Vision, Passion, Diversification and Growth are at the heart of GIII

Press Release Details

<<  Back
March 19, 2020

G-III Apparel Group, Ltd. Announces Fourth Quarter and Full-year Fiscal 2020 Results

— Reports a Record Year of Net Sales, Adjusted EBITDA, Net Income and Net Income Per Diluted Share—

Net Income Per Diluted Share for Fiscal 2020 Increased 7%—

Non-GAAP Net Income Per Diluted Share for Fiscal 2020 Increased 12%—

—Net Income Per Diluted Share for the Fourth Quarter Increased to $0.52 from $0.48 Last Year—

— Non-GAAP Net Income Per Diluted Share for the Fourth Quarter Increased to $0.75 from $0.55 Last Year—

— Cash and Availability of $800 Million at Fiscal Year End 2020 —

NEW YORK--(BUSINESS WIRE)-- G-III Apparel Group, Ltd. (NasdaqGS: GIII) today announced operating results for the fourth quarter and full fiscal 2020 year ended January 31, 2020.

Net sales for the fiscal year ended January 31, 2020 increased 2.7% to $3.16 billion from $3.08 billion in the prior year. The Company reported GAAP net income for the fiscal year of $143.8 million, or $2.94 per diluted share, compared to $138.1 million, or $2.75 per diluted share, in the prior year.

Non-GAAP net income per diluted share was $3.19 for fiscal 2020 compared to $2.86 in the prior fiscal year. Non-GAAP net income per diluted share excludes (i) non-cash imputed interest expense of $5.4 million in fiscal 2020 and $5.0 million in fiscal 2019 related to the note issued to seller (the “Seller Note”) as part of the consideration for the acquisition of Donna Karan International, (ii) asset impairments primarily related to leasehold improvements and furniture and fixtures at certain of our retail stores, net of gain on lease terminations, of $19.4 million in fiscal 2020 and $2.8 million in fiscal 2019 and (iii) a non-cash income tax gain of $6.7 million primarily from foreign tax rate changes in fiscal 2020. The aggregate effect of these exclusions was equal to $0.25 per diluted share in fiscal 2020 and $0.11 per diluted share in fiscal 2019.

For the fourth quarter ended January 31, 2020, net sales decreased by 1.6% to $754.6 million from $766.8 million in the fourth quarter last year. The Company reported GAAP net income of $25.3 million, or $0.52 per diluted share, in the fourth quarter compared to $24.1 million, or $0.48 per diluted share, in the fourth quarter last year.

Non-GAAP net income per diluted share was $0.75 for the fourth quarter of fiscal 2020 compared to $0.55 per share in the fourth quarter last year. Non-GAAP net income per diluted share excludes (i) non-cash imputed interest expense of $1.4 million in the fourth quarter of fiscal 2020 and $1.3 million in the fourth quarter of fiscal 2019 related to the Seller Note, (ii) asset impairments primarily related to leasehold improvements and furniture and fixtures at certain of our retail stores of $21.7 million in fiscal 2020 and $2.8 million in fiscal 2019 and (iii) a non-cash income tax gain of $6.7 million primarily from foreign tax rate changes in fiscal 2020. The aggregate effect of these exclusions was equal to $0.23 per diluted share in the fourth quarter of fiscal 2020 and $0.07 per diluted share in the fourth quarter of fiscal 2019.

Morris Goldfarb, G-III’s Chairman and Chief Executive Officer, said, “The coronavirus outbreak has sent shockwaves through our industry and country. The health and welfare of our associates is of utmost importance to us. We have closed our retail stores and corporate offices and continue to work remotely or from safe spaces in order to remain operational.”

Mr. Goldfarb continued, “We currently have approximately $800 million of cash and availabilty under our bank facilities. This strong financial position is important as we move forward and strategically plan the balance of our year. We remain confident in our ability to adjust and adapt to the challenges and opportunities that lie ahead.”

Mr. Goldfarb concluded, “We continue towards the restructuring of our retail operations. We are focused on significantly reducing the number of stores we operate and remain committed to substantially reducing the losses from our retail operations as swiftly and efficiently as possible. We reported another year of growth driven by our wholesale segment. Our success remains anchored by our five global power brands: DKNY, Donna Karan, Calvin Klein, Tommy Hilfiger and Karl Lagerfeld. We are confident our solid wholesale business, along with a more streamlined retail operation, creates a strong foundation for continued growth.”

Outlook

The Company is closely monitoring the developments associated with the coronavirus outbreak and its impact on our sales, results of operations and supply chain. It is difficult to forecast the effects of the outbreak on our fiscal 2021 results. As a result, the Company is not currently providing any guidance and expects to provide additional information when it releases results for its first quarter of fiscal 2021.

Non-GAAP Financial Measures

Reconciliations of GAAP net income per diluted share to non-GAAP net income per diluted share are presented in tables accompanying the condensed financial statements included in this release and provide useful information to evaluate the Company’s operational performance. Non-GAAP net income per diluted share should be evaluated in light of the Company’s financial statements prepared in accordance with GAAP.

About G-III Apparel Group, Ltd.

