GIII - Earnings call transcript Q2 2021 | G-III Apparel Group, Ltd.

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Operator

Ladies and gentlemen, thank you for standing by and welcome to the G-III Apparel Group Second Quarter Fiscal 2021 Earnings Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised today’s conference is being recorded. [Operator Instructions] I would now like to hand the conference over to your speaker for today, Mr. CFO. Nackman, Neal

sir. begin, You may

Neal Nackman

Thank you joining Thanks good morning. for us. and

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

discussed differ those factors or are statements to that the actual of operations any from could financial the and implied the turn condition in Company with may I in differ actual cause Goldfarb. our Forward-looking or filed results forward-looking the of guarantees, materially not documents Company expressed Morris are no now Officer, to the by undertakes Company statements. Important Chairman duty results SEC. Executive and the will forward-looking The call over to Chief update statements.

Morris Goldfarb

and merchant-led Executive of been Investor Vice always can Chairman Neal pandemic opportunities has Relations. This and are joining joining in G-III is us. more Good you and Financial and President; situations. President; Goldfarb, Trivedi, so execute company with and even Vice for and swiftly identify Vice Also President this Officer; Sammy entrepreneurial our morning me competitive on advantage that thank our Jeff Aaron, Chief Nackman, our world. culture an today a Priya

market locations stores, floors company. door. We XX last jeans, displayed retailer years. with multiple the categories our be enable apparel suit our evolved in dominance have sportswear, in over brands including into in to all especially These coats, multiple and brands a growth almost athleisure, over swimwear, the XX We've captured some handbags footwear. separates, per It and see we've dresses, and impressive is locations share to well-diversified of major expertise our developed, and classifications, the fueled

and Importantly, have nimble, consumer rapidly on to changing our talent to demand. shifting proven categories resources product based be merchants

manage brands set sold times. through broad up well globally of array successfully also has across to us diverse distribution Our channels strong a these portfolio recognized of unprecedented

their This by driving structured us levels the to businesses. of and we navigate posed continue meeting individual this I proud challenges adjust to are Our management am incredibly high profitability responsible and efficiently by by for people brand are enables complex the pandemic who at teams productivity. through of operate category quickly of sales as and environment. our to

We Let of of to balance us and developments review order some our key our accomplishments work retailers quarter. this and year. for reallocate with for our book reassort the the

rapidly address our shift teams had in our redeveloped our book. product We the shift production collaboratively as dressing able to more been vendors with move change positions Although assortments our worked fall feel with with clear holiday to have order to inventory the and comfortable were toward us our align to casual needs. consumer years, over several our evolving product further to our categories last seasons

were As a this second XX% last as matter of fact, quarter quarter. inventory past down to levels year’s compared

We've accelerating. digital. to provide as our really product Let's some the to additional athleisure categories demand which walk for bigger the facilitate essentials well replenish some of as enables on stores color strong in program, or category built wear and you mix. quickly demand us Performance through with both our The is

themselves have launches, we perfectly recently a initial these brands their to lines active bottom. of one jeans power casual to tops Our three multiple added ratio our and From of for lend today's lifestyle. designed to lines

and casual tops, sweatshirts. comfortable on is sweaters focus Our and woven tees,

athleisure Hilfiger, dominant variety Overall we've the Calvin a in an become of resource We of casual Klein bottoms, wear. relaxed recognized of in have and three and most the also globally with DKNY, pants fabrics. power added assortment leggings, brands, Tommy

capitalize classification that on. wear growth for Coats positioned to area big category us are a are We going and forward. jeans expect be another the best athleisure to we

hiking, mid-wave demand seeing styles, a lifestyle traditional comfort including and To growing our offerings pieces, packable in running, coats jackets in outdoor we've are and interest of biking, layered for all this expanded on a activities, dining. We indoor designed walking, for activity, active greater and and populations an meet based demand, functionality.

