G-III sales growth slows on 'logistical challenges'
G-III Apparel Group announced on Wednesday a 6% sales uptick for the third quarter, a slower growth rate compared to its second quarter, as higher inventory levels caused logistical challenges within the U.S. company's distribution centers, hindering its bottom line.
The New York-based company said net sales for the third quarter ended October 31 increased 6.2% to $1.08 billion from $1.02 billion in the prior year’s quarter.
The company, which operates the Karl Lagerfeld, Donna Karan and DKNY brands, reported net income for the third quarter of $61.1 million, or $1.26 per diluted share, compared to $106.7 million, or $2.16 per diluted share, in the prior year’s quarter.
“For the third quarter we met our top-line expectations delivering net sales of $1.08 billion up more than 6% compared to the prior year, as we continued to make progress on our strategic priorities," said Morris Goldfarb, G-III’s chairman and chief executive officer.
"Our higher inventory levels are due to our accelerated production calendar, which was in anticipation of longer supply chain lead times. Our inventory is comprised of current purchases and guided by our order book. During the quarter, the higher inventory levels caused logistical challenges within our distribution centers. This resulted in significant one-time charges in the third quarter, that were above our expectations, which adversely impacted our bottom line by approximately $0.40 per diluted share. For the fourth quarter of fiscal year 2023, our order book is strong and we are well positioned to meet the demand of our retailers for the holiday season.”
The apparel company, which also operates the manufacturing license for certain Calvin Klein and Tommy Hilfiger product lines, said it had agreed on staggered extensions for both PVH-owned brands by category beginning January 2024 and continuing through December 2027.
"We do not expect significant reduction in net sales, net income and cash generation from these businesses for the next three years," added Goldfarb. "We believe these extensions will allow us time to accelerate our long-term strategy.”
For fiscal 2023, the company expects net sales of approximately $3.15 billion and net income between $147 million and $152 million, or between $3.00 and $3.10 per diluted share. This compares to net sales of $2.77 billion and net income of $200.6 million, or $4.05 per diluted share, last year.
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