GIII - Earnings call transcript Q2 2019 | G-III Apparel Group, Ltd.

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Operator

Welcome to the G-III Apparel Group Second Quarter Fiscal 2019 Earnings Conference Call. My name is Paulette, and I’ll be your operator for today’s call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. [Operator Instructions] Please note that this conference is being recorded. the to turn Company’s Nackman, now CFO. will call Neal over the I begin. you Sir, may

Neal Nackman

Good you. us. thank Thank and morning you for joining

begin, constitute securities forward-looking laws. to like within the made and I the that statements the we federal of in may statements call on remind session Q&A meaning certain today’s Before participants would

of financial factors Forward-looking no not actual and those of guarantees statements any cause that to discussed from forward-looking forward-looking could implied differ the statements. Company update Company or in filed in results the expressed operations actual the Company the undertakes results are SEC. The to condition by statements. may Important or with differ are duty materially the documents

and and In loss measures. income addition, during adjusted call, to will the all income non-GAAP per loss, and we non-GAAP share refer which net EBITDA, are net financial non-GAAP to

of have the and in which Officer, press release, measures provided financial I Morris Chief We now GAAP available website. reconciliations measures our to Goldfarb. Chairman our over our to will also these is Executive non-GAAP on call turn

Morris Goldfarb

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

to whenever has continues to supplier of the detail desire and with wherever to the of a incredible These light in The our continuing guidance our and In raising are with G-III forecast and report momentum be full of from factors the only the exceeded make We will we’re business, fiscal our the results growth market heightened. environment brands. The want reporting. provide our pleased drive that focus to retail We’re Neal and are continued into pleased you choice our quarter. first for quarter year. we they intensely second continued our competitive. shop on results confidence consumers with shortly.

Calvin this continue of our and to marketplace, preferences successfully channels we environment, the across understanding a have In trends, leverage both global shopping brick demonstrate digital to power and distribution. mortar comprehensive We five with consumer our ability product DKNY, work of Each delivers We at Lagerfeld. brands at extremely and resonate product relevant that specific delivering hard Klein, and price Karan, Karl consumers. market brand compelling well-designed Tommy Hilfiger, Donna points. creates consistently

Our retail to to been continue higher as profitability. drive of and relationships partnerships and sales have never our Company we levels stronger

broad-based for pleased Now, let’s our look results results at business. report across strength I’m by wholesale to summary the the quarter. were that the of our fueled again second once

results the financial line sales second top quarter our were Net million $XX last a the bottom quarter. for increase and year XX% compared our to exceeded Our second an record for $XXX and expectations. highlights to few up million, quarter. A for

compared net non-GAAP year’s a quarter. loss income quarter non-GAAP was share second Our in net last $X.XX of $X.XX to second diluted per per share

for Now results. our some details on

in believe comp. had outerwear a own to Wilsons that year. came women’s comp sellers Our to our We the for a quarter. digit the plan deliver the for men’s the decline important low its will last business and for than strong achieving positive holiday single digit were retail better well-positioned low quarter. product be results Bass quarter. season close single Both delivered

out Bass quarter, the expect our sales. apparel This stores be the past a rolled to to We’re Bass of all stores merchandise in for full the higher for season. Based mix our will shifting penetration initiative sales the to deliver we process this shift of in on year-over-year apparel. higher holiday product our of

XXX X high year performance centers at in The in XX approximately closed already Karl XXX that Paris of experienced the beginning on converted We’ve to we fiscal This the XXXX. we’re XXX stores, profile targeted ending quarter. Lagerfeld solid Bass operations the our with approximately and outlet the Wilsons to track Regarding retail stores. close this portfolio, compares locations. of store XXX stores approximately to

As will Palm to opening part last Paris more as San Springs and Lagerfeld in losses reduction of Francis Karl of Wilsons We our and Bass closure expect compared $XX of in be achieve stores store X plan, this repurposing now we business our fall. a and million to to approximately year.

