GIII - Earnings call transcript Q1 2021 | G-III Apparel Group, Ltd.

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Operator

Welcome to the First Quarter Fiscal 2021 Earnings Conference Call and Webcast. My name is Sidney and I will be your operator for today's call. [Operator Instructions] I'll now turn the call over to Neal Nackman, Chief Financial Officer. Sir, you may begin.

Neal Nackman

Good morning and thank you for joining us.

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

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

In addition, share net per which non-GAAP during are both to measures. the we refer non-GAAP non-GAAP income will income, net financial call,

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

Morris Goldfarb

remotely Also recent throughout our do of thank need G-III both communities. company difference of protest any and Miller, Operating morning all Good We our to country maintained related President and kind. in against we our XX inequality Officer; part President; President; in Jeff Executive I'd at and Neal Vice past Vice to injustices and and and believe to Chief make our like our Vice me you a over internally position days. We Sammy Trivedi, the Priya racism, zero tolerance our Wayne strongly Chief externally a that Goldfarb, Nackman, Relations. joining the us. Aaron our Officer; Chairman Financial Investor joining address today for is events

sent and to support throughout and and shockwaves other eradicate the has the the Furthermore, are committing social to Coronavirus world. UNCF pandemic We effort our racial injustices. help organizations

partners times, health remain wealth priority. customers, and During well-being of employees, these difficult and communities top our the our

company the of order harder ever and and us world-class a operational. than keep and have and global a with our Let They drive, heart in employee and highlight our asset, dedication, me moment remotely to crisis base. to compassion soul this incredible thank take greatest working through care been

As this our to pandemic continue in imperative assist community it's we to large. evolved as thought

to philanthropic partners to We money important continue are work. where their contributing they our ensure

We to had an United first an us to have States. supply and pandemic. of our leveraged chain entrepreneurial us are culture very PPE face donate that some pandemic by quickly adaptive in medical our allowed organization a necessary difficult we the agile from difficult decisions add challenges disruption has caused response in keeps address and issues. departments multitude with G-III to this to is the The significant. this flexible times to in facilities, We these police responders to make but

solid These and will base to purchases balance collaborative strong to of the make afford announced inventory prior we release, our flexibility us for year. adjusted our have we As of of year. liquidity. unfortunately, ability employee And our remotely. closed all employees. pay in senior the have most strengthened in combined in been store portion our we press financial opportunistic receipts half base. actions Coronavirus in of retail with Many a about A other our stores sheet, closures We back response balance and of employees update significant the vendor our furloughed and this forecasting reductions large implemented of also the reforecasting been management for our working mid-March. We've our

industry New that well from in and to preparing our are positioned our to corporate retail this current challenges position continue the to fashion On we emerge stores as offices. crisis. our open and We weather reopen demonstrate are leadership note, to we York the City

with manner responsible a our in employees so top of the customers do our priority. health will as and We

we our We ample to a socially distant are workplace available PPE safe, with ensure associates. provide CDC following for guidelines

receive remained online precautions We and our Our sell operational to safety have orders have to to social began as reduced with the warehouses to inventory consumers these a country. distancing ship workforce, product observing for operations stores retail order reopened in throughout strict partners. scale and

from let's Net Now our $XXX stores the last retail Considering quarter share Non-GAAP sales net loss million. first XX% at income stores per look were diluted of $X.XX. was results. closed $X.XX, share of the fiscal $XXX and half per to quarter. partners were retail our for million, XXXX own down compared net year's

our report store retail to our plan own to to Now I'm retail we operations. our finalized pleased segment, turning restructure

work plan us brick As to a Wilsons retail these based Leather on openings. This are liquidation the assist the for was to the restructuring, out make. mortar initially DKNY, will stores retail Accordingly, consist retail we'll greatly to profitability. enabling members and stores businesses this decision Paris closing their we're hired we incredibly over reduce XX dedication After team Lagerfeld the morning, of on restructuring years. and Hilco of appreciative stores. segment and our timeframes hard be losses. to store our to the our And Karl to we of returning of liquidation of landlords announced allow all in stores. Bass we've with and negotiated XX adjust us these and our We Global difficult completion the flexibility G.H. retail We've

