Calvin Klein got a new creative director, Ralph Lauren launched its “Way Forward Plan” and G-III Apparel bought DKI from LVMH.

The coronavirus losses keep stacking up. 

This time its G-lll Apparel Group Inc., which lost more than $39 million last quarter and is now permanently closing all of its Wilsons Leather and G.H. Bass stores. 

“These are challenging times for so many throughout our industry and country,” Morris Goldfarb, chairman and chief executive officer of G-III Apparel Group, said in his prepared remarks. “G-III is an adaptive and agile organization with an entrepreneurial culture that keeps us flexible. These traits have allowed us to quickly make prudent decisions to preserve our liquidity. We took proactive steps in response to the COVID-19 outbreak. We reduced our inventory exposure, furloughed a large portion of our employee base and implemented significant temporary reductions in pay for our senior management and employees.”

Even so, for the three-month period ending April 30, the apparel and accessories retailer, which also owns DKNY and Donna Karan, posted top-line sales of just $405 million, down from $633 million during last year’s first quarter. Meanwhile, the company lost $39.2 million, compared with bottom-line gains of $12 million a year earlier. 

Many of the company’s stores and partner stores are still closed. Goldfarb said on Thursday morning’s conference call with analysts that among stores that have reopened, traffic is down about 25 percent. In addition, damages from recent looting is to be determined. At present, the company is burning through about $35 million in cash each month.

The store closures — 110 Wilsons Leather stores and 89 G.H. Bass stores — will help curb costs long-term. But during the current quarter, which ends July 31, the company is expecting closures costs of approximately $100 million from lease termination fees, severance costs, store liquidation expenses and legal fees, among other things. 

The company hired Hilco Global to help with the store liquidation process, which will begin immediately or once stores reopen. Wilsons Leather and G.H. Bass’ online businesses will continue to operate, along with some wholesale business. 

“The rest of the business, the retail, brick-and-mortar, is all going away, all of it,” Goldfarb said on the call. But the ceo said the “difficult decision” to close stores will enhance shareholder value long-term.

“We believe that this restructuring plan will enable us to greatly reduce our retail losses and to ultimately have this segment become profitable,” he said.  

G-lll’s updated retail fleet will consist of 41 DKNY stores, 13 Karl Lagerfeld Paris stores and the company’s online businesses. The company is also an apparel supplier that produces looks for PVH Corp.’s Tommy Hilfiger and Calvin Klein. 

“Our wholesale business, anchored by our five global power brands — DKNY, Donna Karan, Calvin Klein, Tommy Hilfiger and Karl Lagerfeld — will continue to be the primary growth and profit engine for the company,” Goldfarb said. “Importantly, we operate a sizable wholesale business that has globally recognized brands that are in demand.” 

Goldfarb added that G-lll’s wholesale channels “in most cases” do not work with high-risk retailers such as J. Crew or Forever 21.  

We were hurt slightly with the J.C. Penney and Neiman [Marcus], but nothing astronomical,” he said. “And the doors that we have a high dependency on don’t seem to be greatly affected. Macy’s is our largest customer. There’s talk of their door count decreasing. If it does, if their door count does decrease, it will be their “D” doors that generally don’t affect us to any degree. If there is an effect, sometimes it’s positive because we do participate in helping them on margin assistant.”

The company ended the 2020 fiscal year with more than $2.86 billion in annual net sales from its wholesale segment, Goldfarb said.

In addition, the company will continue to amplify its digital platforms in the coming year with updated web sites and additional tech support. Goldfarb said digital sales will likely represent about a third of the company’s total business moving forward. 

We learned on the digital side that we don’t spend enough money to be important on digital, whether it’s our own site or our customer site,” Goldfarb said. “So we’ve created a budget for that. We implemented part of it that relates to our customers and we’ve gotten the pure benefit of it. You see it almost immediately.”

Meanwhile, during the quarter, bright spots included denim, activewear, loungewear and casual footwear, like flip flops. 

“That’s all anybody has worn for the last three months,” Goldfarb said. 

DKNY and Karl Lagerfeld e-commerce businesses also comped up approximately 60 percent during quarantine.

To help reduce inventory, the company is shipping swimwear out for resort season orders. Goldfarb said the company will repackage more formalwear, such as special occasion dresses and some suits, for next year. 

“We’re going to put a ribbon around some of what was created, not sell it off, just bring it back next year,” Goldfarb said. “The product is great. It’s first-class product. It’s not problem product.”

In March, as retailers Stateside began temporarily closing stores to prevent the spread of the coronavirus, G-lll said it has $800 million on hand, between cash and bank facilities.

G-lll’s stock, which is down more than 44 percent year-over-year, shot up more than 12 percent during Thursday’s trading session. 

“We have a great base to build upon and, along with a more streamlined retail operation, will create a strong foundation for our future,” Goldfarb said. “It seems as if the shopper that’s out there truly is a shopper and not just walking through the stores. They’re armed with money, and they’re eager to buy. So the sales are driven by greater conversion and a bigger basket.

“I guess normality will come as soon as it comes,” he added.

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