the holiday and casual emphasizing tops for casual, sportswear, comfortable season, as dresses for fall and sweaters bottoms. and As are collections, these and featuring of we as components knit the woven well

are and handbags in We casual also traction seeing footwear. good

social separates, dresses. On carrier the categories like lines sportswear deemphasized our side, we the of suit flip have components and

and together June, of clothing home Our Retail which liquidations store accessories $XX Wilsons annualized selection losses all Last closing to come according progressing great The Leather announced spending casual, of In time layered store full these that for and offer the year, a also be G.H. includes early we matched of and assortment of are comfortable restructuring stores locations. outdoors. our and can at products operating mixed, our approximately plan. our million. segment, and for to were underway the Bass

eliminate to restructuring these losses. of all We almost expect the

Karl ongoing and digital Paris about Lagerfeld optimistic are DKNY sites. and We our stores

secured and and to XX% We match to by and maturity sheet decision reduction of facility better issued needs. restructuring loan flexibility is by our wholesale in annual XXXX. $XX cash result retail by savings we million. the enhanced business balance capital term our million which operations, our approximately to also headcount our and solidified approximately $XXX addition made difficult In the term credit increased extending million. debt global expected We further on reduce to our $XX of financial liquidity previously the of balance our staff million roughly notes, outstanding senior $XXX repaid to This our revolving our refinancing structure

also revolving line. the We credit million extended $XXX amended simultaneously and

sequential our for for some of quarter. of This quarter. in as Encouragingly, the reopened. positive brick-and-mortar pent-up our well month Many months to of in improvement a The partners in and wholesale in the of our we closed June resulted fiscal saw shipping as of our as week-over-week of half more the the of of locations the business July, stores own have majority the specifics our second our were turning trends of Now second result quarter. about demand. each

XX. locations ended share a per sales will $XXX GAAP second operations after view, compared the which our quarter and G. filings in disruption the GAAP July pandemics In Let's liquidation ripple were gain The Leather share for year. retail to evident causing the store financial closures. of on The improve positive reduction net to our retailers locations, our loss they last $X.XX overall store fiscal with health. retail million. will be loss of year’s and bankruptcy will the unprofitable second ultimately per the the their as business sales. was long-term million unprecedented a tier loss Bass per a Net closed review financial compared this which the Wilsons effect share been their and $X.XX industry to diluted last to has bottom-tier $XXX digital top $X.XX results the includes be for stores, share per for quarter for resources announced related quarter H. deploy

record narrow business consistent us to positioned share track for a and and competition. grow results of clearly strong execution financial be our will and field Our well what market capture

saw and to the excess significant second partner categories. We own Lagerfeld last Let's talk In approximated $X DKNY about we of Paris in businesses. sites revenue Karl of digital year, comparable as On all this quarter increases take billion. for our ours well years retailers’ our and our sites demand we moment had in our on digital as be sites, sales excess XX%. of retail in a

and teams U.S., Amazon, We've business. are and Europe our Zalando, teams which back These and brand investments Asia, as working share on retailer growing on digital Nordstroms, a ASOS Fanatics, focus amongst end. Taobao. both increasing in sites dedicated of We well our Macy's, our the the as to capture include front sites, others the

to addition internationally our our we dominant are to started getting North just and America, In brand. position with DKNY in grow

the second quarter be XX% trends up our operate improving XX%. some two China China will from joint the seen we a across comps the venture over ownership have XX% about and through We increasing with to We months. of last through half

thrilled key the international market. to in awareness We growth are this with accelerate brand DKNY of and consumers

Europe sales partners. through our expanding our elsewhere also are and We in distribution

markets growth. Now with we brand developing these the are own believe potential our overseas and expanding and present for DKNY, finally they

engine continue be leveraging Our wholesale G-III. drive wholesale expertise long-term our to to business and We to on growth. focused the remain profit sales primary will

dedicated navigate through I of we second As team and will results. a a that position, pass supplier and will a now Neal will for management quarter pandemic, market adaptive our strengthen agile discussion share. this organizational culture financial of and strong grow it enable I position our am confident as detailed us to to choice leadership our

Neal Nackman

of open the effects We our now impacted of of stores quarter stores you, Morris. ended July closed. began midway XX, quarter with and through the began and The many the our the to for own XXXX by majority our the reopened. second pandemic. quarter Stores the ongoing retail results partners are were significantly Thank

