G-III is seeing success with its diversification strategy and is also adding synergies between its core business and the acquired Marvin Richards and Winlit businesses. Second quarter net sales were $69.1 million compared to net sales of $54.6 million last year, a 26.6% increase. While the companys net loss increased substantially to $1.7 million, or 14 cents per share, compared to a net loss of $301,000, or 3 cents per share, G-III exceeded previous guidance for the second quarter, cutting its expected red ink in half.
Previously, the company anticipated a net loss between 30 cents and 35 cents per share.
G-III exceeded their top-line guidance by over $9 million mainly on strength in Calvin Klein outerwear sales and womens suits & dresses, both of which booked above expectations. In addition, new shipments of the Exsto brand of urban sportswear to Wal-Mart helped boost the top line.
G-III increased sales guidance by $10 million for the year to $410 million and has already booked roughly 90% of this forecast for the remainder of the year. While G-III made a corresponding increase to its top-line guidance, the company exceeded Q2 earnings guidance by 15 cents and management only increased year-to-date earnings guidance by a nickel.
Many analysts felt that this implied a potential for margin erosion in the back-half, while management said that they are simply be playing it safe with several relatively new businesses to forecast and a sensitive retail environment.