With the help of Donna Karan and DKNY, G-III Apparel Group is aiming to break out of its longtime stomping ground of North American.

G-III paid $650 million last year to acquire the brands and it’s already benefiting considerably from the additions, with second-quarter sales rising 21 percent to $530 million, $45 million of which came from DKNY and Donna Karan. Total e-commerce sales grew by 20 percent.

New deliveries for both brands are just getting under way, but Morris Goldfarb, G-III’s chairman and chief executive officer, said during a call with analysts that things are on track for sales to hit $200 million in the second half of the year.

Wall Street was happy with the performance and sent shares of the company up 10.6 percent to $30.47, one of the highest levels in the last year. 

Goldfarb is also looking at DKNY and Donna Karan as the beginning of G-III’s transformation into a truly international player with a number of growth avenues waiting to be taken.

“Now with DKNY and Donna Karan, we have iconic globally renowned names that position us to grow in a much more meaningful way around the world,” Goldfarb said.

Asia is an immediate target, aided by a new joint venture with Fred Gehring’s investment fund, Amlon Capital BV, that will see accessories, men’s wear and women’s wear from the Donna Karan brands hit the market next year in China.

But Goldfarb pointed to Europe as a “very significant” opportunity, along with the Middle East and “even Russia” as full of growth potential for the brands.

“As we’ve all noticed, the earnings of companies in our universe, most seemed to be coming from Europe and Asia and this is the first time we’re going to be able to address those geographic areas and we’re excited by it,” he added.

The Donna Karan brands aren’t the only ones expected to grow. Goldfarb said he sees G-III’s Tommy Hilfiger business through a license with PVH as one that will double in the second half of this year, creating about $250 million in annual sales, a number that could in time reach close to $1 billion.

While sales from G-III’s much smaller Karl Lagerfeld brand aren’t expected to reach those heights, the brand is growing, too, thanks in part to “global interest,” according to Goldfarb.   

“We see Lagerfeld has the potential for half a billion in sales globally,” he said.

Other areas of G-III’s business aren’t as rosy. The company posted a $8.6 million net loss for the second quarter, compared to a $1.3 million loss a year ago, and it’s still in the process of closing retail stores dedicated to Wilson’s Leather and its footwear brand Bass.

Last year, the company closed 60 stores and at least another 113 closures are slated to be complete by the end of 2019.

But Goldfarb said profitability is set to improve over the second half of the year, in large part due to the Donna Karan acquisition.

While he admitted that the overall retail environment “is tough, traffic levels are down,” Goldfarb quickly put a positive spin on things, noting,“This is a wonderful time to build retail.”

“If you have the wherewithal and you have a successful model, there is no better time to be able to negotiate with developers on real estate,” he said. “I’m not acquiring retail, I’m not leasing retail. But I would imagine that if I was, this would be a good day to build retail, if you had a formula that was right.”

He added that the internal reorganizations of companies such as Michael Kors, Ralph Lauren and Macy’s have created a pool of “so much great talent” that G-III is looking at to help build its brands further. Earlier this year, the company brought on former Ralph Lauren executive Barbara Kennedy to helm Donna Karan’s growing wholesale business.

“This is a great time to undertake the initiative that we have,” Goldfarb said. “Occasionally, you’ve got to upgrade. Occasionally, you make a mistake. But overall…this is a good time to build.”

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