Marc, the sites, profitable, Donna G.H. Neal small and Karan, details through Paris, will Karl include the ecommerce Andrew Bass. DKNY, will our walk you Lagerfeld although and Wilsons of Leather restructuring. Additionally, financial

focused the grid were quarter five seeing our Hilfiger be the by product and our our leveraging Karl to our wholesale drive business, engine growth. validating we the half our strategy the Prior to momentum strength Calvin to expertise long-term Tommy behind continue remain anchored us, good in They'll DKNY, pandemic profit primary wholesale offerings. Donna sales of for G-III. on and we're We wholesale, global Lagerfeld. and Karan, Klein, power for As with

to We're of retail being exposure. planning closely the inventory reduce reacted respect our out conservative year. and close to stores the work decreased, and with continue we'll and future As rest partners inventory shipping our dramatically ordering with we decisively to our

the we've years, of the earned stores. vendor and retailers Over licensed our respect our XX our base, last

a ecommerce off-price retail, have categories, online weather warehouse base do distribution XX% as channels of business, We we department believe anticipate further stores, remember business through total are but their over sites. their mortar as penetration positioned and of across reach can brick increase clubs retail in stores, sites and and well specialty including It and well-diversified is well retain partners' and We significant through closures their we sales. some own sites. our product or mortar to ultimately brick that amount a online our stores important sites. to we through online In

working online in with significant resources business. dedicating actively sales our be additional will sites. further our and drive investments to in own their retailers We also making We're online

the ended of As sales couple sizeable for matter our own with XXXX and we've Lagerfeld over fact a Karl significant a growing last increase. months comp and DKNY wholesale sites, a We of seen online business.

DKNY billion. sales. approached were sale. double-digit, annual million to North Our grew brand in continue Calvin $XXX great was sales brand. over and million we Outside our $X.X build And annual Karan in up. Klein America, DKNY and sales at base by a strong driven in $XXX just Overall, nearly brands over Hilfiger to significantly of the was at annual sales, of $XXX have million Tommy Lagerfeld Donna own our distribution Karl annual of

through and financial make We will footing crisis. confident this times. challenging patient liquidity our us our solid navigate get and be that preserve we team as enable management prudent our I'm decisions will these successfully through to dedicated

We of results. will strengthen leadership our position call first quarter a exit the Neal? our supplier pass will discussion as a in I much now for detailed industry. Neal to and needed

Neal Nackman

Morris. you, Thank

stores. which and Firstly, of XXX this restructuring address morning closing and let we G.H. includes me the XX Leather retail the Wilsons announced all Bass

our provide pleased flexibility to as reopen. us are have the landlords with reached our that to with they stores deal a begin liquidate to We

We stores which will as the reopen. immediately assist with begin liquidation have Global Hilco hired to

year, right legal approximately termination related in As incur aggregate professional use primarily fees, closing company and fees. a of costs, to of landlord and to and severance store the to result, related charge million this expects liquidation $XXX fiscal assets write-offs an costs,

the approximately $XX to million. cash be of charge We expect this portion

first Now XX, April we this indicated; to momentum. The a had the year ended significant has of pandemic quarter ended as impact good Coronavirus Morris with XXXX. turning results first quarter our fiscal our on

along However, stores with great mid-March our shutdown we and were stores, outlet pandemic outbreak our orders. of the significantly the impacted U.S. here own by under partner majority retail statewide closed were of the in the

sales of of me million same $XXX perspective, our So you the XXXX, million the our let approximately segment to to decreased $XXX $XX for Net sales walk wholesale million. ended $XXX XX, our with year. last operations quarter operation sales period last million. compared million; Net at segment Net results. million in lower through $XX for approximately to quarter decreased were XX% the April $XXX from retail year that approximately XX% and XX% sales

