G-III Apparel Group, LTD.

Ladies and gentlemen, thank you for standing by and welcome to the G3 Apparel Group first quarter fiscal 2023 earnings call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you'll need to press star 1 on your telephone. If you require any further assistance, please press star 0. I would like to turn the call over to your host, Neil Knightman, and the company CFO. You may begin.

Good morning, and thank you for joining us. Before we begin, I would like to remind participants that certain statements made on today's call and in 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. In addition, during the call, we will refer to non-GAAP net income, non-GAAP net income per diluted share, and adjusted EBITDA, which are all non-GAAP financial measures. We have provided reconciliations of these non-GAAP financial measures to GAAP measures in our press release, which is also available on our website. Also, disclosed in our press release for your reference are last year's GAAP to non-GAAP results by quarter. 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 is Neil Nachman, our Chief Financial Officer. We entered the fiscal year with strong momentum that continued throughout the first quarter of fiscal 2023 and exceeded both our top and bottom line guidance. As people go back to work, resume socializing, and life continues to return to normal, customers are shopping to refresh their wardrobes, and demand for our product remains strong. Our retail partners are seeing significant growth in sales of our power brands, DKNY, Donna Karan, Calvin Klein, Tommy Hilfiger, and Karl Lagerfeld Paris. Given the positioning of our brands in better department stores, our business is much less impacted by the recent inflationary pressures. In particular, our status brands, Bill Burkett and Karl Lagerfeld, are even further insulated on pace with the overall luxury market. G3 has been able to successfully navigate a continued globally challenged environment because of our experienced leadership and agile world-class teams. our dominance across a broad range of categories, our flexibility in creating product, and a well-developed supply chain infrastructure, which is one of our competitive strengths. This strong foundation and our entrepreneurial culture has enabled us to quickly pivot resources to anticipate and deliver right merchandise in the right categories with the right price point at the right time. We're confident in our business and future growth opportunities and are raising our outlook. Net sales for the first quarter were $689 million, an increase of 33% compared to last year's first quarter net sales of $520 million, above our guidance by approximately 15%. Net sales were approximately 9% above pre-pandemic levels. Non-GAAP net income was $0.72 per diluted share compared to non-GAAP net income of $0.50 per share in the first quarter last year. Now I'll update you on progress for each of our key priorities to deliver continued long-term profitable growth. Our first priority is to drive our power brands across categories. This was another strong quarter for our wholesale business, registering growth across the board that once again outpaced our expectations. At G3, our team is agile, moves quickly, and has the foresight to see where the market is going. When the pandemic hit, we quickly focused on driving our casual divisions, including jeans, athleisure, casual sportswear, and footwear, growing them significantly over pre-pandemic fiscal 2020 levels. These businesses continue to perform well with sales slightly up compared to last year. In anticipation of people resuming social activities, we've once again rebalanced our mix. With sales up overall across our divisions, we decreased penetration of casual pandemic categories and shifted our production into more polished products, including dresses and career wear. These post-pandemic categories are now seeing strong acceleration in sales, up over 35 percent to last year, with AURs increasing over 25 percent. Additionally, we shifted our production calendars to bring in inventory earlier and are well positioned to capture this robust demand. Out of wear also performed well. The cold weather in the first quarter of this year fueled broad-based demand for our lighter, seasonally functional collections. For the fall 2022 season, we are prepared with inventory, have strong orders, and a high single-digit lift in average AURs. This was a particularly good quarter for our growing handbag business for Calvin Klein, DKNY, and Karl Lagerfeld Paris. Our newly launched Karl Lagerfeld handbags have gained substantial scale and doubled in distribution from last year, now available in approximately 450 doors in North America. We had strength in dressier footwear and fashion sneakers for DKNY and Karl Lagerfeld Paris, which are driving increases in AURs. Our second priority is to expand our portfolio through ownership of brands and their licensing opportunities. Last month, we announced the acquisition of Karl Lagerfeld, which is an exciting milestone as it furthers all our strategic priorities. Given our track record of launching and growing this and other brands in North America, along with the brand's globally recognized significance, we're confident in its future success. Additionally, we have a seven-year working relationship with Pierre Paolo Rigi, the brand's CEO, and his management team, and feel good about their ability to continue to guide this business. Our collective expertise will accelerate its growth. Importantly, 100% ownership of Karl Lagerfeld furthers our geographic reach. In our licensing division, we've created a well-developed capability that is a significant profit driver. Licensing a broader range of categories also expands our customer base. With the addition of Karl Lagerfeld, we now expect to generate over $65 million in annual royalty income. Across