G-III Apparel Group, Ltd. Reports Third Quarter Fiscal 2025 Results Above Guidance; Updates Fiscal 2025 Outlook
Rhea-AI Summary
G-III Apparel Group reported strong Q3 fiscal 2025 results, with net sales increasing 1.8% to $1.09 billion compared to $1.07 billion last year. The company's key owned brands (DKNY, Karl Lagerfeld, Donna Karan, and Vilebrequin) achieved over 30% organic growth. Net income was $114.8 million, or $2.55 per diluted share, compared to $127.6 million ($2.74 per share) in the prior year.
The company raised its fiscal 2025 guidance, now expecting net sales to increase by approximately 2% to $3.15 billion. Inventories decreased 10% to $532.5 million, and total debt decreased 52% to $224.2 million. The company voluntarily redeemed $400 million in senior secured notes in August 2024.
Positive
- Net sales increased 1.8% to $1.09 billion in Q3
- Key owned brands achieved over 30% organic growth
- Inventory levels decreased 10% to $532.5 million
- Total debt reduced by 52% to $224.2 million
- Raised full-year earnings guidance for fiscal 2025
Negative
- Q3 net income decreased to $114.8 million from $127.6 million year-over-year
- Earnings per share declined to $2.55 from $2.74 in prior year's Q3
- Reduced net sales guidance from $3.20 billion to $3.15 billion
- $55 million in incremental expenses expected for brand launches
News Market Reaction – GIII
On the day this news was published, GIII gained 10.42%, reflecting a significant positive market reaction.
Data tracked by StockTitan Argus on the day of publication.
- Third Quarter GAAP and Non-GAAP Net Income Per Diluted Share Exceed Guidance
- Net Sales of
$1.09 Billion for the Third Quarter Compared to$1.07 Billion Last Year - Net Income Per Diluted Share of
$2.55 for the Third Quarter Compared to$2.74 Last Year - Non-GAAP Net Income Per Diluted Share of
$2.59 for the Third Quarter Compared to$2.78 Last Year - Raises GAAP and Non-GAAP Net Income Per Diluted Share Guidance for Fiscal 2025
NEW YORK, Dec. 10, 2024 (GLOBE NEWSWIRE) -- G-III Apparel Group, Ltd. (NasdaqGS: GIII) today reported results for the third quarter of fiscal 2025 ended October 31, 2024.
Morris Goldfarb, G-III’s Chairman and Chief Executive Officer, said, “I am very pleased with our strong third quarter results, with earnings per diluted share exceeding our expectations, driven by over
Mr. Goldfarb concluded, “Looking at the remainder of the year, given our significant third quarter earnings outperformance, we are once again raising our earnings per diluted share guidance for fiscal 2025. Our proven track record of success and our strong balance sheet give us ample flexibility to invest in long-term opportunities to expand our business, while delivering on our commitment to drive long-term sustainable growth and shareholder value.”
Results of Operations
Third Quarter Fiscal 2025 Financial Results
Net sales for the third quarter ended October 31, 2024 increased
Net income for the third quarter ended October 31, 2024 was
Non-GAAP net income per diluted share was
Balance Sheet as of Third Quarter Fiscal 2025
Inventories decreased
Total debt decreased
Outlook
The Company today updated its outlook for the fiscal year ending January 31, 2025. This outlook anticipates the current macroeconomic and consumer environment, as well as the unseasonable weather. The outlook further includes approximately
Fiscal 2025
Net sales are expected to increase by approximately
Net income is expected to be between
Non-GAAP net income for fiscal 2025 is expected to be between
Adjusted EBITDA for fiscal 2025 is expected to be between
Net interest expense is expected to be approximately
We estimate a tax rate of
Non-GAAP Financial Measures
Reconciliations of GAAP net income to non-GAAP net income, GAAP net income per diluted share to non-GAAP net income per diluted share and GAAP net income to adjusted EBITDA are presented in tables accompanying the financial statements included in this release and provide useful information to evaluate the Company’s operational performance. A description of the amounts excluded on a non-GAAP basis are provided in conjunction with these tables. Non-GAAP net income, non-GAAP net income per diluted share and adjusted EBITDA should be evaluated in light of the Company’s financial statements prepared in accordance with GAAP.
About G-III Apparel Group, Ltd.