As announced June, in operations. our we are retail restructuring we

in We we G.H liquidation to the quarter, XX assets will in agreements aggregate to cash lease operations, expect charges. which our have legal with On landlords. approximately $XX termination million Leather severance this have professional closing locations restructuring, will and closing connection all related incur store fees, approximate XXX In $XX significant termination Bass of the year-to-date we fees. charge our we of costs, landlord right-of-use charges Accordingly Wilsons recorded million. million write-offs be reached for $XXX charges early and incurred and the and an retail and of with a basis, costs, approximately

issued breakout Wilsons G.H We for wall have release retail operations included earnings and Leather morning. some relevant the this four of Bass our in data

of of year. the results, $XXX Operations XX% XX, period stores decreased were second $XXX our sales to approximately million and Bass quarter the Retail sales Retail second Leather to million for approximately approximately $XX quarter sales ended of sales million our $XXX July Wilsons last $XX the XX, from year million. ended in XX% to the quarter For and XXXX decreased from Wholesale $XXX $XX same million and Net the million, XX% Net of July $XX included segment sales million. net for sales segment XXXX for in XXXX, G.H million compared our quarter Operation last lower respectively.

compared margin the to Wholesale necessary XX.X% was quarter period. quarter percentage cost and reduced liquidations The in negotiations gross increase that the positively our XXXX to are to was reversal gross our quarter XX% primarily maintained year's year’s higher was longer the by year's last a XX.X% anticipated over G.H the Operations last margin of gross Also $XXX compared yielded XX% commitments. of the due result shipping. XX.X% the driven expenses primarily were the in margin quarter which our percentage percentage accrued royalty and in as accruals We margins impacting Wilsons controls. prior XX.X% which gross period margin Operations in SG&A positive royalties reductions second impacted in XX.X% was for impacted licensors, reversal stores. of portion quarter. gross down our by Our of by wholesale compared prior in markdown same previously to of was the to as in a million Leather our favorable compared Retail segment, The the this in $XXX improvement margin was segment gross in no million last in were to Wholesale store year. the Bass fiscal vigilance with

global furloughed in our difficult wholesale the reopenings. of approximately wholesale of We brought $XX portion portion resulting with the a of still retail staff in back decision on We furlough. have a annualized employees made our conjunction have headcount our as permanently to needed store reduce savings. million We

Bass or management marketing. We like with continue years last with quarter. capital quarter Wilsons tied well, with in been second included discretionary have for $X.XX stores included of second significant share year Wilsons and Leather stores. quarter and $X.XX comparable employees Net the other $XX Leather loss in loss loss per compared and wall other per salary in million $XX to for income Net spending million of loss the $X.XX a or reductions operations. per share the and current share for items diluted Bass the G.H net a previous expenditures as the and was $X.XX The quarter four G.H

to it good XX% in $XXX from fall compared prior the reduction This This will next is Looking with our not our the and onto as to is end that summer a of million approximately quarter. and a this season. million holiday the year’s of the inventory and season we we balance orders receivable $XX million decreased spring summer $XXX year. next at naturally approximately spring despite as and carrying working at shipping. of rework sheet, are year selling into over accounts million $XXX we did feel did cancel product to vendors million job make were year's Inventory that anticipation from $XXX challenged flow into and floor,

debt position million this expires the $XXX compared of term in in at year prior revolver, year. Our million net XXXX the requirements. was as our certain December XX to subject July to now which extended We availability $XXX

In X.XXX% term previously pay-off we million. loan and the the senior million approximately We addition, of $XXX availability in use cash with balance of we second $XXX notes, to quarter excess million sheet. August, issued cash and $XX million $XXX of in to which outstanding ended the added secured

will liquidity enable current financial and strong to environment. current position Our the us through navigate

anticipate period the we the call to now second a range turn half fiscal of of in year. year the making remarks. the additional in we this I XXXX. of compared at Morris difficult guidance, to to continue us last pandemic this XX% for continues back will be net of the results year. in same fiscal the to the to That concludes impact second our to closing sales expect for guidance decline comments. The the my impact fluid, COVID-XX it pandemic time Accordingly, for for half in to negatively As XX% our provide