forward push returning of our to profitability. goals continue to these businesses We

increase sure Since comp we economic to DKNY place. dramatically and/or and we’ve the before the business, DKNY improvements, want the quarter, the the have of locations. sales change. for continue this stores a both the we seeing converting appropriate stores, Europe. We U.S. and we’re changed registered make model product in opening outlet XX% in we In mix As in product and acquired of make strong to assortment results

another wholesale Our quarter. business registered outstanding

dresses some are better strength. particular you well, and quarter separates. second broad-based continues highlights Calvin perform Here of our brand to in led by give level suit a sense to strength Klein

by to women’s strong fueled across our Klein leveraging business with Calvin be the execution. assortment combined Our continues market, in-house well-diversified

marketing continue a development management We XX% a grew execution, our PVH. growth and Hilfiger brand our in to strong than well, business which as across performance is and bolstered and by the by of team’s categories, Tommy strong number from strategy the quarter-over-quarter and robust by see quarter. Tommy sportswear Hilfiger’s led superior more momentum product dresses. We saw

growth We see to Tommy future significant runway a for of Hilfiger. continue

director fashion quarter of also houses. is the of head saw and net Our Karl creative Fendi and by namesake industry’s business sales Karl dresses the most led approximately with of decorated sportswear Lagerfeld of healthy Chanel is the Lagerfeld Besides XX%. his director the business Karl increases, up fashion registered designers. shoes. one head brand, The another creative outstanding being

successfully Gerber SoHo. availability be Revolve.com also this the the to offerings distribution, partnership learn August a of collection Karl develop New Lagerfeld In Karl worldwide Kaia Lagerfeld penetrate the Kaia also appearance will outerwear will the the for at that starting the a like in-stores to in store market. for called season. Lagerfeld We business promote Lagerfeld product every continue Gerber brand and translated collection. support big Karl Week to Last our has collection XXth. we look we businesses which flagship making both collaborations the with wholesale to Limited month, will be Kaia available our to fall on interpretation We further and Our in capsule U.S. Fashion York during holiday to online. well-positioned Kaia, our and capsule tailor x be help our Monday, in our Karl personal of Lagerfeld launched us believe U.S. launched as are with Karl launch, in opportunity upcoming

and book well some really Our great set we’re partners. bringing up retail in for products is our order

We want end very say about our quarter. will quarter. quickly outerwear third also had and have well just good at much J Eliza and the our that I perform Nordstrom’s another note to the initiatives other to more to continue of

Donna the was and Karan DKNY to strong continued another as Karan of progress, board execution DKNY solid sales, net quarter Our businesses and we compared second quarter. across Donna brands. doubled and development grow our to and This last year’s of

for we set than business internationally. million $XXX partners profitable Further, our the a We growth. of brands. opportunity of now DKNY potential business are DKNY, with have of Currently, meaningful tremendous our is growth the working for grow stage with the to these the with outside less future acquisition to North strategic closely America

currently several spring European business for on with XXXX offices Milan We’re large and season. in retailers working new our the

profitability major I the important Licensees As margin our an on DKNY have Karan are call, product and quarter believe licensees. we of and component highlighted first we of opportunity Donna business. structure this with category

quarter, to growing working are fragrance fragrance. to DKNY XXXX. brands. the class holiday launched product license in DKNY July, the Further, in expand this reinvigorate designs global ensure Estée specializing in partners category new eyewear the promote this continue executed expertise innovative much launch marketing this distinct we called materials. eyewear Eyewear, We for its new We X(NYSE:X)IST with of with men’s men’s underwear the DKNY’s to executed industry in are with base In product Lauder their we season. and the forward categories. have right with and license vested product the in agreement past fashion, a the planned with look to anticipated continues and who launch DKNY has and licensee distribution We Stories, DKNY globally to spring product our of scheduled a best Marchon an campaign

the strategy of touch first Next utilizing models called all -- with DKNY. engage based strategy that journey key The into their to week, is and to began into that aim consumers City. holiday talent kicking group The percentage along will some and routed influencers, head as will media concept points, has digital It off digital who print. deep captivate platforms brand’s XXX% shopping be DKNY the marketing design we and consumer with latest campaign will social and The fashion through strategic the New attributes heritage markets fall off diverse is telling play feature social the multiple in city lifestyle outdoor and campaign York online. while in living a to DKNY of key total campaign important season.

enhance DKNY to to focus and for been top Digital consumer. these of All keep brand’s the for visibility has the the G-III. are of efforts a mind

share ensure that marketing the at that investing personnel, campaigns capture or sites in performance best-in-class addition ever-growing of partners. DKNY, retail and whether brand market systems, doing we’re on be of our online work it our purchases online In we are to experienced an we to advertising own

direct-to-consumer last small a for is business quarter the Although year. base, our up XX% versus e-commerce

comparable status our swimwear Lastly, low sales single-digits. Vilebrequin resort the brand positive year-to-date had in worldwide and

