G-III Apparel Group, LTD.

Good day and thank you for standing by. Welcome to the G3 Apparel Group Second Quarter Fiscal 2024 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 will need to press star 1-1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1-1 again. Please be advised that today's conference is being recorded. I would now like to turn the conference over to Neal Nachman, Chief Financial Officer. Please go ahead.

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 prediluted 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. I will now turn the call over to our Chairman and Chief Executive Officer, Morris Goldkorn.

Thank you, Neil, and thank you, everyone, for joining us. We registered another strong quarter, well exceeding our top and bottom line guidance. The second quarter caps off a strong first half for G3, demonstrating our ability to navigate what remains a dynamic environment. This gives us confidence as we look ahead to the balance of the year, and accordingly, we've raised our full year guidance. As a global leader in fashion, we remain focused on strong execution of our business while pursuing our many opportunities for growth. For the second quarter of fiscal 2024, net sales were $660 million, an increase of 9% from $605 million last year, well above our guidance by approximately 10% or $65 million. Non-GAAP net income per diluted share was 40 cents, exceeding our guidance by 40 cents. Similar to what we experienced in the first quarter, second quarter gross margins were better than last year's second quarter. Our freight costs have moderated, and we're now beginning to anniversary last year's significant one-time logistics costs, which primarily occurred in the third quarter. We're very pleased with the progress we've made right-sizing our inventory, which was $805 million down 23% compared to $1.04 billion in last year's second quarter. We remain disciplined in our approach to future inventory buys and have appropriately adjusted our warehousing needs as our inventory levels have aligned. Our new inventory purchases are coming in at a much lower freight cost. We are well positioned for the second half. We ended the quarter in a strong financial position with $825 million in cash and availability, which is after repaying $75 million of debt. Year to date, we've repurchased 1.6 million shares, returning $26 million to shareholders. Further, our board replenished our stock buyback capacity to 10 million shares. The strength of our balance sheet continues to remain a top priority and provides us with the flexibility to invest in the future growth of our own brands and new businesses. Let me begin by discussing the development of our three recently announced growth opportunities, all of which remain on track to launch with first deliveries next year. These include the repositioning and expansion of Donna Karan, which will be more widely distributed in better department stores, digital channels, and our own Donna Karan website in North America and internationally. We will launch in over 200 partner doors, and we will build 150 branded shop-and-shops. The new collection has been well received. Our long-term license for Nautica in North America, which will begin with the jeans category and follow with a broad range of additional categories. Our jeans will launch in over 200 partner doors, and we will build 60 branded shop and shops. Orders are already in from retailers who think the product looks great. Our 25-year agreement as the master licensee of Halston for a full range of products across our global distribution network. The brand is globally well-recognized but currently has limited North American distribution and almost no international distribution, presenting multiple avenues of growth. We also have the ability to act as a licensor for additional categories, creating another income stream. The agreement also includes an option to purchase the brand. Additionally, this morning, we announced our new multi-year license with Hanes Brand to produce outerwear for Champion, an iconic American brand that has wide global recognition. We will create quality heritage pieces that expand Champion's lifestyle offerings. This license aligns perfectly with our core competencies and will fit seamlessly into our already well-developed outerwear divisions. The product will be distributed through our diverse channels in North America, as well as Champion's global network with first deliveries available for fall of 2024. We remain steadfast in our focus on expanding our owned and licensed brands, as well as bringing in additional brands that fit our long-term vision. Supporting this growth is our well-developed corporate foundation, which consists of our high-performing, forward-thinking team and experienced senior leadership, a strong merchant expertise in product development, our dominance across a broad range of product categories, our well-developed sourcing and supply chain infrastructure across diverse geographies, and our diversified distribution network of retail partners to reach an even broader range of consumers. This foundation has enabled G3 to unlock the value of more than 30 licensed and owned brands in our portfolio, including some of the most sought-after names in global fashion. We've built entirely new product lines for our brands across a diverse range of core categories. Our work has enabled them to reach wider audiences, realize tremendous sales growth, and is