Morris Goldfarb

for to uncertain of with has today. G-III times. through a our portfolio Thank Thank brand long cycles, diversified prior turbulent all economic you, history strong us resilient. joining successfully In proved you equity be Neal. has managing

to success. our experienced and highly future essential skilled team is management Our

some Operator, successfully ready through and the globe now their across facing with innovation to have G-III shareholders organization, the G-III teams we are for unwavering entire and are behalf our the I'd stakeholders history. time to all tremendous support. of to dedication of to performed questions. meet like unprecedented position challenges Our continued this take our thank in we On

Operator

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

You may proceed.

Edward Yruma

quick first, Thanks. Good housekeeping me. for question. morning, guys. Neal, ones I guess, quick of a A couple just

casualization If maybe quantify of a you've you bigger from? reversal to us kind what bit in to that a you and area as understand markdown areas conversely, maybe think to more that Obviously, where look you. are invest trend. we wholesale little give And is kind reramp picture that in? you've an to I exactly the success the over should the came entailed, expect of had you are then then other guess, could of you the color Morris, more highlighted try that question. accruals structurally maybe continue athleisure, just business, in the And Thank business there challenged help medium on the term?

Neal Nackman

Yes.

was we markdowns taking high. the the order, Wholesale of gross a that royalty then increased as to mentioned, the had just the really our that in of negotiated The of was piece entire function I course charge in And function reduced Ed. our percentage of operate is fact really Look, the first previously subsequently margin main not business a you markdown for wholesale two reversal did a some wholesale the the So royalty. segment the unusually during And events that year. on of we quarter's in provided. normal this reversal the were result addition, pandemic. in of that things That forecast relief

for. accrued from gross very amounts, times going is low amount was we our you able prevent what we XX% as get past, at about to see to characterize margin would in percentage And you will we were nothing forward if take perform moment. back really dollars would the unusual continuing tell that Without some previously us I once wholesale significant that of I what business, those quantifying think so a therefore, specifically that the

Morris Goldfarb

or out to workout. nobody they you So Ed, know Nobody time of It's house is The for don't clearly People area dressing but business has to do, a become question. what of tie, are the suits today. wearing way a athleisure do do way thank dinner your the their nested to ties. go I or really saw I life. work wearing to a last sit and or around – is

sure been. new than there's I'm it's more certainly it's but So – powerful a ever it's new, much not

for our size that the of in athleisure, three very have So pandemic we amazingly it's sites that is serve fortunately, We grown growth, the department not interruption and that had not prepared in digital are represented growing us, but and athleisure started. well. of brands level world's business rapidly. with this stores, best And we and this were an when production we for at of our

button you on to So it and an back and restart. normal. you're switch was off you a don't And stop an and as major then a button know,

to So on CK the there. it's Alongside that, service and Jeans side, that's from while taken of out we little licensed done well. newly incredibly it the demand women's a has PVH

multiple Our a of is tops bottoms. formula success compared for to

there are amazing There's we the cut that That's on the t-shirts tops. launched tops of Tommy with DKNY much CK. well Again, also worked coordinate everything a sell are simultaneously wears. in pretty very, So side woman and very a business. and in knit ton denim Hilfiger, of

who do asking for, the where It's we got designs in they've them we'll started, the from We're was whatever We'll which be lot going distance on are, it's of believe small, great creative class. a demand. demand. But we long we in best and consumer power a growth. it's bomber there's and and great the to life. a of way There's away testament Although our it address a jacket. we'll to future service is

You are this asked side. certainly areas are about pandemic challenged during – challenged areas, there there

suits the more although nested had We suit the nearly as they career as a well. tops challenging suits, The suit not selling is nested are area historically. the go-to-church and in are well have suit business, doing

to bridesmaid for and demand parties, dresses not weddings, many no as there's social dresses. going we're much And very as

that needed of either a other were it. responded it. not out had produced was we So we that deal is face to negotiate it for found challenged. to We business a what able We of And immediately. of to areas world were we other in two and knew work, slowdown of at with. bulk side parts in our the of we vendors addressed in We or the solutions those inventory bit with specifically going little

If be anything. it's it put wedding, a canvas we're bag that can do workout high virtually heeled So to canvas you a We're sneaker. a fine. malleable that it's can that not not if a wear a bag an company And stiletto, clothing. evening your it's you

much it So resources we we our hopefully, covered that pretty A whatever consumer is all asking little helps wordy, to and allocate the but you. for.

