G-III Apparel Group, Ltd. (NASDAQ:GIII) Q3 2024 Earnings Call Transcript

Morris Goldfarb : Now, we don’t really sell commodities. We’re a fashion business. We sell fashion, we create demand. And when fashion is in demand and you do your job appropriately, you get paid for it. If you don’t, you need to take the markdown and move product. We have a history of doing the right thing. As far as the creative side, we add amazing quality to our product, and the consumer always sees value in our pricing. It’s not arbitrarily just raising your price and saying, we’re going to get $10 more for this dress because we can, we add value whether it’s accessory value, whether it’s branding value, where we’re spending a good deal of money on marketing going forward. And that generates demand and demand don’t generate sales. And if all the pieces are all put together and done appropriately, you get the price that you’re trying to achieve. We have a history, we have a long history that it’s a consistent, it’s a consistent thesis.

Operator: The next question comes from Ashley Owens with KeyBanc. Your line is open.

Ashley Owens: Thanks for taking my question. Just on Karl Lagerfeld, you’ve seen good momentum this year and have several initiatives in place there. Would just like to hear your thoughts on how you’re sizing the opportunity within that brand for next year. And then any additional color on how the other brands are currently performing internationally versus domestically and how that’s progressing would be helpful.

Morris Goldfarb : We have a big internal bet on, Lagerfeld. The bet is it’s going to be our biggest percentage growth brand. It’s doing great. It had a good year. It’s having a good year. And the guidance that we’re getting from our retail partners is, there’s an amazing amount of growth opportunity with the brand door count and penetration with indoors product is selling, all the categories are working. It’s a brand that makes you smile when you see it. They’re — it’s got unique attributes. And we love that acquisition and we’re expanding licensing opportunities as I spoke to the lifestyle opportunities that we have in hospitality, food and beverage, and unique situations. It was really originated by Lagerfeld. There’s a high demand for unique situations.

So, we’ll also, other than the demand for our product is a demand for opportunities with the brand. I think, sooner or later, and I’m going to bet this sooner, within the next 90 days, we’ll probably announce a hotel development in New York City. So, there is some really exciting things, that are going on with the brand. And as far as global, the weather was tough throughout Europe. From what I understand, it is the warmest weather in 150 years. And in spite of that, we are growing DKNY. We are growing Lagerfeld and we are growing, Vilebrequin. So, the weather impacted parts of our business. Our feet business is soft, our coat business is soft, sweater business is soft, but the fast-moving fashion pieces worked well. So, we are learning how to operate globally.

We are not having the same success in China, but Europe and the Far East has been really good markets for us.

Operator: Please stand by for our next question. The last question comes from Dana Telsey with Telsey Advisory Group. Your line is open.

Dana Telsey: Good morning, everyone. And so nice to see the progress, and congratulations on the hiring of Dana Perlman. I think that will be a terrific addition. And Morris, you used one of my favorite words grow and growing. When you think about the strength that you had this quarter and certainly the discussions about wholesale even with more cautious or conservative orders, how do you break down the wholesale strength whether by brand, whether by Channel a wholesale department stores off prices or whatever it may be and what are you seeing there? And do you see that strength continuing? Does it continue because of categories? Does it continue because of pricing? How do you think of the levers moving forward? Thank you.

Morris Goldfarb: It continues because of many factors, primarily, the underlying talent that makes it happen. It is an aggressive group that discovers opportunities that most people just overlook. We are beyond just a brand. I think we are proving that out now. Give our company a start-up situation with, putting a focus and putting our people on the focus of building it. We can build a start-up and make it effective, very quickly. We are proving that out. Our brands were underachievers in the hands of the competition or other people, and we take them on. We embellish them. We give them love and care, and put a little money behind it. Relationships that we have with retailers are amazing. We get support. The moment we pivot a brand, the first question is, well, what do you want us to do?

We are in. And that’s really not the norm. That comes with many years of building that trust. And I would venture to bet that, if you spoke to any major retailer in the United States, they are aware of us, they trade with us, and they are happy with the relationship. We put, as a paramount focus, the profitability of the retailer with without there being able to be profitable, we have no shot. So, our first focus is understanding what they need to be profitable, build around it retain the DNA of what we’re marketing. And there’s a huge payback. There’s loyalty, there are orders, there’s cooperation. So, it’s not a practice that everybody follows, and it comes from continuity of culture. Same management team running the company for decades. It’s not a bait-and-switch situation.