year's fiscal operations in previous to in quarter. to in margin from our other difficult was of reduced this as for reduced which China decisions reducing percentage to been margin in prior our in gross management costs furloughing a XX.X% royalty took compared Gross sourcing and a approximately XX.X% of had operation SG&A in to and segment resulting impacted in a million our We by primarily quarter as percentage in first effective year. to of wholesale year's retail in The XX% and team higher our retail look of consistent fixed offices. China We fiscal addition last gross negatively XXXX was Our SG&A. quarter base. last period reduction were the wholesale our prior compared XX.X% capital. employees. compared recognizing percentage $XXX to some shift a at XX% period. in $XXX margin make quarter team, we offices payroll China the reductions XX.X% headcount expenses our as XX.X% XX% well significant over compared We efforts in in our same XX.X% efforts headcount order to is our away certain the year's hard million This rates implementing have segment in sales was salary significantly preserve as with result to was in

up thoughtful our and operation. ramp We open are wholesale bringing manner stores a workforce we our as in back

have continue relief. to We includes contractual discretionary other we which licensed our spending, to marketing capital expenditure. with and have reduced conversations also seek partners Furthermore,

to efforts results share, for to cash our $XX have Non-GAAP approximately $XX first was was last $X.XX monthly per exclude income year. or $X.XX share per us share quarter burn compared Net loss to of $X.XX to or of and compared year's reduce in million. quarter. the imputed in income the net million in diluted quarter $XX $X.XX million interest Non-GAAP cents this Our quarter impairments. for per expense net share enabled non-cash impact diluted loss of the share net per asset per prior the

available reconciliation in earlier our GAAP press For our release results today. to are issued

Looking quarter. Inventory million year's at end million sheet $XXX as balance decreased approximately $XXX accounts receivable were at million. of compared the to to prior $XXX the our X%

net $XXX in $XXX was from last of million Our year. down first million debt to the quarter

liquidity we position through as flexibility leaves strong current remains Our and us disruptive. way work financial significant this difficult our with

closing As the guidance, my to are XXXX. to I forecast difficult the providing time, comments. fiscal That guidance. impact for this the fluid, for will back it our making now to call be we continues Accordingly, Morris turn concludes results for at any pandemic not remarks. for us of

Morris Goldfarb

you and the creative to and I'm has their all of have teams to incredibly team. are I've the at to a experienced us in to ways us effects proud said G-III Thank always management put rallied skilled of we pandemic. order in fortunate And respond how pandemic manage and through enable highly really this them themselves joining that for well test. to innovative this today. they

ability changes quickly will challenging in to us these the navigate respond enable to Our times. to through effectively marketplace

to most period our the leader have experience flexibility be difficult and in to to manage this continue through alliances talent, We industry. a global and financial

on in in be a fit our that will the also to arise, think company. capitalize as believe position opportunities will ones We we G-III

much Neal? and entire will organization, G-III we I'd emerge some questions. will continued our for now of We shareholders stronger prosper. their On to support. take like and Operator? to Operator, behalf thank stakeholders the of ready we're all

Neal Nackman

I'm here.

Morris Goldfarb

an Do operator? we have

Operator

Edward Instructions] [Operator of Capital our line Yruma the from first Markets. KeyBanc with And comes question

line open. Your is

Edward Yruma

kind teams the your Hey, of? and good disposing around and question the on you but taking couple are ones and to Thanks piece kind for returns you And of morning. any maybe were you said you my a timeframe healthy. quick that hope guess what that. a piece the easier, of safe profitability, kind retail me the basis, business, that's losses of are that of staying hope trailing first, for I that if remaining I on know,

commentary any you. and bit opportunistic down Morris maybe half? Thank purchases Second, inventory backlog on on your little a comment clicked back the in also on outerwear the

Morris Goldfarb

take on the in of Back compared that the business of I'll then. our back-end we're have the So question order process approximately do code side our XX% year, but renavigating on down business last is of book an in opportunity to the first, piece we of year. excess last to

if your sorry, can the I'm now second year's business, for and didn't goods, of piece in waiting that The code are additional the [indiscernible]. business excess are are all in last relate numbers of business mills factories of question of Our have part aligned. our back retailers stars the we the to orders. the availability side do in

Neal Nackman

Yes.