Edward Yruma

Absolutely. Thanks guys.

Morris Goldfarb

you. Thank

Operator

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

proceed. may You

Erinn Murphy

Good morning. me A as for couple of questions well.

was Neal, prepared in in I losses. about thought remarks, $XX could like losses. a retail It I As the million to sounds to was $XX million you previously, you're like speak stranded business. a first, planning all I there the of hoping of maybe the eliminate bit the believe And more cost

if just actually is kind So a on go-forward Karl of standalone you changed. DKNY on you. what's basis, businesses retail making a curious the money and see Lagerfeld And of Thank basis.

Neal Nackman

will Erinn. we The $XX approximated losses that Yes, and the Wilsons – Bass, from million.

year, $XX If call the of end looked million. at lost business the you about DKNY last

draft have some from to at deal going last to have continue So with. happen, that that year, of got overhead actually are that have we that we the will we with the those where to continue will but any will have end we disclosures they earnings shared before we've expect will were release improvement to in are have will businesses expenses. obviously with the that we in And overhead continue the some In to The overhead draft to business. XXXX. deal the of calendar

wall the in only identified in earnings release. we've the disclosures four our So losses

Erinn Murphy

my expectations then has broader Prime Okay. I for about Amazon just XXXX. mean, into question, you. of kind And talking holiday early. shifted holiday helpful. And Day I second retailers Morris, October. I are That's is guess know setting of some

as the changing how see strategically just about season think curious you you this fall? So flows that unfolding, anything holiday product you're

Morris Goldfarb

product on I several of explained a production on product. time we're are to countries. some So our and as doesn't the structure as flow mobility free a period as well give mercy That of we And at restarted, to out of container coming there sourcing flow space stop how issues as little us bit for we Ed.

adjustments of in and earlier early shortage And what in. contrary made eager to we're clearly So are believe believe product our product. ever We I you inventory. the to as impacting the have that inventory there's will industry will for ship the we see a a get to that you our can most early opportunity than holiday holiday stores, we shop believe of that. availability people come

can ship our we'll levels help And demand stated, us able it to we about inventory can we get down the comp earlier. I should So service it. somewhat here are last early If our believe earlier, XX% as year. if we've to products be

dealt Our residual dated been inventory with. has

a of there's lot inventory past So seasons. not that is from

to us. when I whole at is This will of year. issues where unchallenged lighten a at of great at And factors that retailer and patience all we're on world has think through somewhat be as to look But believe we the at to affected this banner done likely our end this And the limited container that of year, we believe It's it to we company have year, of represent global up. the will and an in bringing pandemic company we’re for ability. will the I'm I stronger into end we're not company, out at the the It’s space of said, being categories this what luxury the a of looking going the it and what participation to many be service initiatives I an to we're but perfect look an Many job. in grateful have our best that's come product maybe it So that is fall And acceptable forward year. beyond the a acceptable like which having demand, of don't amazing investors the going look a place well. of just point, year. but sourcing. going everybody's there's

Erinn Murphy

best. Thank Great. All you. the

Morris Goldfarb

Thank question your for Thanks you. Erinn.