We key continue in to and drive cities. brand U.S. awareness European

Los fall. This Ibiza, through five in and London, Cervo, open remain Paris, they pop-up stores quarter, Angeles, opened will we the Porto

brand through launched Middle collection licensee opened store GIADA. in around and the new and are our and in the We the world We recently Singapore the just the developing expanding premium China East. denim

Neal several drive comments and increases guidance the We our Vilebrequin the for over turn to years. quarter performance the I’ll next call at and to the now additional expect financial for to on over our detail year. on sales provide profit

Neal Nackman

XX, from Thank to in approximately stores. reported you, Karan last X.X% of were drivers million. $XXX wholesale the same XX% million. $XXX Wilsons decline our brands period at $XXX H. quarter our segment Morris. this million increased from Bass of million and Hilfiger stores Donna same-store our $XXX ended year our $XXX were of Net X.X% Net comp to of We second G. for sales segment sales flat for July last increased increase. the Tommy million XX% sales and a year. retail main XXXX, to at increase sales operations operation Net a the

and year. compared prior SG&A in G. quarter. year’s Donna and million, of margin XX.X% by Gross quarter percentage prior period. margins gross compared prior in to This the expenses XX.X% of related increased salaries. percentage were valuation to year. from improved the due and the was driven income wholesale XX.X% in quarter year’s in The margin retail quarter. compared bonus mix. increased reflect million to percentage fiscal which year. last Similar lower in segment the XX.X% operations our was from the for to the in acquisition The stores reversal year’s Gross the year increased DKNY segment margins for to Karan accounting. XXXX $XXX increased gross last quarter than $X in our the quarter, Gross XX.X% Wilsons for employee gross expense licensing compared was was margin H. favorable Our more first Total costs, second to margin the to operations Bass $XXX gross primarily higher our in the prior margins year percentage in significantly million our XX.X%, product stores previous was reserves

diluted year quarter. with expenses the net income XXXX. are do that advertising of of the the the quarter, In Non-GAAP loss Non-GAAP of the in share, quarter quarter loss accounting quarter million. expense starting per per these Net to current to $X.X exclusions in share of The quarter of $X related which for last and or second in net now share imputed million income SG&A in non-cash and $X.XX Karan treated prior $X.XX a the accordance addition, approximately in for sales reduction million in rules last new of diluted $X of in $X.XX to year net interest of interest year. year. fiscal per excludes of $X.XX related compared in $XXX,XXX, the net was a the diluted per reflect of same Donna of of to expense the net expenses, acquisition became $X.XX was to year prior $X.XX million transitional loss applicable the income this year’s the share period as not both the this compared per share imputed $X.X fiscal Non-GAAP quarter share cooperative in per effect equal excludes Donna aggregate the acquisition in per this net share in in second million or second second Karan. year a second was $XX

rules an short-term revenue reported Looking $XXX contained consideration, increase offset accounts from to liabilities. of connection $XXX the new require rules recognition prior sheet, million at at These is quarter. receivable year’s accounting balance end increased This predominantly to which related our the in the liabilities as ASC with of related be to the receivable, recorded as adoption reflected Company’s variable the previously in to XXX. were accounts second million now

million X%. and a the receivable current $XX We this XXX accounts under inventory quarter, approximately at end new approximately of anticipated basis, adjusted have debt compared million of approximately year. Inventory accounting on sales. quarter our classification, exclude the year-to-date. same up an classifications long-term impacted rules of outstanding aligns and million with impact the capital to end million and to had new ASC comparable $XXX returned the $XXX would We inventory. also increased the On been the of been spent have at forecasted $XXX Excluding last now by X% expenditures

to this addition, million previous the at the of cash the year, balances end year. In compared were quarter $XX in our million $XX

our guidance. Regarding

per and we to previous million $XXX our and billion sales compared income share, and raising and net diluted to or $X.XX guidance XXXX, of between XX, billion between and and $X.XX income of per guidance $X.XX net $XXX This compares million share net $X.XX forecasting January diluted are fiscal ending year million in sales of now or billion and $X.XX of net approximately share. and are fiscal between net the $XXX $X.XX between approximately of income our $XX per sales million $X.XX XXXX. For or net diluted $XXX million, $X.XX

