GIII - Earnings call transcript Q3 2019 | G-III Apparel Group, Ltd.

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good morning and welcome to the G-III Apparel Group Third Quarter Fiscal 2019 Earnings Conference Call. My name is Sheryl, 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 call 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 laws. forward-looking to like within the made and I federal that statements the we securities of in may statements call on remind session Q&A meaning certain today’s Before participants would

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

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

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

Morris Goldfarb

the year-over-year the we momentum continued, a for earnings guidance. strong of morning Financial our growth In share We're wholesale joining to Officer; me Nackman, had business per sales Aaron, report our Chief growth are Sammy X%. in Chief as Jeff and and and of quarter. us. was Vice President. Miller, Neal quarter, for as and Chairman thank today income our third quarter Operating President; momentum and our our the our in With responsible our Executive the year, Wayne Good Vice Goldfarb, Officer; you exceeded our we increase all for in largest it continued The net pleased of business

business, net Based in an our sales, our double ambassadors XX% guidance the August Wilsons continued and are October. greater net growth third adjusted EBITDA had and income in then September increasing off share. marked confidence overall guidance quarter improvement in a digit year. in we in and our approximately XXXX slowly and performance full in XX% This on per fiscal started than Our non-GAAP includes increase for growth had

We power We to Karan, designed, and of relevant and competitive range G-III’s of hard global appropriate develop Hilfiger, what the price is five Donna partners. differentiated makes at leverage continue brands, broad us heart Tommy products Klein, Lagerfeld. work and retail Calvin well Karl distribution a and to for This our of supplier at success channels a brand to truly our DKNY, choice points.

once few were sales across the to exceeded compared for third line highlights which the and again were up strength $X.XX for bottom increase expectations. Our a third to quarter. line X% business, $XX fueled financial our top million results billion, by quarter year quarter, a third for and the wholesale our record A last met our forecasts net

Our per an third to as year's quarter increase third last diluted share was $X.XX, $X.XX per non-GAAP net in income XX% quarter. share compared of

details for Now, our some on results.

in Wilsons quarter. month missed the holiday positioned a the sales had inventory a quarter, Bass more Bass lead business and and comparable The The higher believe new digit that posted of the business apparel the improvement margins assortment single sequentially drive October. inventory mix in high we seasonal quarter, turns. the a each in last improved shift gross appears quarter month [ph] product digit retail its expected of decline plan our is as We in embarked own we to the with to be comp and productive to penetration on fall decline business in working in an the season. single apparel quarter. is The arrived. mid product important increased sales well of the Our experience temperatures although did for arrival business with for

We store years. XXX stores and continue track over have approximately on are closed the two to rationalize our portfolio to

we're Bass the Paris compared that approximately We goal business end nine sales quarter centers acquired and closed to of with Wilsons retail two high and in we converted for our these XX targeted and expect not to approximately beginning stores The customer repurposed additional in businesses satisfactory to review outlet in continue making for outlet forward the all to year in DKNY XXXX. reaction double-digit profile solid Karl XXX Results experienced stores In to of locations. of Palm the improvements that operation and this pushing mix Francisco the stores comp fiscal We San are We've Lagerfeld stores. XXXX we our us. XXX and performance in at the businesses. XXX the losses our with to we're own December Springs. DKNY We're pleased the we registered the on options reducing gains stores. product significant to quarter, in

certain want have economic before assortment or appropriate make highlighted I stores. we DKNY place we quarter, and the in last additional As product converting model to opening

and reshape overall that smaller of stores fleet Karl an rebalance stores opportunity over time. and We provide Lagerfeld for an additional DKNY Paris to continue believe us to

