G-III posts 36% drop in sales, announces shuttering of almost 200 stores
G-III Apparel Group, Ltd., the NYC-based owner of the DKNY and Donna Karan brands, reported a 36.1% decline in its Q1 sales on Thursday as a result of disruption related to the Covid-19 pandemic, and also announced the permanent closure of its Wilsons Leather and G.H. Bass Stores.
For the first quarter ended April 30, 2020, the company’s net sales totaled $405.1 million, down from $633.6 million in the prior-year period.
Quarterly net loss was $39.3 million, or $0.82 per share, compared to net income of $12.0 million, or $0.24 per diluted share, in the same period in the previous year.
“These are challenging times for so many throughout our industry and country. G-III is an adaptive and agile organization with an entrepreneurial culture that keeps us flexible,” said G-III chairman and CEO Morris Goldfarb in a release. “We are in a strong financial position. We believe we will demonstrate our leadership position in the fashion industry as we emerge from this crisis.”
Goldfarb also highlighted specific measures that the group has taken to preserve its liquidity during the coronavirus crisis, including the furloughing of a large portion of the company’s employee base, as well as significant temporary salary reductions for its senior management. G-III has also worked to reduce its inventory exposure.
In addition to these measures, G-III announced on Thursday that it is conducting a comprehensive restructuring of its retail operations, which will involve the permanent closure of all 110 of the company’s Wilsons Leather stores and all 89 of its G.H. Bass locations.
The group has entered into agreements for the early lease termination of a large majority of these stores.
Through these closures, G-III hopes to significantly reduce its retail losses and ultimately make the segment profitable. In the meantime, the company’s wholesale business, which achieved $2.86 billion in annual sales in the fiscal year ended January 31, 2020, will continue to be its “primary growth and profit engine.”
The wholesale segment is led by G-III-owned businesses DKNY and Donna Karan, as well as licensed brands Calvin Klein, Tommy Hilfiger and Karl Lagerfeld.
The company expects to incur an aggregate charge of approximately $100 million in relation to the store closures, a large portion of which will be incurred during the second quarter ending July 31, 2020.
Following the completion of the restructuring process, G-III’s retail segment will consist of 41 DKNY and 13 Karl Lagerfeld Paris stores, along with the e-commerce sites of DKNY, Donna Karan, Karl Lagerfeld Paris, Andrew Marc, Wilsons Leather and G.H. Bass.
Due to ongoing uncertainty surrounding the evolution of the coronavirus pandemic, G-III has not provided fiscal guidance for the second quarter or full fiscal year 2021.
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