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
Neal S. Nackman

segment increased 6% to $1.07 billion from $1 billion and Calvin Klein, Tommy Hilfiger, and DKNY brands were the main drivers of this increase.

Net sales of our retail operation segment for the quarter were $90 million approximately 19% lower compared to last year sales of $111 million. We reported same-store sales decreases of approximately 8% for our Wilson stores, 15% for our G.H Bass stores and a flat comp for DKNY. Net sales of our retail operation segment were also negatively affected by the decrease of approximately 45 stores operated by us as compared to the third quarter of last year.

Our gross margin percentage was 35.4% in the third quarter of fiscal 2020 as compared to 35.6% in the prior year's period. The gross margin percentage in our wholesale operation segment was 33.2% compared to 32.7% in last year's quarter. The gross margin percentage in our retail operation segment was 49.3% compared to 48.5% in the prior year's quarter.

SG&A expenses were $247 million in the fiscal quarter compared to $232 million in the same period last year. Net income for the third quarter of this fiscal year was $95 million or $1.97 per diluted share compared to $94 million or $1.86 per diluted share in last year's quarter. Non-GAAP net income per diluted share was $1.99 for the quarter compared to $1.88 per share in the prior year. Non-GAAP results in this quarter exclude the impact of non-cash imputed interest and a gain on lease terminations.

Turning to the balance sheet. Accounts receivable increased to $899 million from $820 million at the end of the third quarter last year up approximately 10% and relatively in line with our wholesale sales growth. Inventory increased approximately 6% to $651 million. As expected these levels have normalized to align with sales growth and have moderated from the 24% increase in the second quarter.

We spent approximately $32 million on capital expenditures on a year-to-date basis. We had long-term debt outstanding of approximately $675 million at the end of this quarter compared to $694 million at the end of the previous year.

Our quarter ending cash balance was $56 million this year compared to $66 million a year ago. As for our guidance. We are revising our guidance for fiscal year ending January 31, 2020. We are now forecasting net sales of approximately $3.2 billion. Net income of between $147 million and $152 million or between $3.01 and $3.11 per diluted share. This compares to net sales of $3.08 billion and net income of $138 million or $2.75 per diluted share in fiscal 2019.

On an adjusted basis excluding non-cash imputed interest expense of $5 million and a $2 million gain on lease terminations. We are anticipating non-GAAP net income of between $149 million and $154 million or between $3.06 and $3.16 per diluted share compared to non-GAAP net income of $144 million or $2.86 per diluted share in the previous year.

To be clear as to tariffs. Our previous and