As I earlier, wholesale stellar our another quarter. had said business

efforts. some Tommy excess the led in managing Hilfiger and building partner, got We sportswear, net Hilfiger of sales to in of this American The outstanding Hilfiger us. quarter, with to more Lagerfeld the a the North credit than the we another of the Karl Karl by give is a events with to up attracting future It $XXX the continues dresses. leveraging brand, this industry. around digital Our also last over created our PVH, XX%. and accomplished have categories, across job We're our some Lagerfeld by excitement another sales superior business a and a incredible growth Klein for introduced significant profitable outerwear, to through of consumers was Karl a launch business well talent We've be growth last two Kaia business with The America. Tommy increases, to seek competencies brand Lagerfeld marketing launch This lines program to third outerwear first in the launched brands, Calvin by sportswear, performed awareness best Karl healthy strength this at demand and spread worldwide supported sportswear, and higher their includes built diverse quarter Gerber. brand. in runway strong in was about in the really generated businesses shoes. represent throughout compared collaboration for to great million in while which very business. public business, of done The strong website performance years important for is saw Out our year. Paris marketing the out product success the dresses. for continues developing sales. annual last consumer approaching than and that Last quarter, we the KarlLagerfeldParis.com of and number handbags We a XX% management market. relations had momentum almost for strong set the quarter quarter Tommy year, which and in North by good of the We've led and third Lagerfeld to our excited traffic business The outerwear this XX% registered brand. from during

own launch G-III’s of also and anniversary brands. of design year our Donna quarter the the marked third DKNY for The product one Karan

be Our America. DKNY XXXX, brand in these capabilities strong delivered year-over-year offering North we with growth, and execution now sportswear, to by development XX% driven and better outerwear and continued will dresses, spring approximately stores businesses in and Beginning strength Karan all Donna footwear. department

extremely Karan global We’re excited brands [Technical reach of also about our DKNY Difficulty]. and this and Donna

As joint business an over and growing categories driver. of and DKNY the and look represents becoming venture introduce broader for years. China brand important XX allow in and profitability another additional to Karan we points of us brand this expand awareness example, brands forward has the coming a Introduction global consumer our Licensing base. product to sale Donna the to approximately now lifestyle profitable

best-in-class for fashion outside to Swarovski. America signed fashion in international partner, creating make This into a markets them partner DKNY’s dedication accessories Swarovski’s jewelry. beautiful attainable quarter, for we ideal international North with license luxury of the launch an jewelry and

several a licensing both expect DKNY as Karan at and over brands. rate Donna the to we develop the years, to grow continue next We revenue strong

with As understand the we fall brand the brand ad pleased of provided which -- owners, DKNY campaign importance results visibility. very relevant marketing. We strong were brand with

performing placements consumers. Our digital are of audience well with media a broad

campaign. will For to marketing this We released efforts its holiday with and top a kicking in the media strategy shopping DKNY digital season. XXX% ads off during news mind of keep November, season, DKNY DKNY outdoor behind continue its

is capture be channel our ways brand innovative work our growing of those our As the to ever we retail market create with we digital our wide, purchases, team as on focus and move will or customers. seek to forward, it whether of websites to exchange partners. online for G-III, Corporate marketing new own share an a

with of all product to our our of an DKNY co-op example, As across continues evolve, multimedia leveraging mix the Macy's Macy's marketing DKNY strength categories. marketing

capabilities to works our efforts lift incredible product efforts effect We've DKNY DKNY almost supported and The higher XXX% our and in have tune team Macy's.com by conversion. Our on execution Macy's closely searches shown marketing results. fine curate drive website. strong search the seen with and to successful campaigns a results

and our we've and across third Lagerfeld important quarter on some Paris shipped with great great outerwear. our strength update partners. product Tommy DKNY, Klein, for category the especially business. Hilfiger, driver We retail an Now, board, We an this with sales Outerwear experienced Levi's. Calvin to dominate Karl of is

quarter registered growth. Lastly, comparable mid single third brand a Vilebrequin, performance, status swimwear our resort and with store solid sales digit positive

United Ibiza, incremental China We're in reach key regions, the Angeles. US quarter, the expanded we of Los and all third the expand performance brand including brand Cervo In brand mainland across drove and opening Vilebrequin was through awareness in pop-up strong pop-up the and stores successfully Middle drove to Porto States in the East. the Asia. Paris, continuing the and London, cities location Europe, European The and Importantly, Volume.

to environment exception. our These affected leather business net of outerwear China handbag industry G-III our and represents categories. the sales. tariffs and by primarily is no smaller are our impacted total Our part The on a categories imposed X% is tariff much of imports approximately date and

sourcing base diversifying including relationships diverse in a vendors, entire and network, longstanding strategically apparel. other already countries have started our and of have both many with We China

our believe the points. brands increase allow selling to us will of also strength selectively We

impact tariffs year. the and we to be that entrepreneurial on provide to our the additional over to will and significantly adapt Neal move together, existing needed initiatives times We've detail a I’ll G-III built turn now believe and and results. company do to our the our impact guidance financial ability minimal can offset quarter Taken these in will nimble the have of for performance call quickly. We've our succeed. and proven of whatever for to is difficult succeed financial very the

