G-III Apparel Group, LTD.

Good day and thank you for standing by. Welcome to the G3 Apparel Group second quarter fiscal 2023 earnings conference 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 will need to press star 1-1 on your telephone. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, CFO Neal Nachman. Please go ahead.

Thank you. Good morning, and thanks 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 for 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.

Thank you, Neil, and thank you, everybody, for joining us. In the second quarter, we saw a strong demand for our brands and met our top-line expectations. We continue to manage the business prudently with a keen eye towards gaining market share and building on our strengths while further expanding our global reach. We remain confident in our strategy as the overall fundamentals of our business are incredibly solid. G3 has a culture of entrepreneurship, agility, and flexibility with a world-class leadership team and proven track record of navigating through tough environments. Despite solid top-line performance, we were not immune to inflationary pressures and elevated costs in areas such as warehousing, transportation, and raw materials, which led to bottom-line net income for diluted share below our guidance. Given the challenging environment that has rapidly developed, Along with our retail partners being more cautious on the timing of inventory, we're taking a more conservative view for the balance of the year and adjusting our guidance accordingly. Neil will provide more details on this shortly. Now turning to the quarter's results, where we continue to see significant year-over-year sales growth of our power brands, DKNY, Donna Karan, Karl Lagerfeld, Calvin Klein, and Tommy Hilfiger. We experienced growth across almost all categories with particular strength in dresses and career wear and robust growth in handbags. Our merchant and sales teams responded to the decline in athleisure and a shift in demand toward more polished and dressy categories. They pivoted our assortments early in the year as consumers returned to in-person activities and to work. We continue to evaluate and align our forward production to deliver the right merchandise across categories with the right price points for the given time. Net sales for the second quarter was $605 million, an increase of 25% compared to last year's second quarter net sales of $483 million. Non-GAAP net income per diluted share was 39 cents in the current period compared to 41 cents in the second quarter last year. Before I provide an update on our key priorities, I want to address our inventory levels. Coming out of the pandemic last year, we were in a historically low-level position and did not have adequate inventory to drive our business. As of the end of the second quarter this year, Our inventory is up 108% compared to last year's smaller base. A better indicator would be to compare our wholesale inventory levels to the pre-pandemic second quarter levels of fiscal 2020, to which we're approximately up 38%. Excluding in-transit, our inventory was up only 6%. The in-transit increase is due to our concerted effort to pull forward production by 60 days or more to mitigate supply chain disruptions. The majority of this inventory is comprised of in-demand categories like outerwear, dresses, footwear, and the newly launched jeans category, which did not exist pre-pandemic. Further, At leisure, a downtrending category had an insignificant impact on inventory growth to pre-pandemic levels as we had planned for the decline in demand. Looking ahead to the important fall season, our order bulk remains incredibly strong and we're in a good position to ship with inventory in the right categories. We're working closely with our retail partners to balance the timing of our production of our product to have the right assortment on the floor at the right time. Now I'll update you on the progress we're making against our key priorities. Our first priority is to drive our power brands across categories with a focus on our own brands. I'm pleased to report this was another solid quarter in our wholesale business. We saw notable strength across our power brands, DKNY, Donna Karan, Carl Lagerfeld, Calvin Klein, and Tommy Hilfiger. We've developed solid businesses in our key owned brands, enabling them to realize significant growth with a strong runway ahead. We acquired DKNY in 2016 and launched the brand under our ownership in 2017. Since then, we expected double net sales to approximately $600 million this year. We've expanded distribution across 55 countries through approximately 1,300 retail partner doors globally, including premier department stores and digital pure play sites. Our team has increased global direct-to-consumer distribution to approximately 250 partner and company-owned stores and owned digital platforms. Our licensing division has extended the brand with partnerships in over 20 lifestyle categories. The total DKNY business, combined with a licensing royalty income, has created a highly