NEW YORK — G-III Apparel Group Inc. Ltd. is on the lookout for acquisitions in the $200 million to $300 million range.
This story first appeared in the June 6, 2012 issue of WWD. Subscribe Today.
Responding to a shareholder’s question at the company’s annual meeting here Tuesday, Morris Goldfarb, chairman and chief executive officer, said ideally, he would like to acquire a global lifestyle brand, and his second choice would be a national brand with global potential. He said the company would want a brand that would allow it to pursue multiple categories of business.
“In the past, acquisitions have been used to accelerate our growth and diversification,” said Goldfarb, during the 30-minute meeting. “Our balance sheet remains healthy with no long-term debt.” He said the company continues to identify, evaluate and complete new acquisitions and licenses “on an opportunistic basis.”
In addition to owning such brands as Andrew Marc, Marc New York and Marc Moto, G-III has licenses with companies including Calvin Klein, Sean John, Kenneth Cole, Guess, Jessica Simpson, Tommy Hilfiger and Vince Camuto and owns Wilsons Leather.
On Tuesday, G-III reported that the company widened its net loss in the first quarter ended April 30 to $847,000, compared with a net loss of $520,000 a year ago. Net sales rose by 16.5 percent to $229.4 million, a record for the first quarter, from $196.9 million in the year-ago period. During a morning conference call, Goldfarb explained that the aggressive promotional environment impacted the firm’s margins in the first quarter. “We expect product costs will moderate further for the remainder of the year, which is expected to drive better profitability. As you know, a small loss in the first quarter is typical for us given the seasonality of our business, which is weighted toward fall,” said Goldfarb. He said booking trends for fall are good.
Discussing the company’s overall performance in fiscal 2012 at the meeting, Goldfarb said sales grew by about 16 percent to $1.23 billion. Net income declined 12.5 percent to $49.6 million. Addressing the sales gain, he said, “We achieved this growth despite a challenging retail environment that was made more so by one of the warmest winters on record in the U.S. Even so, we grew our business, finished the year in good shape and are looking forward to further growth.”
G-III’s overriding strategy is to diversify its business “into an all-season apparel company,” said Goldfarb. To that end, it seeks to expand its relationships by adding new product categories. The company’s relationship with PVH Corp. and the Calvin Klein organization is a critical component of the strategy. “When we enter a new category with Calvin Klein, one of the preeminent global brands, we can quickly make a mark and generate very meaningful growth. In turn, that enables us to attract other important licenses in these new categories,” he said. G-III plans to ship at wholesale more than $500 million, or about $1.2 billion at retail, of Calvin Klein merchandise this year in the U.S. alone. The relationship, which began with outerwear, has since expanded to dresses, sportswear and handbags and luggage. He said the handbag business is growing through new doors and increased penetration. Goldfarb noted that the company recently opened two Calvin Klein Performance stores in the U.S. in Scottsdale, Ariz., and San Francisco and is planning to launch the concept globally. He told WWD following the meeting that he will open six Performance stores for Calvin Klein in China by yearend.
Goldfarb also told shareholders he’s pleased with the firm’s relationship with the Camuto Group, which has several strong brands, including Jessica Simpson. The firm plans to ship Jessica Simpson coats this year, in addition to its successful dresses, which are sold in almost 1,000 doors, up from only 450 a year ago. Also, the Vince Camuto brand has been launched in several categories at stores such as Nordstrom and Dillard’s, and G-III is making Vince Camuto dresses, which are sold in about 450 doors.