prior the respect Donna approximately charges. to and last base, great of the with run really guidance when probably this to in of Karan from store little -- right, not business year year. lost year. a to get we where yes, expand that has combination doubling of result loss the excluding that the retail very the we've business. profitable, on in business the for was trying run were as becomes and a able even to on challenging doubled base the $XX retail small losses segment we first formula we quarter, is And a with to that the segment to Karan majority terms the said Edward has in where that primarily store under that were in of -- Wilsons this continue Brass expect we Lagerfeld it's A entire just bit leverage the million and the we're In be and have past, out losses pinpoint we from Donna retail So, impairment that run business losses, Karl from

that moment. to very assess it's at difficult So, the

Morris Goldfarb

their find basics, fabrics second The overseas third going enhance countries. at the we fabric, question which year or team finding an buys denim not lot innovative and fleece part of we're of whether to what a have buys as for we is in that many me, And But fourth are advantage of challenge assortment fashion a we're common can quarter in that are opportunity a it believe this was an has that entrepreneurial margin to opportunity vendors, your be opportunity targeted important core forward. business. suitable or take lives looking some buys and technical we today to of been create

buys. So that was my reference opportunity to

Operator

And next with from our Thank question you. Murphy comes Piper Sandler. Erinn

open. is line Your

Erinn Murphy

started staying partners speak have if then Morris how looking, you traffic open morning. to that as I regions? you're your does Good just all retail at POS as how has could And guess first there's I major thanks. any been Great, question between you're differences my And hope particularly seeing for to or safe you, well. what is stores?

Morris Goldfarb

at be were retailers was were surprised lootings, was we off-price we Prior specifically, number good to and what of to Today, Sure. early to additional could interruption their -- it the and protests department off track with. sector as was. as And left business XX% caused I the the that stages prior to the back. about were closed. off the more most give would coming recapture They on it stores the on business even was you to store the be throughout sector, XX% closest tracking

XX don't count, our doors. of additional know one another XX closed doors, retailers approximately closed the So door one exactly but I

feels of like the situation the count until door shuttered clarity there's it on what was XX% So looting is.

was Some reopening damage of be because There physical the lot done that delayed were them will and to they of damaged. the all of the inventory. totally a was facilities, looting

the through out But like are a the get that that stores shuttered that buy. money the has to anticipation truly in open, seems and up. as there are shopper take So and It not XX% losing of just about down there into traffic open obviously, business. back is And they're will of simply stores. a They're the the while many stores were in that'll were eager is grown seems if that's walking with armed shopper significantly. size and basket to it

So the sales by and driven greater are basket. bigger conversion

you we're So quite hopeful give idea like. we what look of to an

went they month May, in month the of low up the stores XX single have they pandemic We we for as of May, digits. China. all And for comped know, through the

there that to And life that hopeful that believe a follow we can pattern. we're So good is come. we

Erinn Murphy

bringing Thank very How is helpful about compete -- context. think on whether do the I the question for you the guess wholesale currently retail are furloughed labor think your or you pace and labor. benefits back you left the retail you said furloughed second I labor? I the of you. of existing having to just labor, That's wholesale had have you'll XX% -- with furloughed unemployment

Morris Goldfarb

So we the to of work June. begin back come plan on have to a to XXth

doors will has start back spaced, or come to of health is PPE skeleton or with work We've the with to people our equipment. who who we'll properly that a fear And coming properly to back we willing guided a with simply We polled issue believe crew. approximately childcare work. see handicap, to and XXX open associates our are

We have monitors our in temperature lobby.

are We -- G-III. have to exclusively used elevators control that of G-III to five

problems the in we'll coming best that people a that what We'll We're elevator strategy, with an a occur at time. strategy we but believe might figure four I could out that a the given only change. in is. And permit formula will We stagger schedules.

work But will time. of later. may is number. of scale we period home for operation a site We however some people be or on culturally, a valuable and permit the about all together takes, to sooner the site long we're working on from Now that and

forward do it needless of to It It about did of looking than we're home worked incredibly committed passion. as from people hard people It it's and as the were by off doesn't that And to that dedicated harder their all about worked the they sites The money. it. salary was It's about have probably we've culture so most And unnoticed. office always And the time affected advocated. company. decreases. had worked in We've say, the they go well. was what wasn't appreciated.

a be with, associated say. company to is this must wonderful I So

So as Erinn, it I guess normality will as come soon come.

