G-III Reports Robust Q3 Earnings and Sales Growth

This growth resulted from broad-based strength in the company’s business, including strong sales growth in outerwear, dresses, suits and sportswear, as well as an improved performance from the company’s retail outlet store business. The company makes apparel under  licenses with the National Football League, National Basketball Association, Major League Baseball, National Hockey League, Touch by Alyssa Milano and more than 100 U.S. colleges and universities.

Net income for the third quarter of fiscal 2011 grew by 32.2% to $42.7 million compared to $32.3 million in the prior year’s quarter. Net income per diluted share grew by 15.5% to $2.16 per diluted share from $1.87 per diluted share in the year-ago quarter. The company noted that it had 19.8 million weighted shares outstanding for the quarter compared to 17.2 million weighted shares outstanding for the third quarter last year.

“Our diversification has resulted in strong growth and continued expansion of our opportunities,” said Morris Goldfarb, G-III’s chairman and CEO. “We have executed well and produced record results for sales and earnings in the third quarter.”

Goldfarb concluded, “As we look ahead to next year, we are excited about several new initiatives, including the launch of our handbag and luggage business with Calvin Klein, the ongoing development of our own Andrew Marc, Marc New York and Marc Moto lifestyle brands, the continued expansion of licensed properties in our dress business, and the roll-out of our jointly operated Vince Camuto retail stores. Additionally, we believe that our strong balance sheet will enable us to pursue new opportunities for growth. We believe that G-III is well positioned to create significant and sustained value for our shareholders.”

Outlook
For the fiscal year ending Jan. 31, 2011, the company has revised its guidance and now expects net sales of approximately $1.05 billion, compared to its prior guidance of net sales of approximately $1.03 billion, net income in the range of $54.3 million to $56.3 million, compared to its prior guidance of net income in the range of $52.0 million to $54.0 million, and diluted net income per share between $2.73 and $2.83, compared to its prior guidance of diluted net income per share between $2.60 and $2.70.

The company is also now forecasting EBITDA for the fiscal year ending Jan. 31, 2011 to increase approximately 61% to 66% from fiscal 2010 to a range of approximately $99.1 million to $102.3 million compared to its prior guidance of EBITDA in the range of $96.3 million to $99.3 million. EBITDA should be evaluated in light of the Company’s financial results prepared in accordance with US GAAP. A reconciliation of EBITDA to net income in accordance with US GAAP is included in a table accompanying the condensed financial statements in this release.

 

G-III APPAREL GROUP, LTD. AND SUBSIDIARIES (NASDAQGS:GIII) CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share amounts) (Unaudited)
			Three Months Ended							Nine Months Ended
			10/31/10			10/31/09				10/31/10					10/31/09
Net sales			$	450,002			363,540			$	793,239				$	607,029
Cost of sales				296,055			237,912				529,502					409,371
Gross profit				153,947			125,628				263,737					197,658
Selling general and administrative    expenses				80,140			66,738				183,665					150,817
Depreciation and amortization				1,508			1,303				4,065					4,091
Operating profit				72,299			57,587				76,007					42,750
Interest and financing charges, net				1,706			1,891				2,702					3,599
Income before income taxes				70,593			55,696				73,305					39,151
Income tax expense				27,871			23,393				28,955					16,443
Net income			$	42,722		$	32,303			$	44,350				$	22,708
Basic net income per common share			$	2.22		$	1.93			$	2.32				$	1.36
Diluted net income per common share			$	2.16		$	1.87			$	2.26				$	1.33
Weighted average shares outstanding:
Basic				19,227			16,770				19,087					16,740
Diluted				19,764			17,238				19,606					17,011
Selected Balance Sheet Data (in thousands):									At October 31, 2010					At October 31, 2009
Cash										$	16,586				$	16,633
Working Capital											221,400					127,535
Inventory											208,507					127,087
Total Assets											620,909					464,417
Short-term Revolving Debt											166,739					167,815
Total Stockholders' Equity										$	285,660				$	187,631