G-III designs, sources and markets apparel and accessories under owned, licensed and private label brands. G-III’s owned brands include DKNY, Donna Karan, Vilebrequin, G. H. Bass, Andrew Marc, Marc New York, Eliza J and Jessica Howard. G- III has fashion licenses under the Calvin Klein, Tommy Hilfiger, Karl Lagerfeld Paris, Kenneth Cole, Cole Haan, Guess?, Vince Camuto, Levi's and Dockers brands. Through our team sports business, G-III has licenses with the National Football League, National Basketball Association, Major League Baseball, National Hockey League, and over 150 U.S. colleges and universities. G-III also operates retail stores under the DKNY, Wilsons Leather, G. H. Bass, Vilebrequin, Karl Lagerfeld Paris and Calvin Klein Performance names.

Statements concerning G-III's business outlook or future economic performance, anticipated revenues, expenses or other financial items; restructuring plans; product introductions and plans and objectives related thereto; and statements concerning assumptions made or expectations as to any future events, conditions, performance or other matters are "forward-looking statements" as that term is defined under the Federal Securities laws. Forward-looking statements are subject to risks, uncertainties and factors which include, but are not limited to, reliance on licensed product, reliance on foreign manufacturers, risks of doing business abroad, the current economic and credit environment, the nature of the apparel industry, including changing customer demand and tastes, customer concentration, seasonality, risks of operating a retail business, risks related to G-III’s ability to reduce the losses incurred in its retail operations, customer acceptance of new products, the impact of competitive products and pricing, dependence on existing management, possible disruption from acquisitions, risks from the outbreak of the coronavirus, the impact on G-III’s business of the imposition of tariffs by the United States government and business and general economic conditions, as well as other risks detailed in G-III's filings with the Securities and Exchange Commission. G-III assumes no obligation to update the information in this release.

 

G-III APPAREL GROUP, LTD. AND SUBSIDIARIES
(Nasdaq: GIII)
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended
January 31,

 

Year Ended
January 31,

 

 

2020

 

2019

 

2020

 

2019

 

 

(Unaudited)

 

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales

 

$

754,617

 

 

$

766,785

 

 

$

3,160,464

 

 

$

3,076,208

 

Cost of goods sold

 

 

503,529

 

 

 

507,847

 

 

 

2,042,524

 

 

 

1,969,099

 

Gross profit

 

 

251,088

 

 

 

258,938

 

 

 

1,117,940

 

 

 

1,107,109

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative expenses

 

 

187,293

 

 

 

201,780

 

 

 

832,180

 

 

 

834,763

 

Depreciation and amortization

 

 

9,772

 

 

 

9,951

 

 

 

38,735

 

 

 

38,819

 

Asset impairments, net of gain on lease terminations

 

 

21,717

 

 

 

2,813

 

 

 

19,371

 

 

 

2,813

 

Operating profit

 

 

32,306

 

 

 

44,394

 

 

 

227,654

 

 

 

230,714

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other loss

 

 

(427

)

 

 

(2,657

)

 

 

(1,149

)

 

 

(2,960

)

Interest and financing charges, net

 

 

(10,784

)

 

 

(11,771

)

 

 

(44,407

)

 

 

(43,924

)

Income before income taxes

 

 

21,095

 

 

 

29,966

 

 

 

182,098

 

 

 

183,830

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income tax expense (benefit)

 

 

(4,193

)

 

 

5,886

 

 

 

38,261

 

 

 

45,763

 

Net income

 

$

25,288

 

 

$

24,080

 

 

$

143,837

 

 

$

138,067

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income per common share:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.53

 

 

$

0.49

 

 

$

2.98

 

 

$

2.81

 

Diluted

 

$

0.52

 

 

$

0.48

 

 

$

2.94

 

 

$

2.75

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

47,841

 

 

 

49,032

 

 

 

48,209

 

 

 

49,140

 

Diluted

 

 

48,484

 

 

 

50,088

 

 

 

48,895

 

 

 

50,274

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selected Balance Sheet Data (in thousands):

 

At January 31,

 

 

2020

 

2019

 

 

(Unaudited)

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

197,372

 

$

70,138

Working capital

 

 

754,728

 

 

673,107

Inventories

 

 

551,918

 

 

576,383

Total assets (1)

 

 

2,565,137

 

 

2,208,058

Long-term debt

 

 

397,467

 

 

386,604

Operating lease liabilities (2)

 

 

312,206

 

 

Total Stockholders' Equity

 

 

1,290,672

 

 

1,189,009

 

(1)

Total assets now include operating lease assets of $270.0 million as of January 31, 2020 in accordance with ASC 842, Leases.

(2)

These liabilities are now included in accordance with ASC 842.