G-III Apparel Group, Ltd., a global leader in fashion with expertise in design, sourcing and marketing, owns and licenses a portfolio of over 30 preeminent brands. The Company is differentiated across unique brand propositions, product categories and consumer touch points. G-III owns ten iconic brands including, DKNY, Karl Lagerfeld, Donna Karan and Vilebrequin, and licenses over 20 brands including Calvin Klein, Tommy Hilfiger, Nautica, Halston, Converse and National Sports leagues, among others.
Statements concerning G-III'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, risks related to the reliance on licensed product, risks relating to G-III’s ability to increase revenues from sales of its other products, new acquired businesses or new license agreements as licenses for Calvin Klein and Tommy Hilfiger product expire on a staggered basis, reliance on foreign manufacturers, risks of doing business abroad, supply chain disruptions, risks related to acts of terrorism and the effects of war, the current economic and credit environment risks related to our indebtedness, the nature of the apparel industry, including changing customer demand and tastes, customer concentration, seasonality, risks of operating a retail business, risks related to G-III’s ability to reduce the losses incurred in its retail operations, customer acceptance of new products, the impact of competitive products and pricing, dependence on existing management, possible disruption from acquisitions, the impact on G-III’s business of the imposition of tariffs by the United States government and business and general economic conditions, including inflation and higher interest rates, as well as other risks detailed in G-III's filings with the Securities and Exchange Commission. G-III assumes no obligation to update the information in this release.
| G-III APPAREL GROUP, LTD. AND SUBSIDIARIES (Nasdaq: GIII) CONSOLIDATED STATEMENTS OF INCOME (In thousands, except per share amounts) | ||||||||||||||||
| Three Months Ended October 31, | Nine Months Ended October 31, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| (Unaudited) | ||||||||||||||||
| Net sales | $ | 1,086,759 | $ | 1,067,110 | $ | 2,341,261 | $ | 2,333,460 | ||||||||
| Cost of goods sold | 654,628 | 633,697 | 1,374,363 | 1,373,594 | ||||||||||||
| Gross profit | 432,131 | 433,413 | 966,898 | 959,866 | ||||||||||||
| Selling, general and administrative expenses | 259,240 | 236,308 | 724,891 | 703,476 | ||||||||||||
| Depreciation and amortization | 6,556 | 6,595 | 20,704 | 19,130 | ||||||||||||
| Asset impairments | — | 222 | — | 222 | ||||||||||||
| Operating profit | 166,335 | 190,288 | 221,303 | 237,038 | ||||||||||||
| Other income (loss) | 942 | (3,129 | ) | (2,233 | ) | (1,964 | ) | |||||||||
| Interest and financing charges, net | (6,358 | ) | (11,024 | ) | (16,658 | ) | (32,666 | ) | ||||||||
| Income before income taxes | 160,919 | 176,135 | 202,412 | 202,408 | ||||||||||||
| Income tax expense | 46,151 | 48,755 | 57,903 | 55,651 | ||||||||||||
| Net income | 114,768 | 127,380 | 144,509 | 146,757 | ||||||||||||
| Less: Loss attributable to noncontrolling interests | — | (260 | ) | (273 | ) | (557 | ) | |||||||||
| Net income attributable to G-III Apparel Group, Ltd. | $ | 114,768 | $ | 127,640 | $ | 144,782 | $ | 147,314 | ||||||||
| Net income attributable to G-III Apparel Group, Ltd. per common share: | ||||||||||||||||
| Basic | $ | 2.62 | $ | 2.79 | $ | 3.24 | $ | 3.21 | ||||||||
| Diluted | $ | 2.55 | $ | 2.74 | $ | 3.17 | $ | 3.13 | ||||||||
| Weighted average shares outstanding: | ||||||||||||||||
| Basic | 43,885 | 45,723 | 44,640 | 45,904 | ||||||||||||
| Diluted | 44,954 | 46,560 | 45,719 | 46,992 | ||||||||||||
| Selected Balance Sheet Data (in thousands): | As of October 31, | |||||
| 2024 | 2023 | |||||
| (Unaudited) | ||||||
| Cash and cash equivalents | $ | 104,686 | $ | 197,391 | ||
| Working capital | 980,899 | 1,110,793 | ||||
| Inventories | 532,463 | 591,530 | ||||
| Total assets | 2,783,611 | 2,749,333 | ||||
| Total debt | 224,175 | 461,945 | ||||
| Operating lease liabilities | 302,313 | 239,419 | ||||
| Total stockholders' equity | 1,648,726 | 1,503,220 | ||||
| G-III APPAREL GROUP, LTD. AND SUBSIDIARIES RECONCILIATION OF GAAP NET INCOME TO NON-GAAP NET INCOME (In thousands) | ||||||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||
| October 31, 2024 | October 31, 2023 | October 31, 2024 | October 31, 2023 | |||||||||||||
| (Unaudited) | ||||||||||||||||
| GAAP net income attributable to G-III Apparel Group, Ltd. | $ | 114,768 | $ | 127,640 | $ | 144,782 | $ | 147,314 | ||||||||
| Excluded from non-GAAP: | ||||||||||||||||
| Write-off of deferred financing costs | 1,598 | — | 1,598 | — | ||||||||||||