$X.XX We per share. fiscal XXXX non-GAAP or $X.XX imputed expect fiscal interest, approximately income expect income of $XXX previous and of excluding and $XXX or or share. On $X.XX guidance an of to net million for adjusted, non-GAAP net compared $X between non-cash and diluted non-cash per compares $XXX between share our imputed $XX diluted million expense of diluted of basis to million XXXX This million diluted or $X.XX income we $X.XX million between share $X.XX per million XXXX. interest net non-GAAP $XXX per for in fiscal and

We forecasting million will and our million closed between from improvement we of of XXXX million EBITDA XXXX. be and adjusted losses This increases, of margin XXXX. fiscal $XXX million $XXX our $XXX a reduced forecast $XX and of full now expected stores. to previous fiscal year EBITDA compares to compared gross million expected the by and projected With losses to in in comp for adjusted million. in retail H. are sales $XXX expecting are fiscal reduction between This respect approximately $XXX from Bass operations in G. combination Wilsons a retail,

$X.XX of -- share $X.XX of net or our quarter million XXXX. $X.XX For in net billion, forecasting to income of or billion million $X.XX XXXX, XX, between per $XX.X reported quarter income sales million and third and October we $XX sales approximately This of between net share. forecast third diluted $XX compares and fiscal ending diluted net fiscal a income net the are of or per of $X.XX

This of third quarter the acquisition. issued of quarter Company expense, the fiscal net third basis, non-GAAP million $X.XX net forecasting per non-cash related excluding of share million to forecast note expense income an or part the $XX.X million consideration for of $X.XX includes and seller between quarter between share. or DKI the third $X.XX is to $XX.X the and $XX.X non-GAAP adjusted On the income interest diluted XXXX. per The of diluted imputed compares as for to million interest $X.X imputed

Bass, quarter, Regarding in Wilsons our mid comp positive we single-digit both quarter. the retail increases for inclusive single-digit the both and performance for comp third fourth low and of chains anticipating are positive

Bon-Ton. is second the rate sales closure forecasted half impacted of Our growth by year this

We profit to now I sales future. for in expect continue remarks. closing That call turn my to strong and Morris concludes comments. the growth the back will

Morris Goldfarb

Before know are challenging we that and take with many your questions, execution. and industries superior I’d take their We moment the in like times around a teams globe our to to being for to support diverse thank ever-changing. consumer dedication buying habits these unwavering

analytics preference. and to enabling we I’m and creating diversify our as available always that grow and remain consumer. metrics is trends to developing of to we confident products their mining our and targeted meet and to in business. expand whatever to data our demands competitive insights us opportunities, forecast constantly adapt consumer and G-III’s We’re proactively faster to are and new more insight deliver is necessary do gain DNA evolving and adapting the of have, directions sets for the Tommy many These to the North ourselves our skill we questions. will continue throughout in among some anchored to seizing we Operator, DKNY, and resources Thank Lagerfeld, the believe most begun we’re have growth We’ve to five global the market Hilfiger, for forward win. to here and Donna Calvin Karen, take we important ready power ability our to growth brands in world. Karl new continue explore challenges. Klein, now you. to path With chart retail America. opportunities have positioned to only And channel

Operator

you. Thank

ahead. the our comes session. Yruma begin Edward from first go question Please Instructions] KeyBanc And now will Capital. [Operator We from question-and-answer

Edward Yruma

I kind bit, out just the Morris, the Second, inventories? between I some we new that XQ of should the a is obviously, season, performance little guess, that retailer And zooming quarter, calendar it’s should some consider, put or of to shifts longer plotting want the it relates and DK DK, XQ? of out? the of particularly finally, so there goals the any then, on we on any interplay comments product. much. momentum some kind shifts as on shaping in on comments guys last Thanks to how up, term first, outerwear with How guess, were shipping just I understand, in nice performance you the

Neal Nackman

between in So, part question, the terms significant Ed, shift no QX. of there of first your and QX is

Morris Goldfarb

coat on as strong. far as years. stores Ed, all last dominate we’ve in time. anniversary very, that So, good of department store performance been our where kind We sale got that some department from very in late, got coat with started. has got the few And been We consistent reads. started and reorders good. very with is early us It’s business, We business of And positioning direction as our very reads most brands. our departments Nordstrom’s

up book the even be, So, guess, strong, new we’ve our earlier, to stronger is I our stores, that own shaping this is order would was store. our store I than Wilsons it’s last outerwear year. outerwear predominantly, And that into at -- said it consider as our anything I moment, shipped retail,

New product is retailing really well.

