G-III, parent company to brands like DKNY and Donna Karan, reported a loss in shares despite a net sales increase in the first quarter of FY2018 which ended April 30, 2017.
G-III saw a net sales increase of 16 percent in the first quarter to $529 million, up from $457.4 million during the same period last year. However, the company reported a net loss of $10.4 million, or $-0.21 loss per share, compared to net income of $2.8 million, or $0.06 per diluted share, during the same time last year.
G-III had professional fees and severance of $1.1 million related to the acquisition of Donna Karan International. Excluding those fees, the non-GAAP net loss per share for the first quarter was $-0.18 compared to net income per share of $0.06 during the same period last year.
Morris Goldfarb, G-III chairman and CEO, said that the company’s wholesale business remains strong and continues to grow and show the power of G-III’s brand portfolio, to move past a tough market environment. “Offsetting our strong wholesale performance were the previously forecasted losses with respect to our own retail stores and the development of the Donna Karan business,” he said.
Goldfarb also relayed that the company is reducing operating costs in retail business by closing and repurposing stores and enhancing product offerings, meant to help reduce the losses in retail operations.
“We are approaching an inflection point for the Donna Karan business where our efforts are expected to yield profitable results for this business in the second half of this fiscal year,” said Goldfarb. “Overall, we believe that we are in a renewed position to drive higher levels of growth, investment returns and value to customers, consumers and shareholders.”
G-III increased its guidance for FY2018, expecting net sales of around $2.76 billion and net income between $52 million and $57 million, or between $1.04 and $1.14 per diluted share. This compares to the previous expectations of net sales around $2.73 billion and net income between $40 million and $45 million, or between $0.80 and $0.90 per diluted share.