these expenses are related to marketing initiatives to support the Donna Karan and DKNY brands. The remaining costs are principally associated with technology and talent to expand operational capabilities.

  • For Fiscal 2025, the company expects net sales of approximately $3.20 billion and net income between $167.0 million and $172.0 million, or between $3.50 and $3.60 per diluted share. This compares to net sales of $3.10 billion and net income of $176.2 million, or $3.75 per diluted share, for fiscal 2024. Non-GAAP net income for fiscal 2025 is expected to be between $167.0 million and $172.0 million, or between $3.50 and $3.60 per diluted share. This compares to non-GAAP net income of $189.8 million, or $4.04 per diluted share, for fiscal 2024. Full-year adjusted EBITDA for fiscal 2025 is expected to be between $290.0 million and $295.0 million compared to adjusted EBITDA of $324.1 million in fiscal 2024.
  • First Quarter Fiscal 2025, the company expects net sales of approximately $615.0 million compared to $606.6 million in the same period last year. Net loss is expected to be in the range of $(5.0) million and break-even, or $(0.10) and $0.00 per share; this compares to net income of $3.2 million, or $0.07 per diluted share, in last year’s first quarter. Non-GAAP net income for the first quarter of fiscal 2025 is expected to be between $(5.0) million and break-even, or between $(0.10) and $0.00 per share; this compares to non-GAAP net income of $6.0 million, or $0.13 per diluted share, for the first quarter of fiscal 2024.

Non-GAAP Financial Measures
Reconciliations of GAAP net income (loss) to non-GAAP net income (loss), GAAP net income (loss) per diluted share to non-GAAP net income per diluted share, and GAAP net income (loss) to adjusted EBITDA are presented in tables accompanying the financial statements included in this release and provide useful information to evaluate the company’s operational performance. A description of the amounts excluded on a non-GAAP basis is provided in conjunction with these tables. Non-GAAP net income, non-GAAP net income per diluted share, and adjusted EBITDA should be evaluated in light of the company’s financial statements prepared in accordance with GAAP.

Image courtesy cG-III Apparel Group/DKNY