profitable brand operating above our company's average operating margins. Continued growth in the brand is expected to enable us to further expand margins. Our marketing efforts have created a highly engaged social following for DKNY that has consistently delivered consumer engagement. In our fall campaign, which celebrates self-expression with diverse influencers that inspire customers through high impact global outdoor placements in key cities and digital media. In 2016, we launched the Karl Lagerfeld Paris brand, introducing it to North America, and this year we expect to grow net sales to over $200 million. The brand has distribution in approximately 450 retail partner doors, including premier department stores and digital pure place sites. Additionally, we've established strong direct-to-consumer distribution with over 20 stores and owned digital platforms. This fall, Karl Lagerfeld will launch the gender-neutral Cara Loves Karl capsule collection in September, designed in collaboration with the actress and model and activist Cara Delevingne. It will deliver significant brand visibility in New York during Fashion Week with a Soho pop-up shop, an immersed 3D campaign in Times Square, robust digital and outdoor media, and influencer partnerships. Following New York, the capsule will launch with events in Milan, Dubai, and it will wrap up in Paris. Taken together, we're proud of our accomplishments with these two key-owned brands, and believe there is significant runway ahead for both DKNY and Karl Lagerfeld Paris. Our licensed brands for which we have distribution rights for North America only are Calvin Klein and Tommy Hilfiger. Just a reminder, for those licensed brands, we pay significant licensing fees as opposed to collecting those fees from our own brands. For the quarter, we continue to drive sales for both brands, with Calvin Klein growing 14% and Tommy Hilfiger growing 5% as compared to last year. Our retail partners have responded well to our collections, which are resonating with consumers in-store and online. Our second priority is to expand our portfolio through ownership of brands and their licensing opportunities. During the second quarter, we completed our previously announced acquisition of the remaining 81% interest in Karl Lagerfeld. This further expands G3's global presence and ownership within our portfolio. The Karl Lagerfeld brand product is sold primarily outside of North America at a higher price point with an elevated product offering and higher end distribution across premium department stores. Whereas the Karl Lagerfeld Paris brand, which we created for North America, is an approachable fashion brand at a more moderate price point that is distributed through better department stores. This acquisition adds a fully owned brand to our portfolio. The total Karl Lagerfeld business is now approaching annual revenues of approximately $400 million. Leveraging our operational expertise, we expect to unlock additional growth opportunities through continued expansion into new categories and new geographies as well. Our teams are working to bring Karl Lagerfeld to the United States with a number of premium department stores and to take the Karl Lagerfeld Paris brand abroad. Other initiatives, including increasing our direct-to-consumer omnichannel sales and a focus on growing the number of wholesale partners and licenses for the brand. Importantly, we see a net sales potential of approximately $1 billion for us, or in excess of $2 billion in retail sales. We continue to evaluate ownership opportunities where they may make sense in the future. as we think about the makeup of our portfolio and where we can bring value to leverage our expertise to drive brand growth. Our licensing business remains a key profit driver for G3 and broadens our reach to more consumers in a capital light way. It leverages the global appeal of our own brands with category expansions and exciting partnerships with new customer experiences. We continue to look for opportunities to expand our licensing business with best-in-class category partners. This year, we expect to generate approximately $65 million in annual royalty income. DKNY and Donna Karan both have well-established iconic fragrance businesses through global licenses. This quarter, Interparfum, BEGAN DISTRIBUTION AS OUR NEW FRAGRANCE LICENSEE. WE BELIEVE INTERPROFUME IS WELL POSITIONED TO EXPAND THE FRAGRANCE BUSINESS FOR BOTH OF THESE BRANDS. WE'VE MADE PROGRESS WITH LICENSING DEALS FOR OUR RECENTLY ACQUIRED EUROPEAN LUXURY BRAND, SONIA RICCHIEL, WHICH AUTHENTICALLY EMBODIES PARISIAN FASHION. DURING THE QUARTER, We finalized several key agreements for children's wear, shoes, and jewelry, and are working on other partnerships. Licensing is expected to be instrumental in supporting our global growth plan for Sonia Ricciel. Additionally, several unique partnerships are expected to build global brand excitement for Vilbercan and Karl Lagerfeld, creating new customer experiences. With our partners, Karl Lagerfeld has recently launched its first-ever hotel and opened its