Operator

Thank you.

Gulmi question next Matt Fargo. comes from Our with Wells

Your line is open.

Matt Gulmi

think roughly is the XX% I of business. ecommerce

If can thinking like DTC color you're talk of business and just in the the profitable, the its you but wholesale.com on you Morris forward. guys about, about as any additional thoughts any there quarter Wilsons, what saw what Bass far as mentioned, and business at and going size remaining that

Morris Goldfarb

Wilsons, the address comment. me it. let retail business, to will be bit is all of rest The So with Bass, wholesale mortar away, of your going business all limited Bass and the last the a size the of little brick of

as through go Landlords been we accommodated have done a our product. great. timeframe, have quickly. will We've we're process Global of if liquidating in As that to assist soon process. is open, door Hilco that engaged They

doors We and go will shut our away.

time current that sell the ourselves through sits in that whether we that very or rent dated a is percentage in either of was on rate. cancelled. reduced to our And inventory that help we're the we a inventory augment period will or at liquidating Our warehouse

Bass in licensor we are we several in will Bass derived There's online the royalty that with be Again remain done. Wilsons, that for piece. the will a classifications. as So, pieces

bottom-line costs to any So but of those down operating there drops that attached sort to be just the won't retail. there,

stores good business will We're a when of that closed. is Lagerfeld. the and Karl remain time, period going our during through So DYNK were retail pandemic,

Our of compared and man And Karl, online away Karl. business time, XX% Karl Lagerfeld we business year for of passed is time on was business this our period this unique iconic amazing that during and designer that to for approximately had year year this -- memory And last amazing piece was up of last comped Karl a XX%. up both period his DKNY. a Lagerfeld. spite everyone and wanted of year in of

our So well. as prospered business where customers online has

the the Some online we stores and with of them of beneficiary the fulfill doubled for of that dropship direct were accommodations product needed warehouses the provide their department online it, and to to them maybe geared product. we're need and supplying occasions customer some on business of

We third recognized So a controlled much in we we business our can as we online were year. significance total the retail, of and on online business sales. believe dedicated our the to be will of be coming as

Matt Gulmi

Are helpful. a I brands. consumers There's I of are follow just exercise, focusing on three about up that? you or category this speculated recent of with at focus your That's Have Okay. a of could less at all one changed denim big core the kind schedule wear given as has remain events, if to how your then, et at plans with on And are on cetera. those popular And thinking kind home denim more. year been rollouts? things as think or

Morris Goldfarb

read Quite we same we're quite of business recipient But to not for the press. denim. in contrary, honestly, the the

business in is denim Our exceptionally areas good. the

extremely a a our if the for quarter. year. business denim well anticipated, and to to we business be is than softer launched launch early fourth be of area big amount concerned not worked with about. we with significant We the intended But this was we of better on buying Tommy an third had not denim CK, just inventory that and One DKNY a future had dedications to anything, was

Operator

our Thank Patel next & with you. from Needham Rick And question Co. comes

Your line open. is

Rick Patel

questions Few on inventory.

that if certain product [indiscernible]. be mean follow-up current planning on get just you on outwears, demand. not much does it actually clarity categories? about up fall, back I'm that you're talk planning until opportunities wanted the it you're I second, or for seeing just you the pace, see to in could how and the be those it mean how Or are curious And then the you predicting you held of question right now that do composition? inventories that can consider does seasonal means earlier packaway First, versus to

Morris Goldfarb

a Okay. it. just we're of stores of We in of the pack The has our swimwear most inventory way went is manage sidelines. There dealing open. are is this level to attached our that There's inventory, level inventory order are cases, away to away an that many trying we seasonal pack through as with. for as that, and our to ship shipping swimwear. were gotten to It at that too of stage orders store early late was And to the open. we've relate resort the swimwear

So the problem our are We described what of we've our to away. depends on house as fragmented classification. pack the by bulk solved the inventory. considered in business area. accommodated is the space fragmented classification. -- the issues We've of needed always operationally And every of It kind

all area Performance wear, very of for not the active That's wear, our last all leisure anybody is classifications -- to So has months. are worn business strong. equal. three

prom strike of that So, is do our We We exists. virtually issues, have clean significant social business. inventory have have clearly And dress a inventory there are where been reorders. there no area business. really do inventory a