| One-time warehouse related severance expenses | 530 | — | 559 | — | ||||||||||||
| Gain on forgiveness of liabilities | — | — | (600 | ) | — | |||||||||||
| Expenses related to Karl Lagerfeld acquisition | — | 1,847 | — | 5,517 | ||||||||||||
| Non-cash imputed interest | — | 682 | — | 3,585 | ||||||||||||
| Asset impairments | — | 222 | 222 | |||||||||||||
| Income tax impact of non-GAAP adjustments | (610 | ) | (761 | ) | (446 | ) | (2,563 | ) | ||||||||
| Non-GAAP net income attributable to G-III Apparel Group, Ltd., as defined | $ | 116,286 | $ | 129,630 | $ | 145,893 | $ | 154,075 | ||||||||
Non-GAAP net income is a “non-GAAP financial measure” that excludes (i) in the third quarter of fiscal 2025, the write-off of deferred financing costs related to the redemption of the Notes, (ii) in the third quarter of fiscal 2025, one-time severance expenses related to a closed warehouse, (iii) in the second quarter of fiscal 2025, the gain on the forgiveness of certain liabilities related to the acquisition of the minority interest of our DKNY business in China that we did not already own, (iv) in the third quarter of fiscal 2024, incentive compensation expenses related to the Karl Lagerfeld transaction, (v) in the third quarter of fiscal 2024, non-cash imputed interest expense and (vi) in the third quarter of fiscal 2024, asset impairments. The income tax impact of non-GAAP adjustments is calculated using the effective tax rate for the period. Management believes that these non-GAAP financial measures provide meaningful supplemental information regarding our performance by excluding items that are not indicative of our core business operating results. Management uses these non-GAAP financial measures to assess our performance on a comparative basis and believes that they are also useful to investors to enable them to assess our performance on a comparative basis across historical periods and facilitate comparisons of our operating results to those of our competitors. The presentation of this financial information is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP.
| G-III APPAREL GROUP, LTD. AND SUBSIDIARIES RECONCILIATION OF GAAP NET INCOME PER SHARE TO NON-GAAP NET INCOME PER SHARE | ||||||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||
| October 31, 2024 | October 31, 2023 | October 31, 2024 | October 31, 2023 | |||||||||||||
| (Unaudited) | ||||||||||||||||
| GAAP diluted net income attributable to G-III Apparel Group, Ltd. per common share | $ | 2.55 | $ | 2.74 | $ | 3.17 | $ | 3.13 | ||||||||
| Excluded from non-GAAP: | ||||||||||||||||
| Write-off of deferred financing costs | 0.04 | — | 0.03 | — | ||||||||||||
| One-time warehouse related severance expenses | 0.01 | — | 0.01 | — | ||||||||||||
| Gain on forgiveness of liabilities | — | — | (0.01 | ) | — | |||||||||||
| Expenses related to Karl Lagerfeld acquisition | — | 0.04 | — | 0.12 | ||||||||||||
| Non-cash imputed interest | — | 0.01 | — | 0.08 | ||||||||||||
| Asset impairments | — | 0.01 | — | — | ||||||||||||
| Income tax impact of non-GAAP adjustments | (0.01 | ) | (0.02 | ) | (0.01 | ) | (0.05 | ) | ||||||||
| Non-GAAP diluted net income attributable to G-III Apparel Group, Ltd. per common share, as defined | $ | 2.59 | $ | 2.78 | $ | 3.19 | $ | 3.28 | ||||||||
Non-GAAP diluted net income per common share is a “non-GAAP financial measure” that excludes (i) in the third quarter of fiscal 2025, the write-off of deferred financing costs related to the redemption of the Notes, (ii) in the third quarter of fiscal 2025, one-time severance expenses related to a closed warehouse, (iii) in the second quarter of fiscal 2025, the gain on the forgiveness of certain liabilities related to the acquisition of the minority interest of our DKNY business in China that we did not already own, (iv) in the third quarter of fiscal 2024, incentive compensation expenses related to the Karl Lagerfeld transaction, (v) in the third quarter of fiscal 2024, non-cash imputed interest expense and (vi) in the third quarter of fiscal 2024, asset impairments. The income tax impact of non-GAAP adjustments is calculated using the effective tax rate for the period. Management believes that these non-GAAP financial measures provide meaningful supplemental information regarding our performance by excluding items that are not indicative of our core business operating results. Management uses these non-GAAP financial measures to assess our performance on a comparative basis and believes that they are also useful to investors to enable them to assess our performance on a comparative basis across historical periods and facilitate comparisons of our operating results to those of our competitors. The presentation of this financial information is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP.