Neal Nackman

XX% drivers Thank $X.XX you, third $X.XX segment year. Morris. last Net to $X.XX from and XXXX and the main of increased G.H. impact negatively growth, a occurring the Bon-Ton same Klein lower wholesale XX, of Net $XXX sales operations X% decreases X% billion ended stores billion impacted quarter. Wholesale stores for Wilsons sales our in sales number sales the We with for compared Hilfiger quarter were from million. approximately the period also operation our retail for were stores, of X% store by operations to decrease segment were $XXX approximately us. same sales DKNY this of our by segment brand, DKNY October increase. largest our the approximately bankruptcy increase affected Net third X% of of Tommy stores the at same in by the Calvin increased million. to Bass year brands of billion last our sales reported operated unfavorably of particularly X% the were retail in for our sales stores. store our at Net

margins the to operations of DKNY margin of in margins quarter also the promotions. expenses quarter. in period. result the decrease percentage year. gross XXX expenses quarter as co-operative million Total of Gross just was SG&A the the DKNY year, to adoption of last in in adoption sales. quarter. in million unfavorable in this $XX for advertising quarter. the was prior of quarter compared the to operations of the last a of the stores SG&A Similar our the our XXXX, benefit XX.X% our in treated were XX.X% in the our brand The same part gross XXX a result higher stores the to prior the XXX was in XXX, SG&A margins expenses year fiscal quarter This in for a decreased ASC million of in acquisition to reduction reversal XX.X% were advertising retail gross percentage from expected percentage from to for of in operations as lower year. Donna the percentage and XX.X% mix, segment these reflected in an primarily margins result was prior gross Karan was discussed. last of The segment gross gross year, Due result sales margin mostly year’s year reclassification to as co-operative two gross in accounting. segment a our of first net reserves reduction the to net DKNY XX.X% period of and in the to wholesale are now in The XX.X% expenses wholesale compared ASC as Our of Prior decrease quarters, lower year's third percentage this year’s than product compared compared as a Wilsons as valuation prior the margin margin

we related $X.XX result Net of to third revenue for and year per a expected, quarter compared DKNY base, this diluted or Hilfiger Non-GAAP year's are acquisition imputed quarter quarter in a million income to $XX of quarter. $X.X and primarily $X.XX last for fiscal million year's share per the per net Non-GAAP leveraging of the or expense $X.X seeing benefit diluted was quarter. our of as $XX to As International compared this excludes share per share income the per last income share SG&A growth. Tommy $X.XX Donna of non-cash was the the prior million interest share Karan in in year. million net $X.XX third

Looking connection now adoption to that consideration, to the million liabilities be previously recorded $XXX increased receivable related receivable of term at the were which This our ASC at liabilities. the as company's increase $XXX predominately million reported offset variable end year’s balance from in XXX, third quarter. reflected sheet, to is an of short requires prior as which accounts accounts with

long at million current have is We impact implementation inventory the with to comparable receivable on increased growth. compared increase accounts This year. this XXX million. Inventory classification, the XXX up of debt to would of approximately X%, outstanding now aligned end Excluding quarter impacted and end the sales classifications last at is also sales ASC term our with forecasted capital growth. exclude of quarter been expenditures spent approximately approximately consistent had our have of the XX% basis, million $XXX new the inventory. been We anticipated the which return same XXX $XX year. a by million the On of to

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

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

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

now and between our million. $XXX We XXXX million and store full of digit in respect between compares single With mid $XXX million operations, and in are of quarter. G.H. $XXX to to previous we million forecast Bass the $XXX fiscal This year to projected now adjusted EBITDA EBITDA our fiscal retail are fourth for forecasting adjusted for $XXX of million compared forecasting declines Wilsons sales comparative XXXX.

we same anticipate these fiscal turn As comments. from result, the Morris losses chains back be remarks. as XXXX last our that now That for now a approximately concludes closing my two will will the call year. for I to

Morris Goldfarb

Thank you, Neal.

brands DKNY Donna to in key brands our The power forward. cornerstone Karan company. continue a Our driving profitability and growth five propel future and are for us

how finish and a feel off wholesale great about we in quarter start we the year. to to are is Our good business positioned the fourth

Our the develop they continue the as most fashion out to market. best industry the product stand in merchants innovative the designers creative and and in and

partners merchandise while experienced our products made and positioned develop like many important the for support the their and you, and floor stakeholders to of significant all the to throughout difference coordinators for thank efficient maintaining be have world. resources operator. in holiday our service retail talented bringing explore to and ourselves to among for ability most Our in growth in happy manner. We’ve our timely a customers, a season. shareholders, we'll teams our wish Thank the partners the US a selling and and I'd and opportunities you and

take to questions. some We’re now ready

Operator

[Operator Instructions] from from first And our comes Edward question Yruma KeyBanc.

