G-III Apparel Group, Ltd. (NASDAQ:GIII) reported strong first quarter fiscal 2025 results, beating expectations and raising its full-year guidance. The company's diversified brand portfolio, strategic initiatives, and operational excellence have positioned it for continued growth and profitability.
Financial Highlights
For the first quarter ended April 30, 2024, G-III reported net sales of $609.7 million, compared to $606.6 million in the prior year period. Net income was $5.8 million, or $0.12 per diluted share, compared to $6.0 million, or $0.13 per diluted share, in the same period last year. The company's non-GAAP net income for the quarter was $5.8 million, or $0.12 per diluted share, compared to $6.0 million, or $0.13 per diluted share, in the prior year quarter.G-III's gross margin expanded 130 basis points to 42.5% in the first quarter, driven by a favorable product mix and growth in the company's higher-margin proprietary brands. The wholesale segment's gross margin was 40.9%, compared to 39.9% in the prior year period, while the retail segment's gross margin was 47.0%, compared to 50.9% in the same quarter last year.
For the full fiscal year 2025, G-III is reaffirming its net sales guidance of approximately $3.2 billion, representing growth of 3% compared to the previous year. The company is raising its non-GAAP net income guidance to a range of $170 million to $175 million, or $3.58 to $3.68 per diluted share, compared to $190 million, or $4.04 per diluted share, in fiscal 2024. Adjusted EBITDA is expected to be between $295 million and $300 million, compared to $324 million in the prior year.
Business Overview
G-III is a leading designer, manufacturer, and distributor of apparel, accessories, and footwear across multiple channels and markets. The company has a diverse portfolio of over 30 licensed and proprietary brands, including DKNY, Donna Karan, Karl Lagerfeld, Nautica, and Halston, as well as major licensed brands such as Calvin Klein and Tommy Hilfiger.The company operates through two segments: Wholesale Operations and Retail Operations. The Wholesale Operations segment includes sales of products to retailers under owned, licensed, and private label brands, as well as sales related to the Vilebrequin and Karl Lagerfeld businesses. The Retail Operations segment consists primarily of direct sales to consumers through the company's own stores and digital channels for the DKNY, Donna Karan, Karl Lagerfeld Paris, G.H. Bass, and Wilsons Leather brands.
G-III's diversified brand portfolio and distribution channels have been key to its success. The company has been strategically reducing its reliance on the Calvin Klein and Tommy Hilfiger brands, which accounted for approximately 30% of its total net sales in fiscal 2024, and focusing on growing its proprietary and other licensed brands, which are expected to represent approximately 70% of total net sales in fiscal 2025.
Operational Highlights
During the first quarter, G-III's DKNY and Karl Lagerfeld brands delivered strong double-digit sales growth, while the relaunched Donna Karan brand also gained traction with retailers. The company's marketing investments, particularly for the Donna Karan brand, have been driving increased brand awareness and engagement.G-III continues to make progress on its retail transformation, with double-digit comparable store sales increases at its Karl Lagerfeld Paris and DKNY stores. The company is also expanding its points of sale, adding over 2,500 new locations across its retail partners in the better department store channel for the fall season.
The company's recent investment in AWWG, a global fashion group with a strong presence in Europe and India, is expected to accelerate G-III's international expansion and provide access to new growth opportunities. G-III plans to increase its ownership stake in AWWG to approximately 20% by the end of the fiscal year.
Liquidity
G-III ended the first quarter with a strong balance sheet, with approximately $508 million in cash and cash equivalents and no borrowings outstanding under its $650 million revolving credit facility. The company's net cash position of $80 million, compared to a net debt position of $253 million in the prior year period, reflects the significant improvement in its working capital management.During the quarter, G-III repurchased $28 million of its common stock, demonstrating its commitment to creating shareholder value. The company also recently upsized and extended the maturity of its revolving credit facility to $700 million and five years, providing additional financial flexibility to invest in its business and pursue strategic opportunities.
Outlook
G-III's solid first quarter performance, strategic initiatives, and strong financial position position the company for continued success. The company's focus on growing its proprietary and licensed brands, expanding its international presence, and optimizing its retail operations are expected to drive long-term growth and profitability.Despite the challenging consumer environment, G-III remains cautiously optimistic about the remainder of the fiscal year. The company's raised guidance reflects its confidence in its ability to execute on its strategic priorities and deliver value for its shareholders.