our own brands, we work with some of the best partners in categories that include fragrance, eyewear, intimates, kids, and home. This past quarter, we renewed some of our top licenses for DKNY and lined up licenses for Sonia Rykiel in kids, shoes, and jewelry. Our third priority is to maximize omnichannel opportunities and leverage data. About a year ago, we accelerated our investment in digital and created a cohesive omnichannel strategy centered around the customer. We have the right team in place with technology and performance marketing experts, along with new data analysts who are driving our business. And our focus on utilizing data to learn more about our customers is yielding results. Compared to pre-pandemic levels, digital sales of our product for the quarter are up approximately 60%. In addition to our Owned direct-to-consumer segment, we have a strong omnichannel business with our retail partners. Our brands hold a significant presence on their growing websites and occupy some of the most desirable real estate in their stores. We're capturing market share as consumers are increasingly returning to stores for categories such as dresses and career wear. Our ability to deliver across channels continues to elevate our position as a vendor of choice to our retail partners. Additionally, we've made minority investments in two emerging digitally native companies. These strategic investments create an exciting, mutually beneficial relationship. We will test and learn in the space by using their technological expertise. It also provides us with revenue growth opportunities through product development and providing them supply chain services. Another component of our omnichannel is our own DKNY and Karl Lagerfeld Paris retail operations. We had a rebound in traffic despite continued challenges in tourism. Some store sales were up 30 percent for DKNY and 50% for Karl Lagerfeld. This year, we will add seven new Karl Lagerfeld Paris locations and we'll close about the same number of underperforming DKNY stores. We're focused on further driving omnichannel growth by improving the customer's experience both digitally and in our brick and mortar stores. At digitally focused brand marketing campaigns for DKNY and Karl Lagerfeld Paris are delivering results. Both businesses are growing their communities of loyalists with a curated group of celebrities and social media influencers. We're increasing our investment in performance and data-driven marketing in addition to developing our CRM capabilities. Karl Lagerfeld's fall marketing campaign will focus on its collaboration with Cara Delevingne. This will be a global branding initiative, launching first in New York for Fashion Week, followed by Dubai and Milan, and wrapping up in Paris. Marketing investments in our own brands have contributed to building significant businesses, as well as a wider consumer awareness and great brand equity. Our fourth priority is to extend our reach by developing our European-based brand portfolio. The Karl Lagerfeld acquisition significantly furthers our progress in this area, together with the opportunities ahead for Vilbercan, Sonia Raquel, and DKMY. We're developing our infrastructure, leveraging our leadership talent, and creating synergies to build a solid foundation that will fuel these businesses. Additionally, Vilbrecan had a good quarter. Direct-to-consumer sales were up strong double digits compared to pre-pandemic levels and wholesale nearly doubled. We're expanding the brand's presence by adding approximately 10 company-owned and partner-operated stores in Europe and in North America. They have a very strong lineup of collaborations coming for the year. To further amplify the brand's visibility, we're in the process of acquiring and launching our first-ever WilberCamp Beach Club, located in a prestigious vacation destination in the south of France. This will create an immersive customer experience and provide a differentiated marketing opportunity, which lends itself to franchising the concept. Looking ahead, we're expecting Vilbrecan to have a solid year. As of 2021, recycled or recyclable materials represented 50 percent of the brand's collections, and by 2023, we expect that figure to rise to 80 percent. Last year, the business launched Foundation Vilbrecan with a focus on protecting marine biodiversity educating children on their environmental legacy, and advocating for a more conscious fashion industry. This coincides with the progress we've made on our overall G3 corporate social responsibility initiatives last year. Of note, we furthered our commitment to diversity, equity, and inclusion. We are a founding member of the groundbreaking Social Justice Center at the Fashion Institute of Technology. program that will increase opportunities for minorities coming into our industry. We also continued our partnership with the UNCF by fully funding 10 scholarships. Both initiatives include opportunities for students to gain first-hand experience here at G3. Our 2022 CSR letter that will be posted on and I encourage you to look at for more details on our efforts. It will be posted shortly. In conclusion, we deliver better than expected top and bottom line results, a solid start to the fiscal year despite the challenging operating environment. Accordingly, we're raising our full fiscal year 2023 guidance. We now expect net sales to be approximately $3.24 billion and non-GAAP net income per diluted share to be between $4.40 and $5.50. This guidance is inclusive of approximately $140 million in net sales and approximately $0.10 per diluted share for our newly acquired Karl Lagerfeld brand. With the return to normal life, we remain optimistic about our business and ability to gain market share. I'll now pass the call to Neil for a discussion of our first quarter financial results, as well as guidance for our second quarter and full year fiscal 2023.