essential to elevating their lifestyle appeal. Our demonstrated track record continues to make G3 a partner of choice for brands and for retailers. Over the years, our entrepreneurial and nimble culture has always enabled us to deliver results. Agility is at the heart of everything we do at G3, and we continue to evolve regardless of external factors. Since announcing changes to our Calvin Klein and Tommy Hilfiger licenses in December, we moved quickly to create the four new strategic initiatives I just discussed with more to come. In doing so, we're creating additional shareholder value. Now, let me update you on some of our progress this quarter against our strategic priorities. Our first priority is to drive our power brands across categories. Our results continue to be led by strength in outerwear as well as dressier categories, including sportswear, dresses, and suit separates across our key brands, DKNY, Karl Lagerfeld, Calvin Klein, Tommy Hilfiger, and Levi's. We also saw strength across denim, footwear, and team sports. Looking ahead at our third quarter, The order book looks good and our inventory is aligned appropriately. We're well positioned for the important fall and holiday seasons. As we look to the future, we think about several key brands as being important growth drivers for our business, including DKNY, Donna Karan, Karl Lagerfeld, Vilbreken, Nautica, and Halston, each of which have unique propositions. The varying aesthetic appeal to wide range of customer segments and lifestyle needs, creating opportunities across an even greater number of retailers. DKNY is inspired by the energy and attitude of New York. This brand provides a modern wardrobe to carry you from day to night that attracts younger consumers looking for contemporary products. While Donna Karan is a modern system of dressing created to appeal to women's senses on every level, it addresses the full lifestyle needs of women in search of sophisticated products from one of the most recognizable American brands. Karl Lagerfeld, an iconic name in fashion, embodies the aesthetic of its namesake, fused with a contemporary forward-looking spirit. The product features Parisian-inspired classics with a rock-chic attitude for high fashion. Vilbrecan, our status swimwear brand, cultivates a spirit of refinement and fantasy, staying true to the casual charm with perfectly tailored and always-in-style products for a top-tier clientele. Grounded in classic Americana, Nautica is a lifestyle brand with nautical-inspired designs that's iconic and modern with a casual fit, feel, and function, which appeals to shoppers in search of a more relaxed style. And Halston, our most recent key license, stands for simple and classic elegance that will offer an easy, modern approach to dressing and appeals to consumers seeking aspirational style. Our brands offer a range of price points, have tailored distribution strategies, and dedicated teams that design for their specific positioning. Each of our core brands complement one another and bring a distinct point of view to our portfolio which broadens our distribution opportunities. Growing our own brands, including DKNY, Karl Lagerfeld, Donna Karan, Velbercan, remains a key strategic priority as they represent an important longer-term profit driver by generating higher operating margins and providing licensing income for G3. They also enable us to further extend our global reach This year, with the ownership of the whole Karl Lagerfeld brand, our international sales will be up 20% to last year. With $1.3 billion in annual revenue last year, we believe we can grow this business to over $3 billion in annual revenue over time. Our DKNY and Karl Lagerfeld businesses registered solid year-over-year growth in the second quarter. It has now been a year since our acquisition of the full Karl Lagerfeld brand. The integration of this business was seamless, and it had a great transitional year. We launched Karl Lagerfeld jeans in Europe, a new key growth category for the brand. We will have two stores dedicated to just the jeans line, one in Paris and the second in Madrid. DKNY is fall marketing campaign will be focused around the theme DKNY4U, which explores the uniqueness of New York from a number of perspectives. This campaign will be amplified through a robust mix of media, including digital, premium outdoor placements, as well as social and influencer partnerships across the U.S. and key international markets. Coming off the momentum of the Met Gala, Karl Lagerfeld's fall campaign will be brought to life through high-impact marketing activities around the globe. The campaign will roll out across channels with a focus on digital, including innovative NFTs, augmented reality filters, creative collaborations, and more. We continue to capitalize on opportunities to leverage our own brand's recognition through highly profitable licensing arrangements. This quarter, we secured renewals from some of our key licenses, which is another good indicator of our brand's strength. Additionally, we are in the process of adding licenses in entirely new categories, exposing our brand to wider audience. Extending our global reach is another important priority. We have unique partnerships for Karl Lagerfeld that drive notable international exposure. Last month, the brand officially opened its first five-star luxury hotel in Macau, with 271 opulent guest rooms and a restaurant featuring a Michelin-starred chef. This project