So, in happy we’re positioned business. outerwear where we are with the

DKNY as forecasting far what we’ve performance and partners. to telling relative our and As been

there. We’re

would. deliver we We’re on said target to what we

we go through to of on way can a out a of we every That’s the error product as good volume but and an quickly. it, better that day. is process get was side very of Our work. We part and strong; bit the as our industry get We expectation. then supplier didn’t close We get. of product perfect our little gets started start trial

there. almost We’re

with we’re pleased DKNY. we’re where positioned with So,

Operator

Kernan comes Please Our from next ahead. Cowen. from John go question

John Kernan

on with the the could performance the implied and Donna drivers business million as half Neal, wondering stand you’ve $XX if year. just us given of we the guidance year back what big half you’re the you metrics, guidance, of back the profitability deceleration generated the wondering it there forecasting Donna back Karan million help understand in you if the a Karan and at like within core specific us the of despite in I we retail that business, growth momentum pretty ex-Donna profitability help of on wholesale drivers understand and lot the not because margin a in where the because core at business. the profitability the into go half is of year I look the incredible into standpoint, the us we versus If I’m Karan a I’m by year if EBIT of just now. in Thanks. $X wholesale last first as in EBIT does dollars just all go turnaround. look loss just a that you you over part of pretty the simply have year, look half

Neal Nackman

Yes, biggest significant the terms really things first are year. business, of John. focus missing we’re single second versus half. The was the I guess, the in in half is main to second Bon-Ton the quite the which thing on two of points half

really think I we you where we we that be back if profitability, feel to need performing be. to our added would about

a little relative we mind -- that reason just other launched in the seeing ownership keep the really business was you’re in the Karan the G-III to half, second first launch Donna bit of that half. under The did softness

last second product year. So, our certainly, comparisons of in against in the now fall are the launched the half

first but still is the business, we’re in comp obviously nice different than showing bit So, -- increases the the a very little is half.

John Kernan

right just remind head you as a standpoint can or overall us you year? Donna where Neal, we an idea ballpark now where give into Karan us profitability you next of And from -- stand

Neal Nackman

Sure.

the number profitability So, incremental is business, significant. quite rough And Karan million. we I the sales little have year, we expect lost $XXX did million on cumulatively, a about year, numbers, mentioned last over as those to This about $XX in $XXX be million. before, Donna

solid single positive the digit expecting Donna operating business. I’m for margin low So, Karan

John Kernan

topic right then, of just Donna Right. the Karan And more. around

you’re Karan albeit future? into were that you store more the very comps, Thanks. think thinking about for I said, the base, Donna a low potential Karan stores shape So, Donna does up over going off How XX%.

Morris Goldfarb

Donna into future. fleet, go now, Right stores or line retail certainly, rightsizing the our as in conversion our either stores John, DKNY fleet, are Karan more is stores for Wilsons our will evaluating stores Bass and focus Karl into Lagerfeld. into the have we what on we

it a focus. is So,

we XX DKNY. the So, -- shrink to stores will continue have we still in currently

or those. will stores for We shrink They’re close. of not that future. to X X like some I’d the appropriate probably There’s

grow, So, retail we’ll we And is before expand shrink it. we -- time then, will this good the concept. to a

Our developers swap repurpose working Most future, for help find out and better in us are is with closely us to poor stores, locations the DKNY. some maybe of toward locations. locations that deals targeted for better

not are are we Bass; expanding not expanding We Wilsons.

as So, on, than to we you’re real appropriate for see, find and perfect DKNY XXX the likely goes time it. estate more stores as the product

Operator

from question next from Eric ahead. go Research. Tracy Our comes Buckingham Please

Eric Tracy

morning, Neal, the follow the you target. this prior But could on the and profitable. add like DKNY, based I It was on everyone, I modestly believe the up congrats. said, little semantics. prior my Good guess, elements seems I $XXX perhaps guide maybe that I just million will if is and outpacing approaching

kind on of be any in second of So, from, coming may upside is through? expectation an color something first the driven that just coming curious or half half where the

Neal Nackman

would first half. half it’s and little Yes. Eric, both, of I the a second bit you, tell

the the comments in than wholesale the on those the we first income half, in second originally lower strong, -- operating then, we we of profitability. stronger was And slightly business. increased had -- are half what so, of in in And side the earlier sales were probably very thought licensing

Eric Tracy

international you year developments Morris some white in terms development about think arrive? then could of next could year. but some just Could the spring maybe of opportunity strategically you curious, DK and And we -- space as for that just maybe bigger where mentioned talk about next -- Okay.