Operator

Company. And Rick with our Patel & next question Needham comes from

may proceed. You

Rakesh Patel

Thank morning. And Good the just to investments Can the hope you're does this outlook making, you. through right strength growth you be talk about the for the pandemic? beyond progress believe extent everyone you you channel given well. this on change is what here? Nice sustainable? your mix And the business I digital. about is thinking think the could as what

Morris Goldfarb

The will marketing, enhance price our will certainly the can to aggressively build, at alive. to channel mix bit and the for change that Klein Hilfiger is majority directly side Karl our of product We or DKNY, businesses. Zalando, It's The sell pieces produce. it digital very can't the which we unique. there. site. puts little a budget for licensors. Guess? the or the We're volume, So licensor, therefore, We then us quite sell We we sell that who sites working spending brands are build honestly mix our that do change. deal of a license and good marketing keeping not Haan. we're we we're we've the Tommy on points all we accepted to own business we and Calvin product or Amazon, or can digital sites are site our by the on And change, the to or Bass Lagerfeld. Cole all will their retail will produce – pure-play a accelerated good We

a I And statement in in on earlier, was Same own our that's China. that site. And now businesses coming The distributing of we as along digital comes alongside as for important, other as becoming pure-play well goes nicely. that of distributing that's stated the ability are Europe. piece

overpowering our much overall of time, but to an can hopefully sales, overtime. over as So get digital we won't it XX% percentage be as

Rakesh Patel

back the the what And avoid understand down that from of future help pullback by half question curious pulling represents to department Can is markdown maybe how you demand consider be order pressure? guidance how you XX%. would much stores us on of versus XX% intentionally much to to design? how G-III plan in back that much Just for

Morris Goldfarb

of inventory it were us back deal of up design. end of where we The might by uncertainty good the temper we level forced A risk. pulled is to willing to

Our operating optimum, additional stores concerned about were stores be might were their so We not the department are of we conservative. still periods time closed. at where

So took rather we it conservatively. than bet the entire ranch,

toward. the be costly left far our the a as in likely the fairly you to likely year. year. reasonable needs of a or order, try every needs would approach. that's to our got I This like without be to risk – some would have the very It stellar you'd not you're of than inventory will in more shoot We've said, As market of all service a profile And of this an retailers. that we great with outlet know, not be a out major sufficient fill We're year. if for inventory company. our to we're with to conservative been it for And outlet come an this year

we're it's lower of a like quarters not are to earnings topline. we improving next We're We're margins. the than better look of have about quite So with topline. likely looking expect where on might at time our with for two And visibility happy period the us. all one

Rakesh Patel

Thank you. the well. All best as

Morris Goldfarb

Thank you. Thanks Rick.

Operator

comes question next from our And Duffy Jim with Stifel.

may proceed. You

Jim Duffy

favorable Neal minimums permanent? more partners? terms guaranteed license or or Morris, forgiveness, explain something that can temporary with you changes the to some Was

Morris Goldfarb

But It reductions that are thank the And much Thanks a are toward. period you're time royalty possible. the future that for struggled that both fair our These seeing, question. contractual renegotiations solutions licensors temporary. you. if forgiveness much solutions is from for gotten pretty solution. Jim, the the temporary. are pretty all was we we've to The subject the

Jim Duffy

how again organization G-III the Morris, Then Okay. again and to demonstrated be has nimble.

have athleisure, have that expertise speak some sufficient demand? challenges about areas with you to materials? availability challenges vendors of the supply capacity chain managed that facing? can to raw have you're these Do challenges meet of With you you’ve through the any available how and pivot in with been And there

Morris Goldfarb

a our done become problem is job Let other athleisure denim a is important. raw good The Indonesia and our one of great first. The deal important me all. Vietnam last to areas very not hit is materials from China we've incredibly of a – countries. our Jordan production has for at moving the of important. vendors business.

we've became experience became masterful who are our of about countries. office Jordan different vendors talent through literally many is So countries We've were hired focus a most that overnight. And for producing of network our managers Chinese or competitive free. that factories, deal. done who manufacture appropriate from a player Jordan our XX just deployed in experienced a in us sources either these we helped had most finding the good – and an us. duty Again, We solution We products. in That to we're our seamlessly. Vietnam. dominant And job Chinese athleisure handbag incredibly production The Vietnam. it's one I to live business developed moved importers quite for of key from larger we've from and a of overseas our production. amount out important for, was is produce our as incredible China production We a said, Vietnam areas. in the to in primary and that and coats oversee worked that's that source Vietnam, Jordan. denim And in

China. world Vietnamese vendors, produce a became coat proficiency either that the As our Chinese in place local a the or coats one-time us Jim, some to were – predominantly company. Over coats And vendors there. enables the time you know, best of the up we to the Korean picked produce

concern now vendors, for areas countries retailers And a lack really of the lot how little takes inventory of the they're a the it little responded for crisis a really explained is pandemic. much pretty and different the pandemic got of shut Pretty business to lights on we while. the to responded Erinn, but it no we've So as back, to immediate of all how and and product for quality. I much the and while, were a hurt different

Jim Duffy

Thank you.

