G-III Apparel Group, Ltd. has signed a license agreement with Converse, Inc. to design and produce men’s and women’s apparel for distribution globally. The product is expected to launch in Fall 2025.
G-III said with Converse holding a position as an iconic American youth lifestyle brand the agreement represents a significant opportunity for the company to expand the G-III active lifestyle business, “providing exposure to a differentiated consumer and distribution network while leveraging existing fashion talent.”
Morris Goldfarb, G-III’s chairman and CEO, said, “Having the most desirable brands is central to our strategy and I am pleased with the transition to our go-forward portfolio, which will continue to evolve for the future. Our new businesses are working, and I am excited to announce a licensing agreement for Converse, Inc., a globally recognized American youth lifestyle brand. This new partnership represents a significant opportunity to expand our active lifestyle category while leveraging our core capabilities to build a global apparel business. The powerful combination of our brands, our business model and diverse growth drivers, together with our agility, operating discipline and strong foundation give us confidence that our strategy will deliver long-term shareholder value.”
The company also reported results for the fiscal 2025 second quarter ended July 31, indicating that net sales for the period decreased 2 percent to $644.8 million, compared to $659.8 million in the prior-year second quarter.
Net income for the second quarter was $24.2 million, or 53 cents per diluted share, compared to $16.4 million, or 35 cents per diluted share, in the prior-year Q2 period. Non-GAAP net income per diluted share was 52 cents for the 2025 second quarter compared to 40 cents per share in the Q2 period last year.
“We delivered a strong first half of the year. Our second quarter non-GAAP net income per diluted share of 52 cents exceeded our expectations, led by our owned brands,” Goldfarb commented. “DKNY and Karl Lagerfeld collectively grew double-digits and the Donna Karan relaunch has been incredibly successful, in addition to continued solid performance with healthy sell-throughs across the rest of our business.”
Non-GAAP net income per diluted share excludes:
- In the second quarter of fiscal 2025, the $0.6 million gain on the forgiveness of certain liabilities related to the acquisition of the minority interest of G-III’s DKNY business in China that it did not already own;
- In the second quarter of fiscal 2024, incentive compensation expenses of $1.8 million related to the Karl Lagerfeld transaction; and
- In the second quarter of fiscal 2024, non-cash imputed interest expense of $1.1 million related to the note issued to seller as part of the consideration for the acquisition of Donna Karan International. The aggregate effect of these exclusions was equal to a loss of 1 cent per diluted share in the second quarter of this year and 5 cents per diluted share in last year’s second quarter.
Balance Sheet Summary
Inventories decreased 24 percent to $610.5 million at quarter-end, compared to $804.9 million at the corresponding time last year.
During the quarter, G-III bought back 1,180,328 shares of common stock for an aggregate purchase price of $31.6 million.
Outlook
Mr. Goldfarb concluded, “Given our second quarter earnings per diluted share outperformance, we are reaffirming our fiscal year 2025 net sales and, once again, raising our earnings per diluted share outlook. Despite the uncertain macroeconomic environment, we remain optimistic about the remainder of the year and our order book is in a good position for the important Fall and Holiday seasons.”
G-III Apparel Group, Ltd. updated its outlook for the fiscal year ending January 31, 2025. This outlook continues to anticipate approximately $60.0 million in incremental expenses, primarily associated with the launches of Donna Karan, Nautica and Halston. Approximately 65 percent of these expenses are said to be related to marketing initiatives to support the Donna Karan and DKNY brands. The remaining costs are principally related to technology and talent to expand operational capabilities.
Fiscal 2025
- Net sales are expected to increase by approximately 3 percent to $3.20 billion (unchanged to prior guidance), compared to net sales of $3.10 billion for fiscal 2024.
- Net income is expected to come in between $179.0 million and $184.0 million (prior $170.0 million and $175.0 million), or diluted earnings per share between $3.94 and $4.04 (prior $3.58 and $3.68). This compares to 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 come in between $180.0 million and $185.0 million (prior $170.0 and $175.0 million), or diluted earnings per share between $3.95 and $4.05 (prior $3.58 and $3.68). This compares to non-GAAP net income of $189.8 million, or diluted earnings per share of $4.04 for fiscal 2024.
- Adjusted EBITDA for fiscal 2025 is expected to come in between $305.0 million and $310.0 million (prior $295.0 million and $300.0 million) compared to adjusted EBITDA of $324.1 million in fiscal 2024.
- Net interest expense for the year is expected to be approximately $24.0 million, including a $1.7 million non-GAAP charge related to the write-off of deferred financing costs associated with the redemption of senior secured notes. The company estimates a tax rate of 28.5 percent for fiscal 2025.
Third Quarter Fiscal 2025
- Net sales for the third quarter of fiscal 2025 are expected to increase by approximately 3 percent to $1.10 billion compared to $1.07 billion in the third period last year.
- Net income for the third quarter of fiscal 2025 is expected to be in the range of $97.0 million and $102.0 million, or diluted earnings per share between $2.18 and $2.28. This compares to net income of $127.6 million, or diluted earnings per share of $2.74, in last year’s third quarter.
- Non-GAAP net income for the third quarter of fiscal 2025 is expected to come in between $98.0 million and $103.0 million, or diluted earnings per share between $2.20 and $2.30. This compares to non-GAAP net income of $129.6 million, or diluted earnings per share of $2.78, for the third quarter of fiscal 2024.
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