G-III Apparel Group, Ltd. (NASDAQ:GIII) Q2 2020 Earnings Conference Call Transcript

Sep 05, 2019 • 08:30 am ET

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G-III Apparel Group, Ltd. (NASDAQ:GIII) Q2 2020 Earnings Conference Call Transcript

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Presentation
Operator
Operator

Welcome to the G-III Apparel Group Second Quarter Fiscal 2020 Earnings Conference Call. My name is Paulette, and I will be your operator for today's call. [Operator Instructions]

I will now turn the call over to Neal Nackman, the Company's CFO. Sir, you may begin.

Executive
Neal S. Nackman

Thank you. Good morning and thank you for joining us. Before we begin, I would like to remind participants that certain statements made on today's call and in the Q&A session may constitute forward-looking statements within the meaning of federal securities laws. Forward-looking statements are not guarantees, and actual results may differ materially from those expressed or implied in forward-looking statements. Important factors that could cause actual results of operations or the financial condition of the Company to differ are discussed in the documents filed by the Company with the SEC. The Company undertakes no duty to update any forward-looking statements.

In addition, during the call, we will refer to non-GAAP net income, non-GAAP net income per share and to adjusted EBITDA, which are all non-GAAP financial measures. We have provided reconciliations of these non-GAAP financial measures to GAAP measures in our press release, which is also available on our website.

I will now turn the call over to our Chairman and Chief Executive Officer, Morris Goldfarb.

Executive
Morris Goldfarb

Good morning, and thank you for joining us. With me today are Sammy Aaron, our Vice Chairman and President; Wayne Miller, our Chief Operating Officer; Neal Nackman, our Chief Financial Officer; and Jeff Goldfarb, Executive Vice President; and Priya Trivedi, Vice president of Investor Relations.

Let's review the results of our second quarter. Our results were in line with our bottom line expectations and were led by continued outperformance in our wholesale business, which was more than offset -- which more than offset heightened challenges in our own retail operations. Second quarter net sales were up 3% to $644 million. Our second quarter wholesale net sales increased 8% to $589 million. Our second quarter non-GAAP net income per diluted share was $0.23 compared to $0.22 in last year's second quarter.

Let me provide you some details on our own retail operations. By the end of this year, we will have eliminated over 140 stores, down from over 350 stores, which represents approximately a 40% decrease of our Bass and Wilsons stores. We're being aggressive in finding a solution for the remainder of our own retail operations. In July, we engaged outside advisers to assist us with this process. Our own DKNY and Karl Lagerfeld stores reflected low single-digit positive sales comps for the quarter despite the reduced traffic and high volume tourist centers, which is where many of these stores are located. For the second half of the year, we anticipate performance benefits at DKNY and Karl Lagerfeld stores as a result of improved product and store design. We remain committed to eliminating the losses in our own retail operations as swiftly and as efficiently as possible.

Before we get to our wholesale business, I'd like to provide you