Edward Yruma

on and Hi. nice quarter. congrats Good a morning

steps accelerating thinking transit holistically, I entirety based challenge retail the that year expected. at the illustrated, Macy’s, the the the the kind more taking down at I beyond kind decision of what’s And on what Thank new there think a better of that you if have in you’re exclusive it losses you growth there the all earlier come your initially on I In store closures department business its broadly guess a mentioned dig the that the retail you way what may terms retail guidance, wasn’t you. to openness haven't quarter. DKNY bit that be and the we you clearly, I will were to your a in XXXX? know might the I wondered of profile as to in think for offer forward? I weather -- if follow-up, improved, little said take offered in could know know are business, have going should about been losses but that I then reduce you stores. how

Morris Goldfarb

performed, thing has We've not many It's Clearly, about. strategists a how of closing demand and It's Thanks, constantly to talk is secret. different put looking it’s not Ed. our giving underperforming we're and stores not solve dealing retail away a for We're Clearly, the trying side at the as We're will the solution, path G-III. attempting all other product product, doors. we with it within changes problem. meet It of one now to we're with we fast we say, cure on a path. deal alternatives first we'll a situations moving it developers, greater but we're like, and efforts it and than create with our an on we we're made it. are those you focus that's in to with that on mix clearly easy we would We're the we're later. management on quite it's making it, honestly, but negotiating not landlords. changes, with on and as

Are on follow-up So you that okay? question. there Ed? would that, be Is your retail a

Edward Yruma

Yeah.

then -- Just DKNY please. on a follow-up and

Morris Goldfarb

stepped scale. the So acquire and with exposure brand we many us they for committed the doesn't to G-III. be greater The have support committed appropriate exclusive to today, -- the think achieved need in Macy's in sometimes The came that accomplished exclusive to that Macy's. everything and from we the believe They to And guaranteed to what able We’ve numbers mutually Macy's, turn with helps to an distribution product sometimes that I Macy's. Macy's. discussions an be. the clearly needed and DKNY acquire initially, we rationalize significant company up brand

and their So, we the we’re commitment exclusive. are at they channels to least G-III that can level an jointly carefully as believe it grow that on beyond Macy's in same distributing at

took of that we're this So through the in it's to negotiate a path agreement for brand. time and the lot both best

Edward Yruma

from a much. change top EBIT the as the that, as perspective follow-up So you some to guidance perspective? maybe that DKNY, laid so longer-term a does just Thanks from an both well had line quick out from of as

Morris Goldfarb

It still we the is greater on doesn't on the it upside opportunity might, significant first it will perform. be clearly, season, out, won't as it the product, as we anything downside. massive, the jury is change the for The and be but distribution distribute

believe, we opportunity. if significant anything, there So upside is

Operator

comes question next Murphy Piper from Our Erinn Jaffray. from

Erinn Murphy

my you. guess for I first is Morris, question,

good just guidance fourth seeing you little about for Can share guys in you're of up obviously feel terms about particularly a pretty year, the sales the stand in You the so what took the where reorders, seasonal bit you more in product? quarter.

Morris Goldfarb

being is had good. year. excellent product We Yes. exceptionally Seasonal and year outwear a an last is year this year decent

have come inventory, levels bigger taken all down on sold. it been Had inventory Our risk would have significantly. we a owning

So evident, well. for we're at we are will QX the But all shape of and categories in the that on be QX side. that, disclosed doing outwear great beyond end as growth

