G-III Apparel Group records more quarterly losses – WWD
Losses continue for G-III Apparel Group Inc.
The maker and retailer, parent company of the DKNY and Donna Karan brands, released its quarterly results Wednesday morning ahead of the bell, falling short of both high and low results as it began the process of permanently shutting down all of its businesses. Wilsons Leather and GH Bass stores.
“The pandemic has had a major impact on the fashion industry and our second quarter results,” Morris Goldfarb, president and CEO of G-III, said in a statement. âOur customers now prefer a casual, comfortable and functional outfit. With our wide range of brands and product categories, G-III is able to capitalize on these changing trends. We reset our backlog for the rest of the year and reoriented our product assortment towards leisure sports, jeans, casual sportswear and coats.
For the three-month period ending July 31, the company’s total revenue fell nearly 54% to $ 297 million, from $ 644 million in the same period last year. Revenues from retail stores in the Wilsons Leather and GH Bass businesses, which G-III announced in June it would close permanently later this year, was $ 19.7 million for the quarter, up from $ 53.6 million. million dollars over the same period a year earlier.
The company – which also includes Vilebrequin, Eliza J, Jessica Howard, Andrew Marc and Marc New York in the larger portfolio, in addition to fashion licenses under Calvin Klein, Tommy Hilfiger, Karl Lagerfeld Paris, Kenneth Cole, Cole Haan, Guess , The brands Vince Camuto, Levi’s and Dockers have lost nearly $ 15 million, against profits of more than $ 11 million a year ago. This is in addition to more than $ 39 million in losses from the previous quarter.
The losses included approximately $ 25.6 million in lease termination fees, severance pay, store liquidation fees, and legal fees, among other things, due to the closures of 110 Wilsons Leather and 89 GH Bass stores, which began. during the quarter.
But despite the losses, Wall Street seemed pleased with the company’s progress. Shares of G-III, which are down about 50% year-on-year, closed 8.79% higher at $ 13.24 apiece on Wednesday.
âAth-leisure The size of our business is growing very rapidly, and luckily for us we have three of the best brands in the world that are represented in ath-leisure in the department stores and digital sites that we serve and that has grown incredibly well, ” Goldfarb said Wednesday morning on the conference call with analysts. âAth-leisure has become a way of life; it is a way of dressing today. I can’t remember the last time I saw someone wearing a tie. No one wears a tie, and no one wears a tucked-in suit to work or dinner. I am not sure [ath-leisure is new], but he’s certainly more powerful than he’s ever been.
âOur recently added jeans lines for three of our top brands lend themselves perfectly to today’s relaxed and active lifestyle,â added Goldfarb.
Although the CEO admitted that there are still headwinds, including the recent spate of bankruptcies and the company’s selection of more suitable clothing.
âWe have a tough nested suit business,â Goldfarb said. âPlus career costumes and must-have church costumes don’t sell as well as they did in the past. And the social dresses, because we don’t go to a lot of parties or weddings. There is no demand for bridesmaid dresses.
âOur wholesale business will continue to be the primary driver of G-III sales and profits,â he added. âWe remain focused on leveraging our wholesale expertise to drive long-term growth. [But] there are quite a few bankruptcies in which we have been involved. Bankruptcies have certainly not helped us. Some of the store closures may not help the topline [sales]. “
The CEO expects a reduction of around 10% in revenue for fiscal 2022.
To help cut costs, Goldfarb said the company has refinanced its balance sheet, extended the maturity of its revolving credit facility and term debt until 2025, and reduced its selling and administrative expenses. about 40% in the last quarter, or $ 16 million. The 20% reduction in staff will also result in annual savings of approximately $ 22 million.
âIn addition, the closure of the Wilsons Leather and GH Bass stores, which are expected to be completed by the end of this fiscal year, will result in the elimination of significant operating losses,â said Goldfarb.
G-III ended the quarter with nearly $ 253 million in cash and cash equivalents and approximately $ 409 million in long-term debt. The retailer expects revenue to decline from 28% to 33% in the second half of the year, compared to the same period in 2019.
âThe ripple effect of the pandemic on the retail sector has been highlighted by the unprecedented disruption, causing bankruptcy filings and announced store closings,â Goldfarb said. âIn our view, reducing uneconomic retail store locations will be a net long-term benefit for our retailers as they deploy resources for their digital business and premier locations, ultimately improving their financial health. overall. “