Morris Goldfarb

Thank for you question. your

Operator

And comes from our next Anderson with question B. Susan Riley.

You proceed. may

Susan Anderson

quarter. Thanks my fourth just Neal, of and wondering, SG&A the for I you guess segments athleisure gross taking then much could how products. versus for the will are for maybe fashion morning. margin And the the your Thanks. expectation I was differences second half? Good quarter about was talk denim third in the there curious, continue cuts I question. cost if and more significant back into any in versus just,

Neal Nackman

Yes.

margins, We'll we far very continue variable to those both between So eye SG&A the related watchful That's the year, call prior terms of Susan reductions to might categories. a in well of respect significant cost reductions year. of it. certainly as for With certainly keep shipping. down to as function back the difference as as on don't the anticipate anything compared be a we'll gross the you to what fixed half

continue do tight see trend SG&A year. balance the to a we the of on So

Susan Anderson

Thanks. looking category, outerwear think had the I start actually retailers the are on we just category to impacting categories because have people greater one there? to fall, the the then warmer seeing there? how decision dining maybe I their Or the into guess that the is it retailers a are at greater supposed I mean are the you demand? that And relatively I thinking demand outdoors fall was more. think from that Are mentioned in winter, of is some – as all? you Great. well, orders did about

Morris Goldfarb

that more still serious to we're again, we'll anticipation demand to we in world greater from outdoors we an mid-August. servicing. dining, more the And or process And our of doing. for believe of be of brought on business. a reality the retailers. we retailers. and short side – our of products, new bit supply an coat opportunity some little is It had came had in living seeing The the either exercising demand We're through of There opportunity produce which

Our inventories been never leaner. have

depend be inventory well. as to to is residual on reorders a service So going to problem

Susan Anderson

helpful. in the much. luck so half. Good That's back Thanks Great. very

Morris Goldfarb

you, Susan. Thank

Operator

and And question Kernan from next Company. with Cowen comes our John

may proceed. You

John Kernan

a we for morning, think my questions. to Thanks fiscal wholesale partners able their Neal about about Morris, Morris. being taking do about I company mean, – not issue your think sales how XXXX margin perspective. than should Good fiscal XXXX? with finished for to going how yet, and from and ever your guidance you businesses performance we but how robust Hi. really wholesale as specific think XXXX are versus fiscal a most

XXXX? how business to – how they unfold? your about in vision about partners fiscal that wholesale business might is Just think the about their going we wondering for And and think how think their

Morris Goldfarb

like-to-like if not be we will like-to-like you chasing. that which of accounts, would are recover, if I business we possibly fiscal XXXX our account, talk fully on alter another our But vision our channel, distribution talking So working we're hard at plans would about but tell that place. into for layering plan XX% comes the to down ability with

period time to I think it easier chase. an of will be

partners a a for of a logical level check. is mind. opportunity much is Our And our be everybody was place. at convinced us sourcing logical. there's would would moving anything of not business that better greater in confidence where better much produce be The This state overseas when year in better

big recover to be bet. fully a would So

a bankruptcy to down bankruptcies would help Lord The our fair business in been of. Taylor we've of we certainly mildly amount there's So Added us. that XXXX that part & plan didn't

I stores give help And be store closures the said, And channel in they're And Macy's going not of it. Marcus. help to for private the miners that's to we service, going they as if it's closures line. the topline, our new or store we’re some we're not a known of for be that we're in it's Some after that that whether well, do may topline up may label, well mass might and side the sense, the a not populated business. bottom But – business. there, of Neiman international the we do whether

be plan And I would putting yet, and about down, you as we're a answer, yet me down. to is firm probably not scoped opportunity understand. all it's out. but We've in delayed Neal's XXXX kicking Short is thinking. XX% our So think aligned

now. plan. on Greater gives a working that visibility better us We’re

John Kernan

one Neal, maybe just follow-up.

