G-III Apparel Group, Ltd. F1Q09 (Qtr End 04/30/2008) Earnings Call Transcript

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G-III Apparel Group, Ltd. (GIII)

F1Q09 Earnings Call

June 5, 2008 4:30 pm ET

Executives

Morris Goldfarb - Chairman of the Board, Chief Executive Officer

Neal S. Nackman - Chief Financial Officer, Treasurer

Wayne S. Miller - Chief Operating Officer, Secretary

Analysts

Jim Duffy - Thomas Weisel Partners

[Jody Cain] - Sidoti & Company

Eric Beder - Brean Murray, Carret & Co.

Todd Slater - Lazard Capital Markets

Presentation

Operator

Welcome everyone to the G-III Apparel Group, Ltd. first quarter 2009 earnings conference call. (Operator Instructions). I would like to turn the conference over to Neal Nackman, Chief Financial Officer of G-III Apparel Group.

Neal Nackman

Before we get started I just want to remind you of the company’s Safe Harbor language. Some statements made today on the call are forward-looking statements as assigned under the Federal Securities Laws. Forward looking statements are subject to risks, uncertainties and factors which include, but are not limited to reliance on licensed product, reliance on foreign manufacturers, the nature of the apparel industry, including changing customer demands and tastes, customer concentration, seasonality, customer acceptance of new products, the impact of competitive products and pricing, dependence upon existing management, as well as business disruption from acquisitions and general economic conditions, as well as other risks detailed in the company’s filings with the Securities and Exchange Commission.

The company assumes no obligation to update information in this call. In addition, during the call we will refer to EBITDA, a non-GAAP number. We have provided a reconciliation of our EBITDA numbers to our net income according to GAAP in our press release.

I will now turn the call over to our Chairman and Chief Executive Officer Morris Goldfarb.

Morris Goldfarb

With me today are Wayne Miller and Neal Nackman our Chief Financial Officer.

I will start with the financial highlights from the first quarter, with Neal Nackman providing more details in a few minutes.

Net sales for the quarter were $75.4 million, well ahead of our forecasted net sales of $50 million. We outperformed our forecast primarily due to the excellent sales from our Calvin Klein and Jessica Howard dresses.

Our net losses for the quarter of $6.9 million were also better than we expected, with good profitability in the dress business. Our net loss per share was flat to the year ago level at $0.42, much better than our guidance for the quarter of a net loss between $0.37 and $0.51 per share.

Our order book is in good shape. We are currently booked at about 75% to plan. In general, all of our businesses are tracking well right now, Calvin Klein, Kenneth Cole, Guess?, and the sports business are all looking well. Well we recognize the tough tenor of the retail environment, the strength of our brand and the products we’re delivering are very much in demand in the marketplace.

I’m also pleased to say that the integration process for Andrew Marc is going well. We have eliminated about 20% of the headcount, we’ve closed the redundant to overseas office, systems are converted, and our product expansion strategy is well under way. We continue to be excited about the potential of this business to become a significant brand in a number of categories well beyond outerwear.

We are actively pursuing some licensing arrangements for the initial expansion of the effort. While we are not quite through the process, we have a number of that sort of partnership opportunities and have good indications of support for these efforts from key retailers for the brand.

Because of the opportunity we have with the Andrew Marc brand, we are excited to be investing in the brand this year with a significant media presence for the fall season. We believe our marketing initiatives are well timed, while creating value to the Andrew Marc outerwear business and will prime the market for new categories.

In addition to a good expectation for what Andrew Marc will contribute to our future, we remain optimistic about the remainder of the year. We are fortunate to be aligned with some of the best brands in the marketplace. We’re leveraging this with some steady products that we think will play right into the prevailing fashion trends, giving the consumer a compelling reason to purchase regardless of the environment.

We are also working on some big new properties to augment our core business mix.

Our balance sheet remains strong and we continue to have a vote of confidence from our banking group, which recently extended our available lines of credit to $250 million from $195. Our assets to capital and strong balance sheet positions continue to be an important strategic advantage. We continue to review our position opportunities that will help us grow the company and we are in a strong position to capitalize on what has becoming a more favorable buyers market.

Despite our optimism, as you know we tend to run our business pretty conservatively. This has proven time and again to have been the right approach. We’ve seen some very challenging environments over the past couple of fall holiday seasons and we’ve achieved good growth despite this. Like everyone else in the industry, we are going to be working against pressures of the market which include a generally hesitant consumer and the increase in costs.

We are comfortable that once again this year we have an opportunity to deliver a top-notch product from a variety of powerful brands and to show significant growth both on the top and bottom line.

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