G-III Apparel Group, Ltd. (NASDAQ: GIII) today announced operating results for the three and nine month periods ended October 31, 2007.
For the three months ended October 31, 2007, net sales increased by 10.8% to $271.2 million from $244.7 million in the same quarter of last year. Net income for the three months ended October 31, 2007 was $23.8 million, or $1.41 per diluted share, compared to $23.3 million, or $1.59 per diluted share, in the prior year’s period. In calculating net income per diluted share, there were 16,850,000 weighted average shares outstanding during the three months ended October 31, 2007 compared to 14,613,000 weighted average shares outstanding in the prior year’s period. The results for the quarter were consistent with the Company’s prior expectations and reinforced its confidence in its prior guidance for the full fiscal year ending on January 31, 2008.
For the nine months ended October 31, 2007, net sales increased by 18.9% to $390.2 million from $328.2 million in the same period last year. Net income for the nine months ended October 31, 2007 was $16.4 million, or $0.99 per diluted share, compared to $12.7 million, or $0.93 per diluted share, in the same period last year. In calculating net income per diluted share, there were 16,524,000 weighted average shares outstanding during the nine months ended October 31, 2007 compared to 13,630,000 weighted average shares outstanding in the same period last year.
Morris Goldfarb, Chairman and Chief Executive Officer, said, “We are pleased with our third quarter and nine month performance. Although our business is increasingly diversified, the outerwear category is still key to our ability to generate strong full-year results. Retail sales of outerwear have begun to accelerate which we believe is due to the onset of cooler seasonal weather patterns.”
Mr. Goldfarb continued, “We continue to be excited about our new business initiatives, particularly in the dress category. Dresses are the fastest growing portion of our product assortment. As we move into the Spring season, we expect to accelerate the pace of our business in the dress market and to further develop our portfolio of licenses and private label brands in that category.”
Mr. Goldfarb concluded, “As we move forward into next year, we expect to further expand our business by category and by tier of distribution. We are committed to our strategy of building G-III into a four season apparel company serving the major tiers of distribution.”
Outlook
For the full fiscal year ending January 31, 2008, the Company continues to expect diluted net income per share between $0.98 and $1.03. The Company also continues to forecast net sales of approximately $510 million for the full year.
Similarly, the Company continues to project full year EBITDA to increase 18% to 22%, to approximately $38.1 to $39.5 million, up from $32.3 million in fiscal 2007. EBITDA results 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.
About G-III Apparel Group, Ltd.
G-III Apparel Group, Ltd. is a leading manufacturer and distributor of outerwear and sportswear under licensed labels, private labels and our own labels. The Company has fashion licenses, among others, under the Calvin Klein, Sean John, Kenneth Cole, Cole Haan, Guess?, Jones New York, Nine West, Ellen Tracy, House of Dereon, IZOD and Tommy Hilfiger labels, and sports licenses with the National Football League, National Basketball Association, Major League Baseball, National Hockey League, Touch by Alyssa Milano, Louisville Slugger, World Poker Tour and more than 100 U.S. colleges and universities. We work with leading retailers in developing product lines to be sold under their own proprietary private labels. Company-owned labels include, among others, Marvin Richards, G-III, Jessica Howard, Eliza J., Industrial Cotton, Black Rivet, Siena Studio, Colebrook, G-III by Carl Banks, Winlit, NY 10018 and La Nouvelle Renaissance.
Statements concerning the Company’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, the nature of the apparel industry, including changing customer demand and tastes, seasonality, customer acceptance of new products, the impact of competitive products and pricing, dependence on existing management, possible disruption from acquisitions, general economic conditions, as well as other risks detailed in the Company’s filings with the Securities and Exchange Commission. The Company assumes no obligation to update the information in this release.
G-III APPAREL GROUP, LTD. AND SUBSIDIARIES | ||||||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||
(in thousands, except per share amounts) | ||||||||||||
(Unaudited) | ||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||
10/31/07 | 10/31/06 | 10/31/07 | 10/31/06 | |||||||||
| Net sales | $ | 271,195 | $ | 244,704 | $ | 390,192 | $ | 328,175 | ||||
| Cost of sales | 190,932 | 172,360 | 280,660 | 238,319 | ||||||||
| Gross profit | 80,263 | 72,344 | 109,532 | 89,856 | ||||||||
Selling general and administrative expenses | 36,470 | 29,650 | 75,019 | 61,467 | ||||||||
| Depreciation and amortization | 1,294 | 1,103 | 4,135 | 3,300 | ||||||||
| Operating profit | 42,499 | 41,591 | 30,378 | 25,089 | ||||||||
| Interest and financing charges, net | 1,892 | 2,662 | 2,304 | 4,573 | ||||||||
| Income before income taxes | 40,607 | 38,929 | 28,074 | 20,516 | ||||||||
| Income tax expense | 16,852 | 15,671 | 11,651 | 7,845 | ||||||||
| Net income | $ | 23,755 | $ | 23,258 | $ | 16,423 | $ | 12,671 | ||||
| Basic net income per common share | $ | 1.45 | $ | 1.68 | $ | 1.03 | $ | 0.98 | ||||
| Diluted net income per common share | $ | 1.41 | $ | 1.59 | $ | 0.99 | $ | 0.93 | ||||
| Weighted average shares outstanding: | ||||||||||||
| Basic | 16,393 | 13,859 | 16,015 | 12,898 | ||||||||
| Diluted | 16,850 | 14,613 | 16,524 | 13,630 | ||||||||
| Selected Balance Sheet Data (in thousands): | At October 31, 2007 | At October 31, 2006 | ||||
| Working Capital | $ | 132,886 | $ | 86,704 | ||
| Inventory | 79,881 | 63,337 | ||||
| Total Assets | 327,447 | 298,120 | ||||
| Short-term and revolving debt | 71,795 | 106,485 | ||||
| Long-term debt | 8,144 | 16,800 | ||||
| Total Shareholders' Equity | $ | 172,473 | $ | 110,789 | ||
Prior year share and per share amounts have been retroactively adjusted for a three for two stock split effective March 28, 2006. | ||||||
G-III APPAREL GROUP, LTD. AND SUBSIDIARIES | ||||
RECONCILIATION OF EBITDA TO ACTUAL AND FORECASTED NET INCOME | ||||
(in thousands) | ||||
(Unaudited) | ||||
Forecasted Twelve Months Ended January 31, 2008 | Actual Twelve Months Ended January 31, 2007 | |||
| EBITDA, as defined | $38,100 - $39,500 | $32,289 | ||
| Depreciation and amortization | 5,700 | 4,431 | ||
| Interest and financing charges, net | 3,700 | 6,362 | ||
| Income tax expense | 12,000 – 12,600 | 8,307 | ||
| Net income | $16,700 - $17,500 | $13,189 | ||
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:
James Palczynski, 203-682-8229
Investor
Relations
or
Wayne S. Miller, 212-403-0500
Chief
Operating Officer