 

G-III APPAREL GROUP, LTD. AND SUBSIDIARIES
RECONCILIATION OF GAAP NET INCOME PER SHARE TO
NON-GAAP NET INCOME PER SHARE

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Year Ended

 

 

January 31,

 

January 31,

 

 

2020

 

2019

 

2020

 

2019

 

 

(Unaudited)

 

(Unaudited)

GAAP diluted net income per common share

 

$

0.52

 

$

0.48

 

$

2.94

 

$

2.75

 

 

 

 

 

 

 

 

 

 

 

 

 

Excluded from non-GAAP:

 

 

 

 

 

 

 

 

 

 

 

 

Non-cash imputed interest

 

 

0.03

 

 

0.04

 

 

0.11

 

 

0.10

Asset impairments, net of gain on lease terminations

 

 

0.45

 

 

0.05

 

 

0.40

 

 

0.05

Income tax impact of non-GAAP adjustments

 

 

(0.11)

 

 

(0.02)

 

 

(0.12)

 

 

(0.04)

Foreign tax rate changes

 

 

(0.14)

 

 

 

 

(0.14)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP diluted net income per common share, as defined

 

$

0.75

 

$

0.55

 

$

3.19

 

$

2.86

Non-GAAP diluted net income per common share is a “non-GAAP financial measure” that excludes non-cash imputed interest expense, asset impairments primarily related to leasehold improvements, furniture and fixtures and operating lease assets at certain of our retail stores, net of gain on lease terminations, and a non-cash income tax gain from foreign tax rate changes. The income tax impact of non-GAAP adjustments is calculated using the effective tax rates for the respective periods. Management believes that this non-GAAP financial measure provides meaningful supplemental information regarding our performance by excluding items that are not indicative of our core business operating results. Management uses this non-GAAP financial measure to assess our performance on a comparative basis and believes that it is also useful to investors to enable them to assess our performance on a comparative basis across historical periods and facilitate comparisons of our operating results to those of our competitors. The presentation of this financial information is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP.

 

G-III APPAREL GROUP, LTD. AND SUBSIDIARIES
RECONCILIATION OF NET INCOME TO ADJUSTED EBITDA
(In thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year Ended

 

Year Ended

 

 

January 31, 2020

 

January 31, 2019

 

 

(Unaudited)

 

(Unaudited)

Net income

 

$

143,837

 

$

138,067

 

 

 

 

 

 

 

Asset impairments, net of gain on lease terminations

 

 

19,371

 

 

2,813

Depreciation and amortization

 

 

38,735

 

 

38,819

Interest and financing charges, net

 

 

44,407

 

 

43,924

Income tax expense

 

 

38,261

 

 

45,763

 

 

 

 

 

 

 

Adjusted EBITDA, as defined

 

$

284,611

 

$

269,386

Adjusted EBITDA is a “non-GAAP financial measure” which represents earnings before depreciation and amortization, interest and financing charges, net, asset impairment charges primarily related to leasehold improvements, furniture and fixtures and operating lease assets at certain of our retail stores, net of gain on lease terminations and income tax expense. Adjusted EBITDA is being presented as a supplemental disclosure because management believes that it is a common measure of operating performance in the apparel industry. Adjusted EBITDA should not be construed as an alternative to net income, as an indicator of the Company’s operating performance, or as an alternative to cash flows from operating activities as a measure of the Company’s liquidity, as determined in accordance with GAAP.

 

G-III APPAREL GROUP, LTD. AND SUBSIDIARIES
RECONCILIATION OF NET INCOME TO NON-GAAP NET INCOME
(In thousands)

 

 

 

 

 

 

 

 

 

Year Ended

 

Year Ended

 

 

January 31, 2020

 

January 31, 2019

 

 

(Unaudited)

 

(Unaudited)

Net income

 

$

143,837

 

$

138,067

 

 

 

 

 

 

 

Excluded from non-GAAP:

 

 

 

 

 

 

Non-cash imputed interest

 

 

5,391

 

 

4,951

Asset impairments, net of gain on lease terminations

 

 

19,371

 

 

2,813

Income tax impact of non-GAAP adjustments

 

 

(5,744)

 

 

(1,932)

Foreign tax rate changes

 

 

(6,685)

 

 

 

 

 

 

 

 

 

Non-GAAP net income, as defined

 

$

156,170

 

$

143,899

Non-GAAP net income is a “non-GAAP financial measure” that excludes non-cash imputed interest, asset impairment charges primarily related to leasehold improvements, furniture and fixtures and operating lease assets at certain of our retail stores, net of gain on lease terminations, and a non-cash income tax gain from foreign tax rate changes. The income tax impact of non-GAAP adjustments is calculated using the effective tax rates for the respective periods. Management believes that this non-GAAP financial measure provides meaningful supplemental information regarding our performance by excluding items that are not indicative of our core business operating results. Management uses this non-GAAP financial measure to assess our performance on a comparative basis and believes that it is also useful to investors to enable them to assess our performance on a comparative basis across historical periods and facilitate comparisons of our operating results to those of our competitors. The presentation of this financial information is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP.

G-III Apparel Group, Ltd.

Company Contact:
Priya Trivedi
VP of Investor Relations and Treasurer
(646) 473-5157

Investor Relations Contact:
Tom Filandro
ICR, Inc.
(646) 277-1235

Source: G-III Apparel Group, Ltd.

Digg Digg   Facebook Facebook   LinkedIn Twitter Twitter