G-III Apparel Group, LTD.

Ladies and gentlemen, thank you for standing by, and welcome to the G3 Apparel Group second quarter fiscal 2021 earnings call. At this time, all participants are on a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during a session, you need to press star 1 on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star 0. I would now like to hand the conference over to your speaker for today, Mr. Neal Nackman, CFO, You may begin, sir.

Thank you, and good morning. Thanks for joining us. Before we begin, I would like to remind participants that certain statements made on today's call and the Q&A session may constitute forward-looking statements within the meaning of the federal securities laws. Forward-looking statements are not guarantees, and actual results may differ materially from those expressed or implied in forward-looking statements. Important factors that could cause actual results of operations or the financial condition of the company to differ are discussed in the documents filed by the company with the SEC. The company undertakes no duty to update any forward-looking statements. I will now turn the call over to our Chairman and Chief Executive Officer, Morris Goldfarb.

Good morning, and thank you for joining us. Also joining me today are Sammy Aaron, our Vice Chairman and President, Neal Nackman, our chief financial officer, Jeff Goldfarb, executive vice president, and Priya Trivedi, vice president of investor relations. G3 is a merchant-led company with an entrepreneurial culture that can identify and swiftly execute on opportunities and situations. This has always been our competitive advantage and even more so in this pandemic world. We have evolved into a well-diversified apparel company. It is impressive to see the expertise and the dominance we've developed, especially over the last 15 years. We've fueled our growth and captured market share in almost all major classifications, including sportswear, coats, dresses, athleisure, suit separates, jeans, swimwear, handbags, and footwear. These categories enable our brands to be displayed in multiple locations and multiple floors of our retailer stores, with some brands in over 10 locations per door. Importantly, our merchants have proven to be nimble, shifting talent and resources to product categories based on rapidly changing consumer demand. Our strong portfolio of globally recognized brands sold across a broad array of diverse distribution channels has also set us up well to successfully manage through these unprecedented times Our management teams, structured by brand and by category, are responsible for driving sales and profitability of their individual businesses This enables us to continue to operate efficiently and at high levels of productivity I am incredibly proud of our people who are meeting the challenges posed by the pandemic to adjust quickly as we navigate through this complex environment. Let us review some of our key developments and accomplishments for this quarter. We work with our retailers to reassort and reallocate our order book for the balance of the year. Although our product categories have been evolving toward more casual dressing over the last several years, our teams were able to move rapidly to further change our fall and holiday season's product assortments to address the clear shift in consumer needs. We feel comfortable with our inventory positions as our vendors have worked collaboratively with us to shift our production to align with our redeveloped order book. As a matter of fact, inventory levels were down 32% this past quarter as compared to last year's second quarter. Let's walk through some of our bigger categories and provide you with some additional color on the product mix. The demand for our performance or athleisure wear category has really accelerated. We've built a strong essentials program which enables us to replenish quickly facilitate demand both in stores as well as digital. Our recently added jeans lines for three of our power brands lend themselves perfectly to today's casual and active lifestyle. From their initial launches, we designed these lines to have a ratio of multiple tops to one bottom. Our focus is on casual and comfortable tees, woven tops, sweaters, and sweatshirts. We've also added an assortment of relaxed bottoms, leggings, and casual pants in a variety of fabrics. Overall, with three of the most globally recognized power brands, DKNY, Calvin Klein, and Tommy Hilfiger, we've become the dominant resource in athleisure wear. We expect the athleisure wear and jeans category to be a big growth area for us going forward. Coats are another classification that we're best positioned to capitalize on. We're seeing a greater demand for coats based on a population's growing interest in an active lifestyle and in indoor activity, outdoor activities including walking, running, biking, hiking, and dining. To meet this demand, we've expanded our offerings of traditional mid-weight styles, packable jackets, and layered pieces. All designed for comfort and functionality. As for sportswear, for the fall and holiday season, we're emphasizing the casual components of these collections, featuring knit and woven tops and sweaters, as well as casual, comfortable dresses and bottoms. We're also seeing good traction in casual handbags and footwear. On the flip side, we have de-emphasized categories like suit separates, The career components of our sportswear lines and social dresses. Our full assortment of products come together to offer a great selection of casual, comfortable clothing and accessories that can be mixed, matched, and layered for spending time at home and outdoors. In early June, we also announced the restructuring of our retail segment, The store liquidations are underway and progressing according to plan. Last year, our annual operating losses for these stores were approximately $50 million. We expect the restructuring to eliminate almost all of these losses. We are optimistic about our ongoing DKNY and Karl Lagerfeld Paris stores and digital sites. In addition to restructuring our retail operations, we also made the difficult decision to reduce our global wholesale headcount by approximately 20% to better match our business needs. This staff reduction is expected to result in annual savings of roughly $22 million. We further solidified our capital structure and enhanced our financial flexibility and liquidity by refinancing our balance sheet and extending the maturity of our revolving credit facility and term debt to 2025. We issued $400 million of senior secured notes, which repaid the previously outstanding $300 million term loan and increased our cash balance by approximately $90 million. We also simultaneously amended and extended the $650 million revolving credit line. Now, turning to some more of the specifics of our business in the second quarter, many of our brick and mortar locations of our partners, as well as our own, were closed for about half of our second fiscal quarter. The majority of the stores have reopened. Encouragingly, in the months of June and July, We saw positive week-over-week trends as a result of the pent-up demand. This resulted in sequential improvement in our wholesale shipping for each month of the quarter. Let's review the financial results for our second fiscal quarter ended July 31st. Net sales for the second quarter were $297 million compared to last year's $644 million. Gap loss per share was $0.31 compared to a gain of $0.23 per diluted share last year. The gap loss per share for this quarter includes a $0.53 loss per share related to the operations of the G.H. Bass and Wilson's Leather Stores, which will be closed after the liquidation sale. The pandemic's ripple effect on the retail industry has been evident with the unprecedented disruption causing bankruptcy filings and announced store closures. In our view, the reduction in bottom-tier unprofitable retail store locations will be a long-term net positive for our retailers as they deploy resources to their digital business and top tier locations which will ultimately improve their overall financial health. Our consistent track record for execution and strong financial results position us well to capture market share and grow our business in what will clearly be a narrower field of competition. Let's take a moment and talk about our digital businesses. In the second quarter of this year, we saw significant demand in our retailer sites for all categories. On our own DKNY and Karl Lagerfeld Paris sites, we had comparable sales increases in excess of 60%. We approximate last year's digital retail revenue on our partner sites as well as ours to be in excess of a billion dollars. We are increasing our investments on both the front and back end. We've dedicated teams in the U.S., Europe, and Asia working to capture a growing share of the digital business. These teams focus on our brand sites as well as our retailer sites, which amongst others include Macy's, Nordstrom's, Amazon, Fanatics, Zalando, ASOS, and Taobao. In addition to our dominant position in North America, we're just getting started to grow internationally with our DKNY brand. We've seen improving trends through the second half of the quarter across China, with some comps up about 20% over the last two months. We operate China through a joint venture and will be increasing our ownership from 49% to 75%. We're thrilled to accelerate growth and awareness of the DKNY brand with consumers in this key international market. We're also expanding our sales in Europe and elsewhere through our distribution partners. Now with our own brand, DKNY, we're finally developing and expanding these overseas markets and believe they present the potential for growth. Our wholesale business will continue to be the primary sales and profit engine for G3. We remain focused on leveraging our wholesale expertise to drive long-term growth. As we navigate through this pandemic, I will now pass it to Neal for a detailed discussion of our second quarter results. Thank you, Morris.