G-III Apparel (US:GIII)2019-03-21 18:13Financial Data and Key Metrics Changes - The company reported fourth quarter net sales growth of approximately 7% to $767 million from $715 million last year [9] - For the full fiscal year, net sales grew by 10% to $3.08 billion from $2.81 billion in the prior year [10] - Non-GAAP net income per diluted share increased 79% to $2.86 from $1.60 in the prior year [10][49] - Adjusted EBITDA for the year increased to $269 million, an increase of 34% from the prior year [10] Business Line Data and Key Metrics Changes - Retail operation segment net sales for the quarter were $155 million, approximately 13% lower compared to last year [36] - Wholesale operation segment net sales increased 13% to $639 million from $566 million, driven by DKNY and Tommy Hilfiger brands [35] - DKNY and Donna Karan brands grew by over 50%, reaching $400 million in annual net sales for fiscal 2019 [21] - Calvin Klein products achieved net sales in excess of $1 billion for fiscal 2019 [16] Market Data and Key Metrics Changes - The company ended fiscal 2019 with approximately 308 stores, representing net closures of 103 stores [12] - The company plans to close an additional 43 locations, leaving approximately 265 stores [13] - DKNY comp sales increased 17% for the full year [44] Company Strategy and Development Direction - The company aims to significantly reduce losses in its retail business and is implementing further product design changes [15] - The focus is on expanding the DKNY and Karl Lagerfeld brands, with plans for additional conversions to these nameplates [13][20] - The company is exploring licensing opportunities to expand its global presence [24] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's positioning for continued substantial organic growth [8] - The retail environment is viewed as challenging, but the company is optimistic about its relationships with department stores and inventory management [69] - The company is projecting net sales of approximately $3.28 billion for fiscal 2020, with net income expected to be between $162 million and $167 million [53] Other Important Information - The company has eliminated approximately $5 million of annualized expenses and salaries from its retail operations [14] - The gross margin percentage for the retail operation segment was 48.9% compared to 51.5% in the prior year's quarter [38] - The company spent approximately $29 million on CapEx this year [52] Q&A Session Summary Question: Insights on DKNY business performance outside Macy's - Management indicated that DKNY is performing well with broader distribution beyond Macy's, enhancing overall business opportunities [64] Question: Retail profitability improvement assumptions - Management conservatively projects a $10 million reduction in retail losses for the upcoming year [66] Question: North American inventory and promotional environment - Management noted that G-III has a strong presence in department stores, which requires more inventory to service [69] Question: Donna Karan brand sales and profitability targets - Management believes the opportunity for Donna Karan exceeds $1 billion, with significant growth potential in global markets [83] Question: Calvin Klein brand performance and licensing capabilities - Management stated that Calvin Klein remains the best-performing brand, with significant room for growth [92] Question: Wilsons business underperformance - Management acknowledged that Wilsons has been more promotional than expected but anticipates improvement with new leadership [97]