Business news : G-III Apparel's Q3 Sales Climb 23 Percent

G-III Apparel Group, Ltd. reported sales for the third quarter increased by 23 percent to $668.7 million compared to $543.5 million in the year-ago period.

The company, which owns licenses with the National Football League, National Basketball Association, Major League Baseball, National Hockey League and more than 100 U.S. colleges and universities, reported net income for the quarter increased by 23 percent to $59.6 million, or $2.85 per diluted share.

On an adjusted basis, which excludes expenses associated with the company’s acquisition of G.H. Bass & Co. in the recent quarter and Vilerequin and other potential transactions in the quarter ended Oct. 31, 2012, non-GAAP net income per diluted share increased 19 percent to $2.88, compared to $2.43 in the prior year’s third quarter. A reconciliation of GAAP net income per share to Non-GAAP net income per share is presented in a table accompanying the condensed financial statements included in this release.

“We are pleased to report excellent results in our key third quarter season driven by across-the-board strength in our business," said Morris Goldfarb, G-III’s chairman, CEO and president. "In our wholesale business, great product design, compelling price and value, and a portfolio of strong brands drove our business to record levels of both net sales and net income per share.

“In our specialty retail business, we continued a powerful comp sales trend in our Wilsons’ business and proceeded with our full-priced store test in time for the holiday season," Goldfarb continued. "In addition, we acquired G.H. Bass & Co., which is an iconic brand with great potential and a business that should integrate well into our existing retail platform. We have had consistent growth over the last several years and our opportunities have never had greater scale or wider scope than they do today.”

Outlook

The company revised its prior guidance for the full fiscal 2014 year ending Jan. 31, 2014 to reflect its strong third quarter financial performance and the expected results from G.H. Bass & Co. in the fourth fiscal quarter. The company is now forecasting net sales of approximately $1.73 billion compared to its previous guidance of $1.61 billion. It now expects net income in the range of $72.0 million to $74.0 million, or $3.47 to $3.57 per diluted share, compared to its previous guidance of net income between $68.6 million and $70.6 million, or a range between $3.30 and $3.40 per diluted share.

The revised upward guidance for fiscal 2014 includes the expenses associated with the acquisition of G.H. Bass and other potential transactions incurred through Oct. 31, 2013. The company’s full year guidance of $3.47 to $3.57 per diluted share includes a projected net loss of $0.10 to $0.15 per share in the fourth quarter in connection with the operations of its newly acquired G.H. Bass & Co. business. The full year estimates exclude the impact of any purchase price accounting adjustments relating to the acquisition of G.H. Bass.

The company is forecasting Non-GAAP net income per diluted share for the full 2014 fiscal year to be in the range of $3.50 to $3.60 compared to $2.92 for the 2013 fiscal year. Adjusted EBITDA for fiscal 2014 is expected to increase approximately 22 percent to 25 percent to between $139.0 million and $142.5 million compared to adjusted EBITDA of $114.0 million in fiscal 2013 and an increase from its previous guidance of adjusted EBITDA of between approximately $132.3 million and $135.4 million.

The forecasted Non-GAAP net income per share and forecasted adjusted EBITDA for the full fiscal 2014 year reflect adjustments that exclude any expenses associated with the Company’s acquisition of G.H. Bass & Co. and other potential transactions incurred through Oct. 31, 2013.

Non-GAAP net income per diluted share and adjusted EBITDA should be evaluated in light of the company’s financial results prepared in accordance with U.S. GAAP. Reconciliations of forecasted GAAP net income per share to forecasted Non-GAAP net income per share and of GAAP net income to adjusted EBITDA are included in tables accompanying the condensed financial statements in this release.

G-III is a leading manufacturer and distributor of outerwear, dresses, sportswear, swimwear, women's suits and women’s performance wear, as well as footwear, luggage and women’s handbags, small leather goods and cold weather accessories, under licensed brands, its own brands and private label brands. G-III sells swimwear, resort wear and related accessories under its own Vilebrequin brand. It also makes outerwear, dresses, performance wear and handbags under its own Andrew Marc and Marc New York brands and has licensed these brands to select third parties in certain product categories.

G-III has fashion licenses under the Calvin Klein, Kenneth Cole, Cole Haan, Guess?, Tommy Hilfiger, Jones New York, Jessica Simpson, Sean John, Vince Camuto, Ivanka Trump, Nine West, Ellen Tracy, Kensie, Mac & Jac, Levi's and Dockers brands. Through our team sports business, we have licenses with the National Football League, National Basketball Association, Major League Baseball, National Hockey League, Touch by Alyssa Milano and more than 100 U.S. colleges and universities. Our other owned brands include Bass, G.H. Bass, G-III Sports by Carl Banks, Eliza J, Black Rivet, Jessica Howard and Winlit. G-III also operates retail stores under the Wilsons Leather, Bass, G.H. Bass & Co., Vilebrequin, Calvin Klein Performance and Andrew Marc names.

G-III APPAREL GROUP, LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share amounts) (Unaudited)
			Three Months Ended						Nine Months Ended
			October 31,						October 31,
			2013			2012			2013			2012
Net sales			$	668,702		$	543,513		$	1,245,476		$	1,024,441
Cost of sales				441,400			353,306			826,361			690,702
Gross profit				227,302			190,207			419,115			333,739
Selling general and administrative expenses				125,457			106,287			300,329			242,355
Depreciation and amortization				3,158			2,811			9,523			6,964
Operating profit				98,687			81,109			109,263			84,420
Equity loss in joint venture				—			273			—			706
Interest and financing charges, net				2,949			3,073			6,476			5,211
Income before taxes				95,738			77,763			102,787			78,503
Income tax expense				36,381			29,550			39,059			29,831
Net income				59,357			48,213			63,728			48,672
Add: Loss attributable to non-controlling interest				238			78			577			133
Income attributable to G-III			$	59,595		$	48,291		$	64,305		$	48,805
Net income per common share:
Basic			$	2.92		$	2.41		$	3.17		$	2.44
Diluted			$	2.85		$	2.37		$	3.09		$	2.40
Weighted average shares outstanding:
Basic				20,399			20,053			20,290			19,971
Diluted				20,911			20,401			20,818			20,309

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