G-III Apparel (US:GIII)2025-12-09 21:06Sales Performance - Net sales of Calvin Klein and Tommy Hilfiger licensed products decreased by $188.4 million in fiscal 2025, offset by a $254.4 million increase in net sales of DKNY, Karl Lagerfeld, and Donna Karan products [100]. - Approximately 34.0% of net sales in fiscal 2025 were from Calvin Klein and Tommy Hilfiger brands, down from 41.0% in fiscal 2024 [100]. - Net sales for the three months ended October 31, 2025 decreased to $988.6 million from $1.09 billion in the same period last year, representing a decline of approximately 9.2% [115]. - Net sales of the wholesale operations segment decreased to $977.3 million for the three months ended October 31, 2025 from $1.07 billion, primarily due to a decrease of $122.5 million in Calvin Klein and Tommy Hilfiger licensed products [116]. - Net sales for the nine months ended October 31, 2025 decreased to $2.19 billion from $2.34 billion, a decline of approximately 6.4% [124]. - Net sales of the wholesale operations segment decreased to $2.13 billion for the nine months ended October 31, 2025 from $2.28 billion, driven by a decrease of $209.4 million in Calvin Klein and Tommy Hilfiger licensed products [125]. Retail Operations - As of October 31, 2025, the retail operations segment consisted of 47 company-operated stores, primarily outlet stores in North America [91]. - The number of retail stores operated decreased from 51 at October 31, 2024 to 47 at October 31, 2025, while retail operations segment sales increased to $45.7 million from $42.3 million [117]. - The retail operations segment includes direct sales through company-operated stores and digital sites for several brands, enhancing the company's digital footprint [91]. Cost and Profitability - Gross profit for the three months ended October 31, 2025 was $381.5 million, or 38.6% of net sales, compared to $432.1 million, or 39.8% of net sales in the same period last year [118]. - Gross profit for the nine months ended October 31, 2025 was $878.5 million, or 40.2% of net sales, compared to $966.9 million, or 41.3% of net sales in the same period last year [127]. - Selling, general and administrative expenses increased to $260.4 million in the three months ended October 31, 2025 from $259.2 million in the same period last year [119]. - Selling, general and administrative expenses decreased to $718.8 million for the nine months ended October 31, 2025, from $724.9 million in the same period last year, primarily due to a $12.9 million decrease in compensation expenses and an $8.5 million decrease in advertising expenses [128]. Tax and Financing - The effective tax rate increased to 29.0% for the three months ended October 31, 2025 from 28.7% in the same period last year [123]. - Interest and financing charges, net, decreased to $0.2 million for the three months ended October 31, 2025 from $6.4 million in the same period last year [122]. - Interest and financing charges, net, significantly decreased to $0.4 million for the nine months ended October 31, 2025, from $16.7 million in the same period last year, primarily due to a $19.3 million decrease in interest charges following the redemption of $400 million in Senior Secured Notes [132]. - Income tax expense was $41.6 million for the nine months ended October 31, 2025, down from $57.9 million in the same period last year, with an effective tax rate increase to 29.5% from 28.6% [133]. Cash Flow and Investments - As of October 31, 2025, the company had cash and cash equivalents of $184.1 million and availability under its revolving credit facility of approximately $700 million [135]. - Cash generated from operating activities was $71.6 million during the nine months ended October 31, 2025, primarily due to net income of $99.3 million and increases in accounts payable and accrued expenses [153]. - The company used $28.3 million in cash for investing activities during the nine months ended October 31, 2025, with $27.5 million in capital expenditures related to leasehold improvements and computer software [157]. - Net cash used by financing activities was $51.2 million during the nine months ended October 31, 2025, primarily due to $49.8 million used for share repurchases [158]. Share Repurchase and Stock - The company repurchased 2,158,276 shares of common stock for an aggregate purchase price of $49.8 million during the nine months ended October 31, 2025, with 5,631,892 shares remaining authorized for purchase [152]. - The company repurchased 2,158,276 shares of common stock under its share repurchase program, excluding excise tax [158]. - Taxes paid in connection with net share settlements of stock grants that vested amounted to $5.0 million [158]. Strategic Initiatives - The company aims to expand its product offerings through new licensing agreements and acquisitions, including recent agreements for Nautica, Halston, Champion, Converse, and BCBG brands [99]. - The company has a diverse portfolio of over 30 globally recognized brands, including DKNY, Donna Karan, and Karl Lagerfeld, across various lifestyle categories [82]. - The company is taking steps to mitigate the impact of new tariffs by working with vendors to share increased costs and exploring alternative sourcing options [94]. - Approximately 76% of products were sourced from China, Vietnam, and Indonesia during fiscal 2025, amid increasing tariffs on imports [92]. - The company reported a significant increase in digital sales initiatives to adapt to changing consumer preferences and enhance online presence [96]. - The company recognizes the importance of maintaining relationships with licensors, as the expiration of key licenses could significantly impact net sales [101]. Accounting Policies - There have been no material changes to the critical accounting policies as of October 31, 2025 [160]. - The accounting policies rely on management's judgments and estimates, which may lead to materially different outcomes from forecasts [159]. - There are no material changes to the market risk disclosures from the Annual Report for the year ended January 31, 2025 [161].