I or little not I see with. dress could is bit Our It’s very would I'd business of that it's terrible like a business, okay. us. business better, tell that a you point a good. category footwear not our product but to fabulous, handbags is classification we're There's struggling for business to performance

most cases, in house, doing of is we plan margin, and beating call out a five miss kind power in that our right they're doing plan. house regularly, but we as fairly They're non-essential we're little brands clean of initiative clearing power business and up and the our now, our five brands on making well. what we're our in pieces So are of showing

for no as will strong a us, at you through Neal I guided So and all. believe has be that quarter issues QX

the coming great size significantly overall with are down. of shape. Our inventory come and down dated in somewhat troubled our has levels inventory for we’re we’re The that business, sometimes

Erinn Murphy

on then clarification Bon-Ton Neal, the on a for was That’s how a big follow-up quarter? I referencing Okay. quarter but product think, you million of just down the then mentioned as in third And mix sales, the basis component? XX the has referenced the parts, third an gross third XXX the Morris just curious to And in some a third well. on were before quarter margin just lot year, you quarter, hear. of for the headwind points, good moving

quantify margin? curious, can just of mix the and buckets promotional then gross accounting on just So between the the you some product activity, changes

Neal Nackman

Erinn. Sure,

was When both So we top sales a to the off-price direct we result view line Bon-Ton, Bon-Ton and ship there's the as we in sales. thought -- that sales full the be Bon-Ton price around those $XX of then the million again. impact able related would impact, to

So around to significant we as million very to profit which $XX still the think would well. operating have the quarter, impact it's a been

profitable of As to lose a very fixed top there it us. highly when line – in is costs mentioned, we’ve we’ve and sales, terms lot you got you of an account lose

been show a happened think we from have to it I forward live it's we've here go with different that structure, we'll got will here. and would course, strong totally growth and something So, of from and

exist to prior those Donna quarter as we And of businesses that. as to That approaches really back terms the terms of in points, reclass, DKNY didn't about dilution, itself, co-op Karan, given just launched in little XXX in a basis year. of that, Turning granularity just gross third question, last and in the a of the margin inventory number. as the far out more result we've

inventory this markdown There's that the been really just normal that think launching. So Last about the more would year, of cadence. cadence it's if a were year, in we set you a full on, business have channel.

I a pieces in got one decrease all the to look programs significant run of our sorts we business We've different probably different and of on. the more business. XX rest was When that business, So going at of of the units. wholesale XX turn

Some some are higher, are lower. slightly slightly

way as planned that's as comparable wholesale half. and I it. build business the we takeaway wholesale margins business gross increase stronger the the main running it We think to to first we and our far the in we're is that slightly were the slightly have way at

We’re of maintaining We traditionally of slightly well weaker really pressure this headwinds had right job some again, year. our and merchants any the wholesale job terms leaders shape. that full in quarter divisional year in We've and headwinds a But do pricing We've margins of this are a come. margins. in freight labor have product pressure. great and our great got do

Erinn Murphy

And margin so should a the we fourth quarter? the bad just be saw the gross down third quarter, as clarification, not in as

Morris Goldfarb

short The yes. is answer

Operator

question from next Our Kernan comes Cowen. from John

John Kernan

and talk maybe if we Morris, affected wholesale had year half in ex-Donna Obviously about of been but Tommy. the for look Bon-Ton, of running Calvin us performance the Klein can pretty you by quarter. slower it maybe the at bit the growth than did the little in you Karan, give first a some robust numbers

you Klein the during Calvin what quarter? wondering saw just I'm from So

Morris Goldfarb

trophy Dollar Klein than piece. anything, business. largest piece increases in It’s our percentage increases have or Calvin we Klein Calvin of greater is our Today, not.

Lagerfeld to of pieces of I There's business term wish that performing versus the in the another find better. have growth. long and brand for we or matching genders. or I a $X tough Klein like about Karl Tommy Calvin today, business nothing that's We north to and The could billion business to to outerwear that see bit billion both an of we are still There plenty this. better. aspirational percentages mission. a I $X is perform DKNY American best really in we'd is believe continue there is, incredibly left of or as runway does and I retail. grow I Calvin little only brand have is a can the piece women's Calvin and the well. of brand pieces speak speak can to business the It the view to piece the

the to as a category. As said, repositioning restructuring in I'd the better, we that the grow lead business, that, we see making, almost well. build beyond piece and we’re outs that every is we're to the handbags we're handbag going charge That bit I of were like types our little but

build-out our there to to in from Herald York, you're pad aspirational. so I’d just encourage are different that There sportswear prices of If you affordable products is New are many very looks Square very housed go the It like. classifications range what to see in and amazing. the and

today, – have selling. jacket in there we department, even We $XXXX that it’s that's have housed and a Shearling

for our demand no the are no and So issue brand good issue throughs high and at all. with sell us

