G-III Apparel Group, Ltd.
reported sales increased by 32.6% in the fourth quarter ended Jan. 31, to
$170.7 million from $128.7 million. The company lost $32.1 million, or $1.93 a
share, due to a goodwill impairment charge of recorded non-cash charges for the
impairment of goodwill and trademarks during the fourth quarter of $33.5
million on a pre-tax basis, $1.69 per share on an after-tax basis.
the non-cash charge for the impairment of goodwill and trademarks during the
fourth quarter, the adjusted net loss per share for the quarter was 23 cents a
share compared to adjusted net income per diluted share of 15 cents during the
comparable period last year.
fiscal year ended Jan. 31, G-III reported net sales increased by 37.1% to
$711.1 million from $518.9 million last year. The full-year net loss came to
$xx, or 85 cents a share, after the impairment charge compared to net income
per diluted share of xx, or $1.05, last year. Adjusted net income per diluted
share for the year, excluding these impairment charges, was 84 cent a share
compared to adjusted net income per diluted share of $1.14 in the prior year.
adjusted net income excludes the effects of three different non-recurring
items: (i) a $3.0 million pre-tax charge in cost of sales, equal to $0.11 per
diluted share on an after-tax basis, to reflect losses with respect to vendor
financing that the Company guaranteed; (ii) a $720,000 pre-tax charge in cost
of sales, equal to $0.03 per diluted share on an after-tax basis, related to
the termination of a license agreement; and (iii) a pre-tax gain of $860,000,
included in selling general and administrative costs , equal to $0.05 per
diluted share on an after-tax basis, related to the reversal of an accrued
expense reserve which was originally recorded in connection with the close down
of our Indonesian facility.
For the fiscal year ended
January 31, 2009, EBITDA decreased 3.2% to $36.6 million from $37.8 million in
the prior fiscal year. EBITDA should be evaluated in light of the company's
financial results prepared in accordance with GAAP. A reconciliation of EBITDA
to net income in accordance with GAAP is included in a table accompanying the
condensed financial statements in this release.
The company reduced its seasonal
bank debt outstanding as of the end of the third quarter in line with its plan.
Bank debt was reduced by $142 million, leaving $29 million outstanding at
January 31, 2009. Inventory at the close of the fiscal year was approximately
$117 million compared to the year-ago level of $60 million. The company noted
that of the $57 million increase, an aggregate of $34 million related to
inventory for the
retail outlet business acquired in July 2008 and the Andrew Marc business
acquired in February 2008. Inventory also increased by an additional aggregate
of $19 million in non-outerwear categories primarily related to growth of the
Company's dress businesses and the launch of Calvin Klein women's sportswear.
Core outerwear inventory was approximately $4 million higher than at the end of
last year.
Morris Goldfarb, G-III's
chairman and chief executive officer, said, “We continue to be in a strong
competitive and strategic position, despite the difficult market environment.
Our licensed and non-licensed segments had another good year. However, we were
required to record an impairment charge under applicable accounting rules
primarily as a result of our market capitalization declining to a level below
our book value . Notwithstanding these required charges, our cash flow remains
strong and we believe our portfolio of brands has good long-term growth
potential. Our financial results for the year, excluding the impairment
charges, speak to our excellent value proposition and our high degree of
diversification. Additionally, we have a healthy balance sheet, adequate
availability under our credit line, and a business philosophy and corporate
culture that enables us to succeed even in difficult times like these.”
Goldfarb continued,
“We have recently taken a variety of actions to improve our financial
performance, including additional reductions in personnel, reductions in
executive and board compensation, other expense reductions, and a careful
streamlining of our operations to maximize our potential in what may be a
prolonged, difficult consumer environment. At the same time, we intend to
continue to invest in the areas of our business that we expect will grow.”
Goldfarb concluded,
“There are several bright spots in our business at the moment, including
dresses, which continue to book and sell-through well, and an excellent early
performance from our first shipments of Calvin Klein women's sportswear. We
believe that these bright spots, and a number of other potential opportunities,
can deliver value to consumers, to our customers, and to our shareholders.”
Outlook
The company is
forecasting net sales of approximately $105 million for its first fiscal
quarter ending April 30, 2009, compared to $75.4 million in last year's first
fiscal quarter. The Company is also forecasting a net loss of $8.0 million to
$8.8 million, or between $0.48 and $0.53 per share, compared to a net loss of
$6.9 million, or $0.42 per share, in last year's first fiscal quarter. The
first quarter historically results in seasonal losses. The company also noted
that results this year include the operation of the
retail outlet stores that were not owned during the first quarter last year.
Similar to our wholesale outerwear businesses, the outlet store business is
also subject to seasonal losses in the first quarter.
|
G-III APPAREL GROUP, LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share amounts) (Unaudited) |
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|
Three Months Ended |
Twelve Months Ended |
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|
1/31/09 |
1/31/08 |
1/31/09 |
1/31/08 |
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| Net sales | $ | 170,688 | $ | 128,676 | $ | 711,146 | $ | 518,868 | |||||
| Cost of sales | 128,935 | 98,757 | 510,455 | 379,417 | |||||||||
| Gross profit | 41,753 | 29,919 | 200,691 | 139,451 | |||||||||
| Selling, general and administrative expenses | 45,473 | 26,650 | 164,098 | 101,669 | |||||||||
| Goodwill impairment | 31,202 | – | 31,202 | – | |||||||||
| Trademark impairment | 2,321 | – | 2,321 | – | |||||||||
| Depreciation and amortization | 1,692 | 1,292 | 6,947 | 5,427 | |||||||||
| Operating profit/(loss) | (38,935 | ) | 1,977 | (3,877 | ) | 32,355 | |||||||
| Interest and financing charges, net | 1,403 | 854 | 5,564 | 3,158 | |||||||||
| Income/(loss) before income taxes | (40,338 | ) | 1,123 | (9,441 | ) | 29,197 | |||||||
| Income tax expense/(benefit) | (8,213 | ) | 56 | 4,588 | 11,707 | ||||||||
| Net income/(loss) | $ | (32,125 | ) | $ | 1,067 | $ | (14,029 | ) | $ | 17,490 | |||
| Net income/(loss) per common share: | |||||||||||||
| Basic | $ | (1.93 | ) | $ | 0.06 | $ | |||||||
