G-III Apparel Group had a good year, thanks to its marquee brands like Donna Karan, which is set to go fur-free for the first time.
The company, which operates Donna Karan, DKNY and Karl Lagerfeld Paris, among other brands, said net sales for the fiscal year ended Jan. 31 rose 17.6 percent to $2.81 billion and profits grew 16.4 percent to $62.1 million, equal to $1.25 a diluted share.
Morris Goldfarb, G-III’s chairman and chief executive officer, attributed the positive year to the “strength” of the Karan and Lagerfeld brands, as well as Calvin Klein, which it sells through a license with PVH Corp., and exceeded $1 billion in sales alone. Goldfarb said these brands “enabled us to grow profitability despite the pressures of a persistently challenging environment.”
For Tommy Hilfiger, which came in at $275 million in sales for the year, the long-term goal is still to have that brand hit the $1 billion mark as well.
Although the company beat on revenues and topped its earnings projections, Wall Street seems wary about projections for next year and sent shares down 8.5 percent to $34.32 in morning trading, a low for the last month.
G-III is expecting to lose about $100 million in sales this fiscal year, given the bankruptcy of Bon-Ton Stores Inc., which Goldfarb said will especially impact Calvin Klein sales. Overall, the loss in sales is expected to have a negative impact of about 30 cents per share. Nevertheless, the company is expecting total sales and profits to increase, projected to hit $2.94 billion and up to $102 million, respectively.
“Beyond this point, the remainder of our wholesale business is healthy,” Goldfarb said during a call with analysts.
The first quarter will be challenging however, with a projected net loss of between $2 million and $7 million, stemming from some continued payments related to last year’s acquisition of Donna Karan International.
Goldfarb also revealed that the Donna Karan brands will be going fur free by fall of 2019, citing a “longstanding relationship with the Humane society of the United States.” Goldfarb did not elaborate on the decision or say whether this would become a company-wide policy in the future.
A number of brands have decide to go fur-free in recent months, despite the popularity of some fur-centric products. Gucci, which regularly sold out of its fur-lined mules, and Michael Kors, which offered a full line of fur coats for many years, both said late last year they would no longer use animal fur.
Then Donatella Versace said the same for her designs, as did Hugo Boss, Tommy Hilfiger and accessories brand Furla. Even the city of San Francisco this week announced a ban on the sale of fur products within its limits.
A spokeswoman for the Humane Society said last year’s decision by Gucci to go fur-free, with ceo Marco Bizzarri calling it “outdated,” basically created a domino effect.
“Designers have been racing to prove their relevance by dropping the archaic material,” the spokeswoman said. “With each new fur-free announcement, designers like Fendi and Burberry that are still putting cruelty on the catwalk fall further out of fashion”
Other companies, such as Stella McCartney, Patagonia and VF Corp., have for years been operating with policies around animal and cruelty-free fabrications and products.
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