John Kernan

I And Donna call, next year the this standing little you can a profitability. year? towards Are second expected to million think by numbers? Neal, quarter over this think just for And you in an you on can year. then What give Donna sales us those finish a still on you update Where potentially? you follow-up you Karan for Karan $XXX track said

Neal Nackman

we John, believe the we're same $XXX quarter just place. I really at numbers, the previous over threw and the XXX, out -- were million we in around about what

Our in year. slightly now still operating to up I digit where low percentage from was probably before, level are the just for this mid -- low the single profits but business maybe

accretive are we gross part. we but there, continued gross a and just income Going bottom to but the what expect line the us for variable I expenses the specific here continue And different on highly give those incremental -- you be our for was to are the on with the dollars the sales really starting are us potential additional that would to most the margins that's not forward, and than to a would this much don't business, comment high, for profit did strong dollars concept pay business is as core very higher, that the probably are fact pure licensing that's figures, royalty. sense think margins give you we

most So really of course of this XXXX we growth part profitability is see important it. the for incremental very strong and

John Kernan

one on just you and can leases for help then closures stores us store follow-up, years? many coming year, would And this more a be just in quick commentary remind coming how due

Morris Goldfarb

is of on think the annually, to in normal and couple big of two stand due the attrition I a doesn't issue. real reduction away. a still reduction in there don't that but but we estate being is leases mean evaporated, years, big in watch pace, leases that just it to XX% so XX% just batch The assume years

Operator

question Chethan next Our from from Mallela comes Barclays.

Chethan Mallela

So trying the China to might supply categories. that's a burden of up tariffs you're some China in sort number Is successful I with of pretty seeing with your working different maybe have the now you you're we partners XX-K. your recent you've factory away of the that tariff about right seen are specifically way stance to to categories. and on comment what know in versus where in sourcing the earlier there share been accessories base still wanted any a and follow quantify, outerwear diversifying willingness something in across I years. from And from to

Morris Goldfarb

for you question. your thank So

our two we to Indonesia New complex. production strategy draw into If was product primary you for China. you time, history the mix know of of economic and created a that my of of China, done could, were moved and of into of production their of moved population bulk And all We Outer they sourcing to to production in their period was and size Those we the us much almost this date a we countries from City. to, the our after trying first currency out moved not drag XXX% in in South back need, produced South the as can Taiwan, ago, of China. moved as and and company, Korea. long of it Korea our Mongolia. We moved York We kind then then

in over Today, ago our there. we’re was we XX ago. charge started developed left a strayed Indonesia As We the today product aggressively. we -- our are Indonesia years factor the major in about three back factor built years Indonesia into and collections, about we -- we're we mix, important that an last,

the of producers larger Vietnam. one in We’re

executives China. substitutions not in prefer a to, advantage Cambodia of I business. and months leather last world doing key company, a of find to in to handbag pretty China. of it's of apparel made foothold our earlier much bit over that supplement of little spent, the in I've into – bit of spent because few by for the We’re travelling the impacted we're suitable and a We our little India. in moving handbags and statement India what competitive our We're had tariffs leather list a we've I could down leather in apparel all senior all we’re our go a because always alongside

produce competitive are not, countries was our it found to So, a enhance whether great come we that have tariffs to in or margins. going exercise,

forget are that Some it. is Europe fact our to some capable growing we're we are of them no that have product forget increase, sums large in can't not about free, issue. duty China Then, of a the business duty of the avoiding that them just really of producing for us attached will

we situation into we And the increases. have concerned provider yeah, tariff your export impact about market -- that question will on have China. product in to China So production, partners, the respond no to from European a providing definitely

with like us way our fairly that our they're retailers away. All be there that us and some will we in were lack the also we problem. share the of on recently, the of some and want the pricing. vendors margin that product They counseled going of their agreed assured in trade share are what buying as aggressive. might and impose to Their assured have do contribution They've that increases looks in of all walk not to we we they to the that future along not sure margins cases, to there's us

all being agreed of contribute shift vendor, vendor or So can't this isn't product. to problem factor, to burden basically standalone. the contribute origin on the the lessening problem the one Everybody to on of the it you has the the the

to retailer us on can assume that and it consumer You eat all shift the it and going can’t we shift the all. it to is

think well of thought out, I situation and partnership a will mind top It's be that been there. we're it’s fine. we that's So,

