G-III Apparel Group, Ltd. Announces Second Quarter Fiscal 2012 Results
Net Sales for Second Quarter Increase 21.7% to $230 million
Reports Diluted Net Income per Share for Second Quarter of $0.08 versus Prior
Year's $0.15
NEW YORK, Sep 07, 2011 -- G-III Apparel Group, Ltd. (NASDAQ:GIII) today announced operating results for the second quarter of fiscal 2012.
For the quarter ended July 31, 2011, G-III reported that net sales increased by 21.7% to $230 million from $189 million in the year-ago period. The Company reported net income for the second quarter of $1.6 million, or $0.08 per diluted share, compared to net income of $3.0 million, or $0.15 per diluted share, in the prior year's comparable period.
Morris Goldfarb, G-III's Chairman and Chief Executive Officer, said, "We had a strong second quarter from a revenue perspective, but some softness in the market prompted us to provide higher levels of support and discounts to our customers. While this affected our gross margin in the quarter, we have done a good job of stimulating demand and keeping inventories current for us and our retail partners."
Mr. Goldfarb concluded, "We are shipping on a solid pace as we enter our key selling season. We believe that we are positioned properly for a strong second half. Our designs are trend-right across our suite of brands and product categories for fall and holiday and we have a compelling price and value relationship to show consumers. We continue to have a wide range of growth opportunities by brand, by category and by channel. We believe that we can continue to build our business both organically and through strategic acquisitions."
Outlook
The Company today revised its prior guidance for the full fiscal year ending January 31, 2012. The Company is now forecasting net sales of approximately $1.25 billion and net income between $62.5 million and $64.5 million, or a range of $3.05 and $3.15 per diluted share compared to its previous guidance of net sales of approximately $1.2 billion and net income between $64.5 million and $66.5 million, or a range of $3.15 and $3.25 per diluted share. The Company is now projecting EBITDA for fiscal 2012 to increase approximately 12% to 15% to between $115 million and $118 million compared to its previous guidance of between approximately $117 million and $121 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.
For its third fiscal quarter ending October 31, 2011, the Company is forecasting net sales of approximately $500 million compared to $450 million in the comparable quarter last year. The Company is also forecasting net income for the third fiscal quarter between $46.2 million and $47.8 million, or between $2.25 and $2.35 per diluted share, compared to net income of $42.7 million, or $2.16 per diluted share in last year's third quarter.
About G-III Apparel Group, Ltd.
G-III is a leading manufacturer and distributor of outerwear, dresses, sportswear and women's suits, as well as handbags and luggage, under licensed brands, our own brands and private label brands. G-III sells outerwear and dresses under our own Andrew Marc, Marc New York and Marc Moto brands and has licensed these brands to select third parties in certain product categories. G-III has fashion licenses under the Calvin Klein, Sean John, Kenneth Cole, Cole Haan, Guess?, Jones New York, Jessica Simpson, Vince Camuto, Nine West, Ellen Tracy, Tommy Hilfiger, Levi's and Dockers brands and sports 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. Our other owned brands include Jessica Howard, Eliza J, Black Rivet, G-III, G-III Sports by Carl Banks and Winlit. G-III also operates outlet stores under our Wilsons Leather name and is a party to a joint venture that operates outlet stores under the Vince Camuto name.
Statements concerning G-III's business outlook or future economic performance, anticipated revenues, expenses or other financial items; 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, customer acceptance of new products, the impact of competitive products and pricing, dependence on existing management, possible disruption from acquisitions 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
(nasdaqgs:GIII)
CONSOLIDATED STATEMENTS OF OPERATIONS AND
SELECTED BALANCE SHEET DATA
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended Six Months Ended
July 31, July 31,
2011 2010 2011 2010
---------- ---------- ---------- ----------
Net sales $ 229,975 $ 188,960 $ 426,846 $ 343,237
Cost of sales 164,404 128,206 301,820 233,447
------- ------- ------- -------
Gross profit 65,571 60,754 125,026 109,790
Selling, general and administrative expenses 59,826 53,844 117,751 103,525
Depreciation and amortization 1,852 1,277 3,376 2,557
------- ------- ------- -------
Operating profit 3,893 5,633 3,899 3,708
Equity in joint venture 376 - 475
Interest and financing charges, net 952 634 1,711 996
------- ------- ------- -------
Income before taxes 2,565 4,999 1,713 2,712
Income tax expense 1,000 2,000 668 1,085
------- ------- ------- -------
Net income $ 1,565 $ 2,999 $ 1,045 $ 1,627
========= ========= ========= =========
Net income per common share:
Basic $ 0.08 $ 0.16 $ 0.05 $ 0.09
========= ========= ========= =========
Diluted $ 0.08 $ 0.15 $ 0.05 $ 0.08
========= ========= ========= =========
Weighted average shares outstanding:
Basic 19,848 19,126 19,784 19,016
Diluted 20,253 19,652 20,221 19,540
Balance Sheet Data (in thousands): At July 31, At July 31,
2011 2010
------------ ------------
Cash $ 8,566 $ 6,147
Working Capital 240,431 175,877
Inventory 322,387 223,543
Total Assets 626,877 457,329
Short-term Revolving Debt 141,974 77,411
Total Stockholders' Equity 309,679 239,709
G-III APPAREL GROUP, LTD. AND SUBSIDIARIES
RECONCILIATION OF EBITDA TO ACTUAL AND FORECASTED NET INCOME
(In thousands)
(Unaudited)
Forecasted Actual
Twelve Months Ending Twelve Months Ended
January January
31, 2012 31, 2011
-------------------- -------------------
EBITDA, as defined $115,200 - 118,200 $ 102,665
Depreciation and amortization 8,000 5,733
Interest and financing charges, net 5,500 4,027
Income tax expense 39,200 - 40,200 36,223
-------------------- -------------------
Net income $62,500 - $64,500 $ 56,682
==================== ===================
EBITDA is a "non-GAAP financial measure" which represents earnings before depreciation and amortization, interest and financing charges, net, and income tax expense. EBITDA is being presented as a supplemental disclosure because management believes that it is a common measure of operating performance in the apparel industry. 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 generally accepted accounting principles.
Contacts:
For G-III Apparel Group, Ltd.
Investor Relations
James Palczynski, 203-682-8229
or
G-III Apparel Group, Ltd.
Wayne S. Miller, 212-403-0500
Chief Operating Officer