G-III Apparel Group, Ltd. (NASDAQ:GIII) Q3 2020 Earnings Conference Call - Final Transcript

Dec 04, 2019 • 08:30 am ET

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G-III Apparel Group, Ltd. (NASDAQ:GIII) Q3 2020 Earnings Conference Call - Final Transcript

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Presentation
Executive
Morris Goldfarb

in March. I look forward to updating you on our progress at that time.

In November, we saw a positive benefits from the new product assortments and store layouts we've implemented in both our DKNY and Karl Lagerfeld stores. Both brands experienced much improved store comp sales for November and had a strong Black Friday finish to the month.

We're also seeing double-digit comp increase in the e-commerce business, of both brands. We continue to feel good about the positioning and performance of DKNY and Karl Lagerfeld with positive year-to-date comps through the third quarter and productivity improvements we've experienced since the beginning of fourth quarter.

I'd like to take a moment to talk about our supply chain and tariffs. We've always emphasized and we're real proud of our way of developing strong global resourcing and our vendor relations. We continue to lean on these relationships to accelerate the efficient and effective diversification of our manufacturing base. We estimate our China-based production will be approximately 50% by the end of this fiscal year from over 80% four years ago.

We're also reallocating some of our experienced personnel in China to other parts of the world. And for tariffs in this fiscal year, as I previously stated, we're seeing the benefits of strategically accelerating inventory receipts ahead of the last round of tariffs and implemented in September. As we placed future buys. We continue to negotiate some major support from our vendors to maintain their level of participation of price concessions. We will also seek additional tariff mitigation from continuing our sourcing diversification as selectively raising wholesale prices.

Now let us review our wholesale business, which had another strong quarter. Calvin Klein, which is our largest business delivered another good quarter with net sales growth of approximately 11% as compared to last year's third quarter with strength across major classifications. We've built an incredible business with this brand and we remain a dominant resource in the women's apparel market.

This quarter we shipped out our first product for CK Jeans and have installed about 25 CK Jeans shops at Macy's including one at their flagship Herald Square store in New York City. We're very pleased with the design and placement of the shop on the fourth floor. If you have a chance I encourage those of you in New York City to visit the shop.

The order book for CK Jeans is also off to a very good start with the product receiving great reception from retailers. Initial reads of the sell-throughs are encouraging. We remain confident that we can build a substantial lifestyle women's CK Jeans business over the next several years with the potential of reaching $250 million in annual sales.

Our Tommy Hilfiger business continued on a strong growth trajectory with third quarter sales up approximately 20% compared to the third quarter of last year. We experienced quarterly growth that was broad based across categories. This coming spring we look forward to launching our Tommy Jeans collection focused