G-III Apparel Group continued its decline due primarily to waning fashion licensed apparel sales, reporting that net sales for its fiscal second quarter ended October 31 declined 8.4% to $114.9 million, compared to $125.5 million in the year-ago quarter. Net income shrunk 13.0% to $9.9 million, or $1.33 per diluted share, versus net income of $11.4 million, or $1.50 per diluted share, in the comparable period last year.

CEO Morris Goldfarb said he was “pleased with the direction” of the business “in general”, but acknowledged that “the market is a bit softer” than they had anticipated. In a conference call with analysts he said they had worked hard to offset the decline in retro fashion sports apparel, but also indicated that the core sports business “remains strong and well-positioned for the upcoming year.” Wool and leather commemorative NFL and MLB championship jackets were said to be the “hottest selling items in team sports” for Fall 2004. They see the category, along with NCAA activewear in both Men’s and Women’s, are pegged for strong growth in 2005. Management said next year is already looking to see an improvement in 2005 as larger accounts “respond favorably” to the product line.

The company pointed to its various outerwear licenses as key to their success.

G-III cut its EPS guidance for the year, now estimating earnings per diluted share between 18 cents and 23 cents, down 20 cents from previous forecast of 38 cents to 43 cents per diluted share. The decreased guidance was blamed on weather and leather, which hurt gross margins. YTD margins were down 410 basis points to 26.2% of sales. The company’s forecast for net sales for the year remains at approximately $215 million, but more is expected to be sold for less.