represents Karl's design vision as he personally worked on it for six years prior to his passing. The grand opening was hosted with Academy Award winner Michelle Yeoh and attended by other internationally renowned VIPs and 2,000 other guests. This hotel is a sophisticated luxury endeavor, creating another major brand experience and attracting a global audience. In June, we announced the second Karl Lagerfeld Hotel Tower at the SAIL Development in Malacca, Malaysia, a UNESCO World Heritage Site that is rapidly emerging as an international tourist destination. It will feature the tallest nine tower-linked structures in the world and resemble a ship. The official summer opening of Vilbrecan's new beach club, La Plage, has been a major success, offering guests an elevated beach experience. This summer, the club quickly became a destination for international vacationers as the brand hosted several high-profile celebrity and corporate events at the beach club during the Cannes International Film Festival. This concept has enabled us to rapidly replicate the model to franchise and licensing opportunity for beach clubs. We're actively working on additional opportunities as we continue to create more Vilbrican experiences, which will increase global awareness, enhancing the status appeal of the brand. The brand also opened two new international stores during the quarter, one in the Bahamas and a second on Paris' Rue de la Paix, which will offer a higher penetration of our luxury line, enabling us to increase our store AURs by double digits. We continue to build our DKNY international business. In Europe, our Milan office has been working to expand the brand's presence. Our franchise partners continue to open stores and have already opened three to date with additional openings to follow. We continue to invest in resources in our digital and omni-channel expansion, which remains an important priority to drive growth for our brands. Our North American digital business with our PurePlay partners and our owned DKNY and Karl Lagerfeld Parasites was up over 60%. Our work with Amazon, Fanatics, and many sites operated by them, as well as other digital-only retailers, is paying off. And these investments have created digital capabilities that we are leveraging across our entire portfolio. We're excited about the opportunities ahead with these partners and believe this is just the beginning of the digital growth that we can create. A brick and mortar business across our department stores and our wholesale accounts is key. As customers continue to shop in store, our teams have done an incredible job of getting the right product and the right channels at the right time to maximize sales as evidenced by our strong performance in the quarter. We've created a differentiated business model to support our success at wholesale. Our teams are uniquely comprised of strong planners and merchandisers who partner with our designers to create data-driven designs which deliver desirable products. And on the sales side, they work hand-in-hand with our retailers to plan their buys, again, informed by our data, ensuring the appropriate product is in their stores and is well positioned on their floors on a timely basis. Our investments in analytics enable us to design and continually revise our lines to capitalize on the needs of the retailer. Additionally, a proven formula for building each category line creates a strong mix of product that meets consumer demand, creating some of the strongest sell-throughs that ensure we drive our retail partners and our business successfully. This makes us a best-in-class partner to retailers. Lastly, I'm pleased with our board refreshment efforts with three new independent directors having just recently joined us. Overall, we've added six new independent directors over the past four years. Our impressive list of new board members include Bob Johnson, founder and chairman of RLJ Companies and founder and former chairman of BET, Victor Herrero, the CEO of Australian brand Lovisa, and former Chief Executive Officer and Director of Guess. Patty Ogman, former Chief Merchandising Officer of Macy's and currently a leading fashion consultant. Dr. Joyce F. Brown, President of the Fashion Institute of Technology. Michael Schaefer, recently retired Chief Operating Officer and Chief Financial Officer of PVH Corp. and an external advisor to a number of fashion businesses, and Andrew Yeager, global head of Jefferies Strategic Equity Transaction Group. Each of them, along with our current board members and management team, provide independent, diverse, and valuable perspectives to G3. Having new points of view during this time in our company's evolution is important to better position us for the future. In conclusion, we've done a great job successfully executing our strategic priorities, and I feel great about our product, strength across our wholesale segment, digital increases, and our prudent inventory management, financial discipline, and enthusiasm of our team. Based on the strong second quarter performance and our order book, we have confidence to raise our fiscal 2024 outlook. We now expect fiscal 2024 net sales of $3.3 billion. We're raising our non-GAAP net income for diluted shares to be in the range of $3.20 to $3.30, compared to $2.85 in fiscal 2023. I will now pass the call to Neil for a discussion of our second quarter financial results, as well as guidance for the third quarter and full year fiscal 2024.