Morris Goldfarb

DKNY So, clearly, just isn’t this initiative.

both Europe, in can comfortable we going to North than of world. come another compete in shining currently back What more really now America their page specifically presence relevance the more with achieved to North Vilebrequin and and we DKNY, Most strategy in are bit enter a Europe. into that is Hopefully, in we is with, that much with we And that America. universe part and focused near becoming their and Europe on is the future, of of we’re the announce With with lights clearly take the little ours of in unique. we’re out playbook Asia; in have. America North developing companies

excited we’re that us. the about Europe and So, opportunities affords it

more to there’s come. So,

Eric Tracy

And then, lastly me. just for

obviously But, and talked and this. terms in have Correct that quarter, and a you quantify forward did missed of DK. I then, might You about expectation brand momentum, me, there? the broader just strength CK the Tommy, in color going

Neal Nackman

sorry. I’m Eric,

CK? said, You

Eric Tracy

Yes, Calvin Klein. I’m sorry.

Neal Nackman

The of sales. -- didn’t terms quantify business, Yes. Calvin in we

the to business set Calvin is. where we Just think level

negative due We’re expecting this a low Bon-Ton. year single-digit the to

getting I think to business. without without the prior that second probably specifics And, for for for single quarter into Bon-Ton, a the the we performer would positive mid digit performance quarter, have been was by low it year. strong for Calvin Klein

Operator

Riley FBR. question from Please Susan from go Anderson ahead. B. comes next Our

Susan Anderson

Good morning. Hi.

a my congrats on business. Klein quick add the Calvin guess, on follow-up I me Let the quarter. just really

it what So, in year? curious, in it the is was just expectations it guess, strong sounded with running your like for was I And the excluding grower if from quarter. seeing Bon-Ton, perspective guess, lower be margin you’re far I gross the margin I so business? line now for we as that that heard from Thanks. could about talk PVH you a would then,

Morris Goldfarb

Our very Bon-Ton universe. lost like of Calvin It from doesn’t the the Klein pace with we seem strong. business is departure any

excellent significantly, are up ever copying than been. are better they’ve our and margins We’re sell-throughs our

trophy So, for our piece. in is future our Klein. positive but the we Calvin It nothing world, for see

Susan Anderson

be spring? the I bit how in maybe business guess, talk a you you helpful. point, in many on Europe, that DKNY think some be business at could doors Great. then, little about just could if And Thanks. you That’s think you could how for big next

Morris Goldfarb

So, lot for opportunities of market a in got the Europe us. has

penetrated and footwear, in somewhat light distribution We’re ready-to-wear. on handbags we’re and in

doors we today, couple with at X at stores But, that hard is it. than probably more just X,XXX stores; is more have situations that on a have are that on specialty which X -- focusing to in, footwear in and working distribution; no opportunity unique count the and we’re to We’re accessories. stores wholesale is we X only performance company-owned and wholesale Europe. distribution believe not doors all; stores store clearly possibility The efforts taking we can probably there of to in opportunities there XXX expand on

we’re scratching Europe. mark. we’re to surface our just what’s available us of in So, make the beginning And to

opportunity us. So, it’s significant for a

Susan Anderson

Great. you just acceleration in go then, -- Bass you the expect of back particularly you on one It of going exciting. driver retail. in be and you. fourth touch the to last as kind on That could Wilsons sounds that? an like if what’s half comp think Thank the And sounds Maybe we and into I one quarter. guys the

Morris Goldfarb

said earlier, in changed we’ve So, I our Bass, assortment as mix.

in that heritage the than this much a our finding, footwear. really done has that better of our spite We’re is fact apparel brand footwear

So, Bass, good. into on is there than the the we’ll has development footwear of be a kid’s historically. far make children’s a hone it early and greater We’ve in degree. stages down styles that the footwear penetration for of going will And focus just is been to of to margins Those very apparel entered huge difference. a group small business

an product product business we’re coats, been has significant mix the men’s performance. a So, at product that as And change coats, business our third for the our a Wilsons is will us. the on historically women’s in of well, third elastic a accessory -- coats, today the mix mix third I of believe make a accessories. and clear Wilsons

and to if that to And have. it. care really size it’s even found shrink accessories, men’s is mix these maintain haven’t we improve -- or and We coats. business I women’s don’t We’ll the that solution the a X%

money. gets we’re your that for buyer a buyer performing nothing the going have category, There in If is, buying on by more is mandates menswear funds So, your it that rules, those constitution strategy better, to allocation the our we difference. menswear and make to of based anniversary performance. is is playing and a is

Operator

next Rick Please go Patel from & from Our question Company. comes Needham ahead.