So thing social we to as cancel realized it We that we that to the gatherings. catch bit be of to first stores didn't all. and there be we going not and very this every could, many were we occurred pandemic did, tried are going products closed

we're great. on of off, okay was around created bring The of some sell and it to bit inventory and not just with we're product, some is some side. we're next what ribbon problem product. a social the fragmented, into described It's with of sitting that product it it, with first day back year. The put class going we're we're career sitting it's a suits, not not somebody little dresses, but dressing, So pack-aways short sitting

-- solving working the the maybe businesses. So some of we're towards dress

shoe casual the is shoe business. good, Our business

strong. flip the more Now the a not shoe dress which footwear shoe are very form. strong. part been big The our problematic. is era strong, sandals flop total is flops descriptive side on business, This are flip canvas literally The of has a is

of a handbag And the So casual our we're -- fine lot than was with business stark. has more that. is been

borrow. as go a of we Neal come So our holding it, inventory cash warehouses, concerned, great as we're to good our next markets as the far into shape side accommodated, to as shape We're And if has on inventory. warehouses we're year on some to that levels retailers okay described, have as base in didn't is have have soon goods down. inventory piece is we needed. in great vendor And open,

to have forward to we'll business. little payments on looking of with. a a well credit And we're delay receivables there back in that orders We no generate ship and been are more retailers bit balanced and issues there's very into getting

Sorry that's a our questions wave associates, to nobody's the long winded off. as operate we me distance here from

anything So, else?

Rick Patel

the made No, on it's earlier great. statement And just outwear. to clarify you

think inventories that is if manifest? demand see book a position the in just you order you XX. outerwear potential think do to I you down the But to Are that or planning you're you up business chase, for see for that be higher.

Morris Goldfarb

a couple unfortunately, of question in a kind me, better of weeks. It's asked of

only the quickly how still don't open. Now, round, know goes are all aggressive. opportunity know execute and weeks and coming be of that way few we hesitate be We more our second in don't then and we third window to this open have the fourth will too quarter what's stores to that we attempted a to

I The So idea want cash. too back you plenty we're as story, fine. the analysis, and have and plenty and to as say, we the come inventory cash our inventory. of is with thing how to fine. of last excess to of want we have we have I I'd like a we're We don't rather be inventory have I'll into a manage year. next we do do going better

Operator

comes from question And you. next our Thank Balsky BofA. Heather with

open. is line Your

Heather Balsky

talk how on I could about infer do you think I or ability those wholesale consolidation what stores in close. years guess, potential Morris, you the just like? wholesale closed? in, online more you the customers, able can happened, next so seen team those base margins have was it's will productive bit you as another the customers. was past year little few store? see I Thanks. over you to throwing the hoping just look your to maybe to what's you side under stores given about industry on to what the whether your were industry, And And these hoping. partners retain you've retain we little over of talked and color a been or your What Thanks. also a some and

Morris Goldfarb

Heather. you, Thank

for So, recalculate is amazing everything advantage. wand power customers doors takes an cancelled, can't the we says, our magic a is having say draw back. hurts five They a their when retailer and we When it have and open. our survive that sit unless minute. brands brands They

-- things are through first door brands, club what store. after for cheapest product attached were What and intrinsic the is whether a for the is It's department channel looking value buying out they're corrected product the of customer level the the the that the to first a They there. the off-price really customers has business or draw cancellations brands is it's first necessarily want brand. that know a product. traditional to that generally So that were not got value the

to were orders we orders believe got on that didn't normal we a So and We at reinstated, we almost we reinstated that not that huge process, discounted -- not percentage got rate. believe, permit our the we're of a happen.