Chethan Mallela

and follow-up a wall was you much. Wilsons remind how on store so Thanks the And quick Great. much helpful. base, G.H. just us basis. on retail can That the store of profitable four a just of is really base Bass

Neal Nackman

probably than third of chain. the a a little more It's

Operator

B. comes Our Riley. from Anderson next from Susan question

Susan Anderson

the also was space coming I of over doors, I within growth. between Good new see rollout. product the from new you guess, drivers growth now the and morning, the the expanded is I door few on DKNY, more where quarter. give a some on guess, on next the I given doors guess particularly additional existing years. follow-up bulk then nice color job wondering if maybe could you

Morris Goldfarb

a usually, it's So classification. comes dresses, depth regardless grow generally space, the the within growth sportswear, from area. whether our footwear, of We greater

broader a to there's that's phase First, testing we're and overnight, won't. if to have you're say, me distribution us going impact and it going hearing

will many but breadth the Macy's product it Macy's. sits of is the is supportive Door that the very in We that growth in that outperforming real distribution in the brand more in. get it. within Macy's and expanding that customers, to DKNY outperform cases are of expanding the department space our increases be sits is and the a count additional classifications departments

So I piece make the would door doors, And growth look within the business doors expansion we the that over growth of the greatest within for accretive will mark. its the will sit. the count accretive of be time,

Susan Anderson

And follow-up business guess one then retail too. I on the

I you well apparel like hoped. think had It as that to seems perform quarter. this as you add it's didn't stores the more probably

into in your what curious we So keeping the stores, are I year. thoughts the as next look about apparel guess on

Morris Goldfarb

Yes, of testing the mix more reference to changed to you'll where different your we're Susan, -- we've footwear of methods apparel. So, G.H. retailing. see is Bass

that be stores. pure stores find will some footwear You'll

footwear. You'll find apparel find stores, some that but stores find stores won't skewed to pure are any you'll more you that will, apparel than

what that an of thought are we many You'll elimination have find achieving accessories stores they that would. not

reduced have that stores find of a luggage. mix You’ll

awful There is business don't pretty. doesn't and our that do takes luggage stores it's, it's merchandise clarity going tough It be we within a require not a room that's enough we're as and customer what attractive eliminate to I play, or and greater as not for store an speak. in lot sell we we assortments cases, many the of and big of sell it's in going well it and up a in. from luggage of to Our the luggage, make to believe more difference have will to going walk

today, won't we're implement. see won't all today, depth greater the other that initiatives You about apparel to you'll that in see see you but

Susan Anderson

Wilsons then average perform was? did there was any I in that within line was And pretty the Bass or with what well products, or everything much guess,

Morris Goldfarb

would pick sacrificed The what of It's have even performing. good a There time it. amount incredibly a well that of outs in margin well. product We we not a inventory year to We part Wilsons outerwear We the fair at prior. call business. very well, because the moving for there's Wilsons. should performing season is and took tell okay. performing, and year of the this I impact, a part down have because been not bit sacrificed down spring spent We hit marked late. brought we is fall our did you, of do outerwear a in that's classification is business little hard culture a that of

apparel as consumer. down, penetration to buy leather The or more leather prices transfer and well, have to XX% in more today, opportunities and much the apparel. are product thus in competitively about We of leather leather selling but about product XX% compelling there women's are men's XX% is

we’re So in which the probably the our happy leather. in highest new is that ability prices to ticket create promotional store, at product now

Wilsons store. to and leather be is – known So a

will opportunity We stores eliminating. longer. luggage would product is as our of same will XX% XX% any there business. XX% are Bass. XX% go not an usually about total case, found say, the there change of stores Wilsons I carrying stores, this and again So the through the of We're about the of the that doing is be

a that show best for in We reason going that's consumer that necessary. specialize stores carrying and and us will we there's give he's now. on going the that make who it and So don't go the Wilsons. difference Abercrombie tend through -- will We've a lands for a person to a existence we're a and big product to will eliminate our than really came up form we need product is the better and make big that shouldn't is in in new will to be for we're category choices difference space the put and store and open from product in our to and we existing We create much what of more have we mistakenly the variety doing in opportunity products been showcase to believe want than do better effort product an historically. turning a

Operator

comes from Our Group. Advisory next from question Telsey Dana Telsey

Dana Telsey

everyone and progress. nice see to morning, Good the

And as the discussion about about think business, the you one of something international long opportunity. you point, Europe ’XX? always been As term because do there a in with XXXX, for seen then has think spring retailers was that. do How in you about DKNY clarification I loss at think Bass there for just how about on that think and some the some Wilsons, Neal,

you I be think, it was last compared to as it originally $XX see do expected How to year? million.