Steve Lengel

little grow to as ‘XX? Thank What’s for this on been around what color for my we curious, you’ve Lengel business up in be going to Hilfiger Steve in is sales and could the second you This more you you. about the think ramp if give question. half and Hi. well was a the potential I taking experiencing. based and Macy’s Thank Rick needs improved Tommy on Patel. me wrong

Morris Goldfarb

with Let’s start improved. to be the needs world everything in

products the amazing has behind Maybe is we PVH were but their piece in difference. PVH of for that done that’s comfortable where that We’re driving aligned, very campaigns in sat and growing. made with quickly million marketing $XXX put with the very maybe combination we’re is the short many never taken of marketing size we it the the type it. as at marketing as it we’re a the brand time of that level we what’s well. the far doing years. very other as one it. less kicked And period stars very a in And And was coincidentally, sit, a part north that product perfect. and all G-III PVH, million and than with built all has $XXX a is But, of the driving We that of ship. to world a has deal signed We’ve categories

As I first earlier, DKNY, related are our perfect. never shipments said to

were They is excellent. the profile with our they’re as were they’re never Our perfect. same good, first consistently. But shipments Tommy today,

first product, the and path maintaining is margin where we’re The delivery the today a the the some retailer at is margin. as with delivery on looks second well. needed what And improvements. product performance like, of G-III at margin we’re less the maintaining needed pleased very improvement, The the

very So, pleased I with commentary guess, it. that says we’re

Operator

go comes Instructions] Jim ahead. next Please [Operator our Stifel. question from from And Duffy

Jim Duffy

Neal, I Good fourth step of margin each shape growth. just that outlook start then down quarter. Q a to The operating of you’re revenue of questions to implied year-to-year But, in talk for in reversal those quarters Can a have the year. you, fourth what’s you third the kind you. going of couple you’re want while a of be picture around down about the for Thank half expecting the guidance implies the Morris. in looking would and bigger morning. lead that? the in just second for Neal I question for quarter,

Neal Nackman

the specifics Yes. the order mix and we’re for of book just are Jim, the that margins looking happening. essentially, second of really half, and our at sales

gives Without minuses margin gross So, it’s books takes, much refining the some what plus in order looks into of and getting just too matter SG&A. and a like.

Jim Duffy

that Karan, Was away go does reversal valuations Okay. the the second the on the reserves year? Donna in of of half

Neal Nackman

was the away of that reversed something year goes year. year. It No, entire after last it the

Jim Duffy

Okay. nuance, share count And up the fourth in count? step just the behind full you’re share conservative quarter the year but gets being then, big this perhaps or on the specific something into the a implies get to to Is guide. that there

Neal Nackman

count. share devious there nothing the No, is in Yes.

of about We’re the probably average million looking $XX for year. an for Yes.

Jim Duffy

of is, up it it quarter? where from brings out What the second coming

Neal Nackman

the The, RSU role grants of grants. RSU the primarily,

Jim Duffy

on to fourth next that lastly into the of business wind-down in just then, there are sizable this does expect you fourth Ivanka the of What quarter, programs wrap of any like? impact thinking quarter? related spring And And to to year. then, around Okay. the the ship the look

Morris Goldfarb

one you. maybe help Jim, I and take I’ll can that

Ivanka Let negligible. me question your is The wind-down business, second of it take the first.

in We’re full control.

Retailers inventory what in. factored And all time. their decision miss us. a made. it the to was a for Our is appropriate that And is This surprise that’s shape. was in was we are good taking in commitments This won’t decision And not were. the beat. a

get because question the top very it, as resonates view, spring. spring get get hard makes And in we of floor on sparkles, it a early to from always first on in economic get it and a is of early. of was it an it stores fight fight financials. point product you spring early difference, we We to where program. well our spring fight Your on This mix. in There the to the programs inventories, liquidating is they’re Yes.