as markdown you you reserve the Obviously, from feel right are back Just where moved first reserves around quarter, a you margin about accruals the go in half you standpoint into now? some how of gross the do how year? feel and second from

Neal Nackman

XX% saw earlier, to quarter. you the in I are think ultimately the gross more a said I but XX% positive we wholesale second Yes. magnitude the have in we'll reserves I think And of zone, a that half, low feel Look, again adequate. don't in that little second margins those prospectively. certainly in the like Probably impact our that XXs, there'll be of land that anything

John Kernan

Excellent. Thanks.

Morris Goldfarb

Thank you.

Operator

Dana And Advisory our Telsey from last with Telsey question comes Group.

may You proceed.

Dana Telsey

Good morning, everyone.

denim impact given of the category, is How which do that where As down time that? of you then around some the spoke you margins? update to you XX%. for that last highlight new think coats going see just And you. book Thank on I certainly introductions, following do order up about see on the sales? a was Any we as percent a believe the outerwear,

Neal Nackman

Yes. No order real Dana. the change book, on

Morris Goldfarb

entry, So We're the not on huge. is sales off of described. percentage wise it growth percentage a the side chart. The as is new I of denim the

to the see. to a you and story. impact a would is or going the not launched learning. say is and to down – the year over that denim dollars, would launched lines road. pure time I like different like see As have I we launching It's time, would We simultaneously But three

that for future things you've and you your you season, done you on have first prosper the from mistakes your right. As learn

on prosper very mistakes. mode. we It like seem made So be we doesn't seem many to

for the very much worked of a of The the coats. multiple we for for per strategy costs higher unit Our have, on bottoms The the is are that side. coat average as out retail much very, tops us. t-shirts doing distribution more coat unit And of they come we percentage has problems well industry. to per than are cost unit

adjusting we're business our accordingly. So

warehousing Our is changing.

And direct-to-consumer is items is packaging also changing some low cost distribute of and changing. becoming to the our much more on ability Our efficient.

we better pure the end but greater garnered of – the of gross coat, than the at margin will side side believe coat business. will have denim gross dollars be the out a margin side. on the of be margin on the denim of that's day, that margin business the better So there We'll

Dana Telsey

any Great. And the update you're that there Donna DKNY Karan, on you're about what and for how and then seeing upcoming thinking year?

Morris Goldfarb

around Yes, inventory. strong better. year. has our consumers We The the like we're it. grown retail business XX% is liking And aggressive inventory. last digital The much quite somewhere business our on over quite

operating management We're We different – management team more better lot. is liking have the a business that efficiently.

as well an comping up back And adding We're historically. benefit we provide owned bought very very, venture. and well much few the an door last back Chinese have great of initiative as a We Chinese better count. XX%, XX% market, the XX% us. expanding in global and in owning And I joint We're the a Therefore, Europe. partner should north working quite business that we of interest is interest, was said, our or took our retail of for brought a on knowledgeable interest. we're left months, and is a have the business, for China We market part doing they that in Taobao XX%. franchisees than we

protecting in for ours well. job the is a need. DKNY choose. – to to flexibility The area. of have merits particularly acquisition out don't It's and pandemic we licensor, of turns really good So a done as we've And we guidelines It's is to a through brand prospering its It flexibility. ours not be to – us the follow a great gives as us. do

Dana Telsey

Thank you.

Morris Goldfarb

Thank you, Dana.

Operator

the concludes our of this And call… Q&A portion

Morris Goldfarb

safe. the stay stakeholders shareholders. with end and and patient very call. very being much we'll you Thank that, us you and And thank With for being much, great

Operator

gentlemen, today's may disconnect. have participating Ladies you now you Thank and concluded. and conference wonderful for Everyone a day. has now

G-III Apparel (GIII) 9 Sep 202021 Q2 Earnings call transcript