| G-III APPAREL GROUP, LTD. AND SUBSIDIARIES RECONCILIATION OF FORECASTED AND ACTUAL NET INCOME TO FORECASTED AND ACTUAL ADJUSTED EBITDA (In thousands) | ||||||||||||||
| Forecasted Twelve | Actual Twelve | |||||||||||||
| Three Months Ended | Months Ending | Months Ended | ||||||||||||
| October 31, 2024 | October 31, 2023 | January 31, 2025 | January 31, 2024 | |||||||||||
| (Unaudited) | ||||||||||||||
| Net income attributable to G-III Apparel Group, Ltd. | $ | 114,768 | $ | 127,640 | $ | 185,000 - 190,000 | $ | 176,168 | ||||||
| One-time warehouse related severance expenses | 530 | — | 559 | — | ||||||||||
| Gain on forgiveness of liabilities | — | — | (600 | ) | — | |||||||||
| Asset impairments | — | 222 | — | 6,758 | ||||||||||
| Expenses related to Karl Lagerfeld acquisition | — | 1,847 | — | 6,115 | ||||||||||
| One-time expenses primarily related to our DKNY business in China | — | — | — | 3,138 | ||||||||||
| Change in fair value of earnout liability | — | — | — | (1,041 | ) | |||||||||
| Depreciation and amortization | 6,556 | 6,595 | 29,000 | 27,523 | ||||||||||
| Interest and financing charges, net | 6,358 | 11,024 | 20,000 | 39,595 | ||||||||||
| Income tax expense | 46,151 | 48,755 | 75,041 | 65,859 | ||||||||||
| Adjusted EBITDA, as defined | $ | 174,363 | $ | 196,083 | $ | 309,000 - 314,000 | $ | 324,115 | ||||||
Adjusted EBITDA is a “non-GAAP financial measure” which represents earnings before depreciation and amortization, interest and financing charges, net and income tax expense and excludes in fiscal 2025, (i) one-time severance expenses related to a closed warehouse, (ii) the gain on the forgiveness of certain liabilities related to the acquisition of the minority interest of our DKNY business in China that we did not already own, and in fiscal 2024, (iii) asset impairments, (iv) incentive compensation expenses related to the Karl Lagerfeld transaction, (v) one-time expenses, primarily related to our DKNY business in China and (vi) the gain recorded from the reduction of the earnout liability related to our acquisition of Sonia Rykiel in fiscal 2022. Adjusted EBITDA is being presented as a supplemental disclosure because management believes that it is a common measure of operating performance in the apparel industry. Adjusted 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 GAAP.
