G-III Apparel (GIII) - 2026 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Non-GAAP earnings per diluted share increased to $0.19 from$0.12 year-over-year, exceeding guidance [11] - Net sales for the quarter were $584 million, down from$610 million in the same period last year, aligning with expectations [32] - Gross margin percentage was 42.2%, slightly down from 42.5% in the previous year [32] - The company ended the quarter with a net cash position of approximately $239 million, compared to$82 million in the prior year [34] Business Line Data and Key Metrics Changes - The wholesale segment's net sales decreased to $563 million from$598 million year-over-year [32] - The retail segment's net sales increased to $36 million from$31 million in the previous year [32] - Key owned brands, including DKNY, Karl Lagerfeld, and Donna Karan, experienced double-digit growth, offsetting losses from exited businesses [4][12] Market Data and Key Metrics Changes - International markets are identified as significant growth opportunities, particularly in Europe [12] - Donna Karan saw nearly 50% sales growth, with strong performance in dresses and suit separates [14] - DKNY and Karl Lagerfeld also reported double-digit growth, with DKNY gaining share across multiple categories [17][19] Company Strategy and Development Direction - The company is focused on driving growth through its owned brands, which are seen as sustainable profit drivers [11] - Strategic initiatives include sourcing diversification, vendor negotiations, and selective price increases to mitigate tariff impacts [6][36] - The company is optimizing its global store footprint and enhancing its omni-channel capabilities [28] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism about the consumer environment and the health of the brands [5] - The company is actively working to mitigate the estimated $135 million tariff impact through various strategies [6][36] - Future growth is anticipated through the expansion of owned brands and strategic licenses, with a focus on long-term sustainability [22][28] Other Important Information - The company has successfully renegotiated lease terms for corporate offices and is streamlining its warehouse network [9] - The North American retail segment is expected to break even this year, enhancing operating income by$14 million [10] - The launch of the Sonya Riquel brand has been postponed due to market uncertainties [10] Q&A Session Summary Question: Pricing power and areas for price increases - Management indicated strong cooperation from retailers in adjusting pricing, particularly for newer brands like Donna Karan and Karl Lagerfeld [41][42] Question: Impact of Sonya Riquel postponement on guidance - The decision to postpone was made to avoid losses, and management remains confident in the overall strength of the portfolio [50][51] Question: Inventory levels and expectations for Q2 - Inventory levels are expected to align with sales growth, with a focus on managing supply chain challenges [74][75] Question: Promotions and consumer demand - Management does not anticipate significant pressure on promotions, citing strong demand for quality products [78][79]