years. we're have either largest with to retailers. vendor many retailers the those cases, our or third alliances We back first, second go most that in And

but going this both to margin side. fine ways I a happy I'm period. need make the would accommodations what concerned, crisis the a and not is which was dilution The So and during into expect one we're to we're there's it on see. respect. okay. obviously, goes There's

company in that business this has been but XXXX. over since We have -- challenges we've our created the actually partnerships

their the were We and is There any risk. Lord have decrease, seem in XX. do longevity. And our If d-doors XX XX, we sometimes on customer. some out don't they stage Penney Macy's be at that don't margin most there high them their count a products look that their of There's provide a are high astronomical. positive We slightly J.Crew. are in we on talk be don't J.C. don't affect with that our dependency effect, is do, does provider. nothing and Neiman's the largest to if And not count it for us. years What doors we but because high greatly does, retailers is of door us trade alliances decreasing. And it's old We affected. of cases it. If participate do a assistance. with, We're is dependency not to & Forever door we do risk hurt generally for stores on it Taylor. degree an helping will there the

historically have that our those the the culprits So been world. stores in are

through is better business see some opportunities we there pursuing into business. address. had their Kohl's never cited retailer. we've say, saw Walmart we So And needless they maintaining mix. and We see a a those. Stepped reassorted their that realized this to all Kohl's Dillard's of and And becoming a how to we're we've

we're So this time our industry about going in excited forward.

Heather Balsky

guess, -- reserve there dollars gross Hi, was quarter I markdown is any a wondering there? there's just first just markdowns I anything if or there follow-up for future time margin was if the in Thanks. wondering Neal, for

Morris Goldfarb

Neal?

Neal Nackman

Yes.

and accruals first we the that in provide and markdown support continue did quarter as We to well.

Operator

you. Kernan John And question our next Thank Cowen. from with

Your open. line is

Krista Zuber

This on taking questions. is Thank morning. for our for John. Krista Good you Zuber

Just restructuring kind that the outlined that, the a for on the segment to restructuring. $XXX million, Neal, follow-up you for of one-time retail

expected liquidity with the wondering in response on through flow or generation. that and provide will and Thank any how be the paydown how 'XX? us fiscal foresee loan before portion 'XX? 'XX of of their insight spread terms the to run CapEx an be ABL maturities of in the Do term you in just kind cadence Can of out your of or really or just the change? you. follow-up then, your could And sort of cash with to rate Just you question

Neal Nackman

Sure.

So first did to We've third with respect really that charges quarter. in clamped second will significantly of With the a we $X respect liquidation the the hit about down quarter expenditure. really capital and from quarter. in us low down the $XX about million on to almost the million cadence CapEx,

and continue be way year look the the for year. the cash will again, sales will to ABL, to what expect would paying will profitability a will future it's balance into of very I to stay the what term hard be, and and therefore So good With that that the down of be. what respect

of suggest we've down looking rise the and really the we hand Again, a hope So be we have then at at normal at point, new feel will sense term. as and into wouldn't we'll stepping paying that we're to what look unfolds. got and the what year we'd this what comfortable business I on very become start better see

Operator

you. next Dana comes from And our Thank Telsey. question

is open. line Your

Dana Telsey

that that then environment and I you what think digital, about And the as think these only may are looks forward, on it going you secondly, given expecting you of margin stores customers open you whether closures, the on period Morris, like? what as the do digital was thing promotional characteristics what did store wholesale the own reopen, just if insights during you. and insights that you Thank learned your take or from the your the from it? away and digital was time partners

Morris Goldfarb

cheap, was with opening that selling really, an be product store. And time There's really the rid it. to get better. it's get It's of honestly. going should see be to out of period. for goods inventory if Easter highly It's And are going that that inventory, Easter are staged looks Stores any promotional. quite those to we not inventory

it. more that's As quite they normalized replace are to and good goods, promotional current We're highly product margin. that attached we're seeing with a not seeing inventory sales

a money away of this or learned we site. as digital as the and on the enough giving the don't the profitable site own period see This spend as of out just we giving. be customer don't our is literally that date whether We our see gift put important So digital product. We is inventory side on soon it's to just it stores of time way. the as

So we've that we've pure it customers created gotten and a of that to of benefit it. a implemented budget part our we relates

almost You immediately. see it

our this is the of It if as you a business. digital sales, will a So said We're percentage our were third profitable. be of not because on dropshipping it customer. facility warehouses distribution a the accommodations it trying through some side. to We're our use own and large Dana, doing We're business a the believe costly. providers on searching overall bit as I find distribution that accommodate is for call, we're we the little directly that to for of third-party will earlier, year of learning to in overall vicinity the

is will budget be the digital specific is we're life. business be preparing and and it. CapEx part is we're have to We'll to future So way of Digital an a a going that of our absolutely it that hiring important for clear.