There it is, be answer day. will the single fight programs. yes. So, We spring every for

Jim Duffy

there, Morris? out call, specific Any

Morris Goldfarb

That to mind be appropriate have tell you competition we and me what with it. wouldn’t our tell in for

Jim Duffy

for Morris, you, Last one enough. Fair bigger question. picture

an You spoke behind this where you it’s the effort that? for associated some to I not agenda suppose, Can you That’s new analytics response and of investments of the new give embracing in idea are times. you. for us Company. speeding commentary

Morris Goldfarb

That Sure. And be it licensed And we our of of part concentrating most is a new assets. for agreement. the Company. our licensing One that on follows of was its luxury the had Company, scenario, to never business. not the e-commerce it that Company in used

some own we’re commentary the we the brands, and we’re hire that going is to brands warranted. in that best-in-class investment significant making And some give that is that be new. Now, we

Jim Duffy

How you talk about where you and are about can you investments? Okay. Have hiring -- started with respect that planned to people?

Morris Goldfarb

Sure.

we’ve to of area. that in what our market north margin you SG&A hired -- people have hired people, of XX people marketing is We’ve appears A e-commerce We our dilution be lot see hired area. in based.

Jim Duffy

Okay. you. Thank

Morris Goldfarb

Neal?

Neal Nackman

Yes.

planners, been retail something of at In terms -- spend forecast, on been is extent in the we’ve incorporated terms this business really -- there our with had And influences happened we’ve doing. more bit planning is been more the that’s something in now past, so the happening over retail more that’s tracking and tightly decisions. obviously buying the years no the it’s is A little wholesale to that we of information that tightly data partners. as our investment into more

efforts. to there retail respect certainly aligning with to need their customers do -- to the our nuances are there new is with we So, that work and online

Operator

Jaffray. question Johnson our ahead. last Eric And comes Please from go Piper from

Eric Johnson

if customers got I Hi, could This anything’s I’m off-price Eric that? to you the just years is been that guys Erinn know a curious challenging past. I to anything was ahead curious, year, little comment if if on I was and so. there’s are just on I buy. if just of on a outerwear sorry, guys. comment specifically But, it, go open the But, approaching asked. with today. apologize how -- setup I and ignore in for bit was they’re

Morris Goldfarb

Yes.

they With we very have our a have cap are customers exceed. off-price Our the that licensees, same historically. can’t been much as we

an much can with cap. that with out off-price there affect have amount staying We of that’s demand the store not not have we to from how and we how that the always So, demand we do business right with in It’s and deliver are cap. do at we how customers -- issue compliance our channel. control we product, the department our never

all in manage that own, a for that So, we that. our we issue we the of brands year to or seems it’s strong is comp type zero whether control can to whether can that for to the provide what with Company. we we at last -- margin always as That’s demand there be a reasonable grow

Eric Johnson

into as negative if And half, as and XXXX? of that great. on expected comment DKNY. business, helpful. then, that Okay, materials retail And outlook, the how gross kind does sourcing, margin the impact great from to play freight and the on move you second into cost then, on That’s be Is that’d the well. out look could we

Morris Goldfarb

be a of and our conversations on of the margins into North on go our the are margins Europe and Asia. should half second the So, American what penetrating are. better for margins year the earlier based historically better basis, Those forward than further

for both So, we DKNY, in are and see some coming assortment There come benefits to in major licensing likely years revenue. opportunity margin DKNY. the with are that

Neal Nackman

the lot question half, second the clarify happen a reserves was that our earlier, impactful larger. asked quarter. year, the in obviously business valuation benefit to the those businesses will Donna because just that is throughout And are did last Karan What the will be

versus obviously higher will of quarter. in impact second the particular the that business those what margins So, become lessened and experienced we

Eric Johnson

Thanks, Okay. guys.

Neal Nackman

Sorry.

also very our seeing into freight are freight, In issues incorporated some near-term we terms are which of plans.

Eric Johnson

so Thanks much.

Morris Goldfarb

thank Thank have good Thank your all. And for questions. you. you you day. a And

Operator

participating. Thank Thank you. Ladies conference. you for may gentlemen, and this And concludes disconnect. you now today’s

G-III Apparel (GIII) 6 Sep 182019 Q2 Earnings call transcript