doors in Macau. Luxury residential villas are being developed in Marbella. This month, we're set to close on the purchase of our first-ever Vilbreken Beach Club in Cannes, creating an immersive customer experience with a differentiated marketing opportunity that is being designed to lend itself to franchising the concept. Our next priority is to extend our reach by expanding our European-based brand portfolio. With the inclusion of Karl Lagerfeld Europe in our results this quarter, we've expanded our global reach. Neil will provide you with an update on the financial performance. For DKNY, we're pleased with our international wholesale business, which we expect will generate greater than $165 million in sales this year. That's a growth of approximately 250% from fiscal 2018, our first full year of owning the brand. In the second quarter, net sales for DKNY's international business almost doubled compared to last year, as we continue to grow and expand our European operations. In total, our distribution partners operate 230 freestanding stores and concessions globally. Over the summer, Billbrecan registered another solid quarter with strong double-digit growth compared to pre-pandemic levels and is on track to have its best year in sales and profitability. We also have a slate of product launches and collaborations. This quarter, VILBRACAN launched an innovative swimsuit line incorporating woolen fabrics and collaborations with artists and brands like Palm Angels. Since we acquired the brand, we've grown VILBRACAN's store footprint to 180 company and partner operated stores. and almost 600 doors in premier department stores and vacation destinations with a product available in 113 countries. We are pleased with its trajectory and believe it can generate $200 million in sales. Over the past year, the European team has been working on the relaunch of Sonia Ricciel. This fall, we will introduce a new collection with a focus on knits and accessories, categories the brand has been known for. The team is also working to expand the brand's footprint through a number of distribution channels. We believe there continues to be a meaningful opportunity to expand DKNY, Karl Lagerfeld, Wilbur Kahn, and Sonia Raquel globally, and developing an infrastructure leveraging our leadership talent and creating synergies to build a solid foundation that is expected to fuel these businesses. A third priority is to maximize omnichannel opportunities and leverage data. Elevating our digital experience and capabilities is an important part of our agenda. We're working to drive the demand on our own and retail partners' digital platforms and have expanded our pure play presence which has resulted in strong growth for pre-pandemic levels. Now, with traffic migrating back to brick and mortar, we're ensuring that we're meeting the consumer and their preferred channel of shopping. Our new DKNY and Karl Lagerfeld websites have improved technical operations to allow seamless navigation and offer immersive brand content. which are designed to drive performance heading into the holiday season. The sites also enable us to leverage sales tools like virtual selling, CRM, and loyalty programs. Across our own brands, we continue our brand marketing and data-driven strategies as we build out updated lifecycle and retention marketing campaigns. We've experienced significant value in our CRM and loyalty technology instruments. Karl Lagerfeld Europe has a strong and growing digital business. Part of the growth is expected to come from converting the website from an outsourced model to running it in-house. This will enable the expansion of product offerings, operational efficiency, and furthering its global brand reach. Our team completed the conversion of the German, Austrian, and Dutch sites on the in-house platform. A full transition across Europe is expected in the next couple of months in time for the holiday season. In our own retail operations, we're very pleased with the performance of our Karl Lagerfeld Paris business, which grew 80% in North America despite continuing challenges in tourism. This growth was driven by new stores, which are off to a good start, as well as strong performance in digital and our existing store fleet. Our DKNY comparisons were slightly negative in the quarter, predominantly due to the European outlets, which continue to see significantly lower tourism, particularly from China. We remain focused on driving omnichannel growth wherever the consumer chooses to shop. In conclusion, we have brands that are in demand, and we continue to execute across all aspects of the product lifecycle. during this dynamic environment. We have prudently incorporated a more conservative outlook for the balance of the year. Our strategy and overall fundamentals of our business are incredibly strong. We remain confident in our ability to deliver our revised full year expectations. I'll now pass the call to Neil for a discussion of our second quarter financial results. as well as guidance for our third quarter and full year fiscal 2023. Thank you, Morris.