Operator

Thank comes And you. Adrienne from our next Yih. question

Your line is open.

Adrienne Yih

to the the follow-up or just was versus that I by own your your And versus digital? Morris just actually guess, brands, what comment Pre-COVID, BXB of so own on one-third, made. over what in digital the year, that then will of course digital digital you that Thank percent end BXB? you. be wholesale your

Morris Goldfarb

product we you to brands. own directly we brands, need our right have with Karl build of are the and site, we DKNY. the do have that two of our build So remember as brands, that the and the and those our power own with need brands autonomy consumer to Lagerfeld use We service to

provide to of With Calvin CK consumer and Klein on the the our of retailers the sites for product Tommy is the product we or own their flow right the and Hilfiger, both.

hard retailers much we we it's a service the the do basis, get on accommodate on we margins. Dillard's, through from through pieces disengage our that better, on as what sites own of we Belk well our But and the pieces So an what we brands, do retail Clearly, needs with direct Nordstroms. to business. advantage to we direct or there's their Macy's, clearly margin out

as I'm to dollar pure the again, cloudy So separation. being

Vilebrequin for said, Our marketing trying as it. Bass it. online we than And the both become and to and spite We've and aggressively And important I domestic stores. some of significant but sites. sites building brands, two sites we're up the fact And in to brand the an operate pick customers' they the online we're internationally. own side. their domestically larger And Besides are on significantly side. were piece power the site our closing international pace, beginning hired is the is talent operate we both

increase. a Dollar clear will the that I'm giving finalize stated, I business sure you separation. pace future it, they our So, picture our of combined. today, But the they're today be of and I'm of not significant a about to the brands as in are And third will they again, both as company-owned

Operator

you. our question from next Marotta. Thank comes Steve And

Your line is open.

Steve Marotta

And double-digit was was can correct, what was international Can markets any U.S.? the there blueprints international a) reopening first penetration year? that in the sure, applied here the Neal, in make international the last us I up lastly, quarter. want earlier on in call, mentioned you that of the be remind are Thanks. you in fiscal to from that b)

Neal Nackman

our Steve, total XX% the international business about represents of business.

decent with a in to America. -- North we segmented that, what a whether is respect think than have the probably for or I is, business challenging not in here us it's really blueprint it different

double we're of significantly significantly up America here just the it [indiscernible] because business segregation digits. the at North and year of that DKNY. necessarily again, for translates So business The believe back exploring us store. strong with learning grew And that last I in -- don't

Operator

our And you. last question Anderson. Susan Thank comes from

open. line Your is

Susan Anderson

and flowing quarter Thanks. also, the And wondering reduction second for then Neal, first you're talk maybe the was could versus should How that of year. think second versus I about this quarter? through half quarter? cost in cash we about to if expecting what the burn quarter you second first

Neal Nackman

Yes.

first quarter So dead We dead May. a look, as ended. We the had month totally the April. second had of a has of quarter totally begun of month sort

our quickly. realize that started in put a cutting And we lot we of to in April. cost Fortunately,

side now start to bring directly people work we're our of in the as businesses we'll as open continue far So that wholesale again, month We'll And May. to certainly as hoping back we bring businesses stores. to store our to fulfill And supporting open up. back that see on people business. up,

see start as our the reduced. hope And see that those SG&A to on. both we on be growth. And bring cuts would top So, line we'll coming we the revenues become

Operator

Thank not any further you. questions. I'm showing

Morris Goldfarb

operator. you, Thank

much. you and us you tuned. So, healthy Thank all today. stay you safe very talk We'll time soon. to thank for and spending with stay Stay

Operator

gentlemen, for this participation. conference the Thank and concludes call. your you Ladies

now disconnect. may You

G-III Apparel (GIII) 4 Jun 202021 Q1 Earnings call transcript