Morris Goldfarb

part. So Dana, first the take I'll

business European good. is Our quite

the all of verge upside is the little There in couple couple of a the that UK a down. companies have bankruptcies, been a bankruptcies. on business bit seen, we've of As are

We have the of Brexit, we that in UK. have exist issues lots

to it in Europe retail support needs affordably. and and we driven haven't were normalized same the is different. play had going expected. we uniquely has just label Europe. we to little that we're the products a here. increase calling aggressive model support is efficiently What the high point understand higher growing some indoctrinating we're inventory a part pricing for continuing of have here, seeing and was to and what bit slapping lots We we're sellthroughs Calvin inventory, to retailer better and classification but much we an brand -- as points, LVMH successful was a price that will image market luxury was margins points, service going that have as we've give higher and owned here, do European have We're and is The was our It are in price element it DKNY concerns, happen. at it's that a took retailers we're maybe by and Fabrics price prospering for and advantages level. seeing take a Europe which So as not we key The inventory unique inventory buy of a their is vendor. support do an incredibly positioned that Europe there, margins to business and the the done working that provide And in we’re we a model product, we're backup in so it the important important that retaining form. in on

So our of initiative. taught distribution, to for New We've selling There LVMH for within lot come, within own is staff the where stabilizes base some the in some our is that for sent we're York have excitement and Milan talent is distribution aggressive excitement we way us. and to G-III the retailers our Europe is and it staff. working. There's there's as a more of

Neal Nackman

on mentioned lost so last basis, year, my actually, to as the than expectation speech our will fourth last Dana, just We The compared up worse last therefore now, taken year. mid we're wanted year-to-date we that in year. but that comp, in On should actually stores as before. that quarter $XX far one in may are third Wilsons, approximately is now Bass perform And the that XX a negative place I running the million just be as approximately I XX% month slightly same is we've are XX trailing that trailing right single comps or are about and running digit anniversary that a the we point we before. that basis and reverse to positive of clarify I last we a made did the negative I stores, were said about on have one chain. year the expect figure. a retail, that to down to probably we’ll

Operator

final our from Rick Patel comes from question Needham Company. And &

Rick Patel

back question a down season. be to entered think category on outerwear, the slightly the expecting this half, for you so Just I

you you're about the much quarter, seeing, it higher Given be expect the chase and into will be strength continues how you how strong. can we now demand that fourth if think to do should

Morris Goldfarb

not cold. any our to by caused slightly that possible and Rick, shipped inventory That's demand business, caused It’s incredible chase the sell be soon, on form higher to product, we've shipping inventory weather the by business an as outerwear, will intended that's spring we're light not or and where start no levels. sell-through. is amount great which is we pretty of in longer

really have not a outerwear but quarter. blow there outerwear don't will blow We an away inventory to the a increase, be So support away. and

Rick Patel

with gross to how close general? just what retail points you’ll gross side, to be margins retail curious some forward? on excess rely more of for distribution And price how you're have think conservative sorry, manage margins, need I’m mean inventory orders your you of we upfront to at especially does some in going should if off or that as for you’ll on and your Wilsons, the I'm going about more

Morris Goldfarb

through? is question your targeted towards retailer selling the Rick, majority that's So, not

Rick Patel

you how dynamic sell of the believe so plays excess just through inventory out? your curious channel, I retail that some wholesale

Morris Goldfarb

Wholesale a liquidation retail not for is its assist sits model. for assist not That is It's an center No. wholesale. assorts our not own purchases. that a retail, to for inventory wholesale. Retail an that support is standalone is our

Morris Goldfarb

thanks story. Thank and to wish on. for all our season listening I you. Thanks a for you day. great Have holiday staying a good

Operator

gentlemen. conference. thank Thank And This you, today's ladies your you and concludes participation. for

may disconnect. You now

G-III Apparel (GIII) 6 Dec 182019 Q3 Earnings call transcript