| G-III APPAREL GROUP, LTD. AND SUBSIDIARIES RECONCILIATION OF FORECASTED AND ACTUAL GAAP NET INCOME TO FORECASTED AND ACTUAL NON-GAAP NET INCOME (In thousands) | ||||||||
| Forecasted Twelve | Actual Twelve | |||||||
| Months Ending | Months Ended | |||||||
| January 31, 2025 | January 31, 2024 | |||||||
| Net income attributable to G-III Apparel Group, Ltd. | $ | 185,000 - 190,000 | $ | 176,168 | ||||
| Excluded from non-GAAP: | ||||||||
| Write-off of deferred financing costs | 1,598 | — | ||||||
| One-time warehouse related severance expenses | 559 | — | ||||||
| Gain on forgiveness of liabilities | (600 | ) | — | |||||
| Asset impairments | — | 6,758 | ||||||
| Expenses related to Karl Lagerfeld acquisition | — | 6,115 | ||||||
| Non-cash imputed interest | — | 3,798 | ||||||
| One-time expenses primarily related to our DKNY business in China | — | 3,138 | ||||||
| Change in fair value of earnout liability | — | (1,041 | ) | |||||
| Income tax impact of non-GAAP adjustments | (557 | ) | (5,137 | ) | ||||
| Non-GAAP net income attributable to G-III Apparel Group, Ltd., as defined | $ | 186,000 - 191,000 | $ | 189,799 | ||||
Non-GAAP net income is a “non-GAAP financial measure” that excludes in fiscal 2025, (i) the write-off of deferred financing costs related to the redemption of the Notes, (ii) one-time severance expenses related to a closed warehouse, (iii) the gain on the forgiveness of certain liabilities related to the acquisition of the minority interest of our DKNY business in China that we did not already own, and in fiscal 2024, (iii) asset impairments, (iv) incentive compensation expenses related to the Karl Lagerfeld transaction, (v) non-cash imputed interest expense, (vi) one-time expenses, primarily related to our DKNY business in China and (vii) the gain recorded from the reduction of the earnout liability related to our acquisition of Sonia Rykiel in fiscal 2022. The income tax impact of non-GAAP adjustments is calculated using an effective tax for the period. Management believes that these non-GAAP financial measures provide meaningful supplemental information regarding our performance by excluding items that are not indicative of our core business operating results. Management uses these non-GAAP financial measures to assess our performance on a comparative basis and believes that they are also useful to investors to enable them to assess our performance on a comparative basis across historical periods and facilitate comparisons of our operating results to those of our competitors. The presentation of this financial information is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP.
| G-III APPAREL GROUP, LTD. AND SUBSIDIARIES RECONCILIATION OF FORECASTED AND ACTUAL GAAP NET INCOME PER SHARE TO FORECASTED AND ACTUAL NON-GAAP NET INCOME PER SHARE | ||||||||
| Forecasted Twelve | Actual Twelve | |||||||
| Months Ending | Months Ended | |||||||
| January 31, 2025 | January 31, 2024 | |||||||
| GAAP diluted net income attributable to G-III Apparel Group, Ltd. per common share | $ | 4.08 - 4.18 | $ | 3.75 | ||||
| Excluded from non-GAAP: | ||||||||
| Write-off of deferred financing costs | 0.04 | — | ||||||
| One-time warehouse related severance expenses | 0.01 | — | ||||||
| Gain on forgiveness of liabilities | (0.01 | ) | — | |||||
| Asset impairments | — | 0.14 | ||||||
| Expenses related to Karl Lagerfeld acquisition | — | 0.13 | ||||||
| Non-cash imputed interest | — | 0.08 | ||||||
| One-time expenses primarily related to our DKNY business in China | — | 0.07 | ||||||
| Change in fair value of earnout liability | — | (0.02 | ) | |||||
| Income tax impact of non-GAAP adjustments | (0.02 | ) | (0.11 | ) | ||||
| Non-GAAP diluted net income attributable to G-III Apparel Group, Ltd. per common share, as defined | $ | 4.10 - 4.20 | $ | 4.04 | ||||
Non-GAAP diluted net income per common share is a “non-GAAP financial measure” that excludes in fiscal 2025, (i) the write-off of deferred financing costs related to the redemption of the Notes, (ii) one-time severance expenses related to a closed warehouse, (iii) the gain on the forgiveness of certain liabilities related to the acquisition of the minority interest of our DKNY business in China that we did not already own, and in fiscal 2024, (iii) asset impairments, (iv) incentive compensation expenses related to the Karl Lagerfeld transaction, (v) non-cash imputed interest expense, (vi) one-time expenses, primarily related to our DKNY business in China and (vii) the gain recorded from the reduction of the earnout liability related to our acquisition of Sonia Rykiel in fiscal 2022. The income tax impact of non-GAAP adjustments is calculated using an effective tax for the period. Management believes that these non-GAAP financial measures provide meaningful supplemental information regarding our performance by excluding items that are not indicative of our core business operating results. Management uses these non-GAAP financial measures to assess our performance on a comparative basis and believes that they are also useful to investors to enable them to assess our performance on a comparative basis across historical periods and facilitate comparisons of our operating results to those of our competitors. The presentation of this financial information is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP.
G-III Apparel Group, Ltd.
Company Contact:
Priya Trivedi
SVP of Investor Relations and Treasurer
(646) 473-5228
FAQ
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