G-III Apparel Group, LTD.

Good day, and thank you for standing by. Welcome to the G3 Apparel Group's fourth quarter and full fiscal 2024 earnings conference call. At this time, all participants are now listen-only mode. After this presentation, there will be a question and answer session. To ask a question during this session, you'll 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 hand the conference over to your first speaker today, Neil Nachman, Chief Financial Officer. Please go ahead, sir.

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

Thank you, Neil, and thank you everyone for joining us. Full year 2024 was an important year for G3. I am proud of the strong results our team delivered. We've accelerated our long-term strategic priorities and developed new opportunities as we transition out of our Calvin Klein and Tommy Hilfiger businesses. The strength, relevance, and recognition of our brand, along with our powerful corporate foundation, enables us to deliver a product that inspires and creates exciting brand experiences for consumers. We successfully navigated through another year in a tough dynamic retail landscape. We believe the consumer environment continues to remain under pressure as we enter the new year, but have a strong plan in place to drive our business. We're investing for the future, and I'm excited about our path forward as a global leader in fashion. Now I want to share a few significant highlights from the year. In fiscal 2024, we grew the sales penetration of our businesses, excluding Calvin Klein and Tommy Hilfiger, by 7%. As a result, our go-forward brands represented approximately 60% of our total company sales in fiscal 2024, and we anticipate this penetration to further grow closer to 70%, increasing our top line by over 3%, in fiscal 2025 while we continue to scale down Calvin Klein and Tommy Hilfiger. We successfully launched Donna Karan, one of the most iconic American brands, which has just hit retail selling floors. With a fantastic collection supported by the largest marketing campaign ever for G3 and a new fragrance launch, the response from customers has been incredible. This validates our belief that the brand has a significant runway ahead. We solidified and went to market with three additional growth initiatives with Nautica, Halston, and Champion, all of which are highly respected brands. We're investing in talent for our future growth and hired Dana Perlman in the newly created role of Chief Growth and Operations Officer as part of our executive leadership team. Now let's review our full year and fourth quarter 2024 financial results. Full year non-GAAP net income per diluted share increased 42% to $4.04 from $2.85 in the prior fiscal year and 85% to $0.76 compared to $0.41 in last year's fourth quarter, both above our guidance. Net sales for the full fiscal year were $3.1 billion compared to $3.23 billion last year and $765 million for the fourth quarter compared to $854 million last year. The fourth quarter top line relative to our plan was impacted by warm weather as well as the consumer environment, which remains challenging. Gross margins expanded by over 600 basis points for the full year. This was driven by disciplined inventory management, moderation of freight, a greater mix of our own brands, and AUR improvements. We believe current gross margin levels are sustainable into the future, and we further strengthened our credit profile ending the year in a net cash position compared to last year's net debt position of 1.6 times. This is after having paid down $125 million in outstanding debt and repurchasing $26 million of our own stock. Currently, we have over a billion dollars in liquidity. Now let's review some of the key results. We're a partner of choice and have strong relationships with a diversified retail network. Our data-driven approach not only prioritizes the consumer at the heart of everything we do, but also enables us to create collections in over 20 categories across our 30-plus brands with a broad range of fashion. Categories that drove the quarter included outerwear, dresses, sportswear, handbags, and suit separates across our key brands. The team sports division had a good quarter and year. We again renewed our NFL and Major League Baseball licenses. Nautica Jeans just launched for spring in over 200 doors and online with our retail partners and is off to a great start. In addition, We're also selling to the brand's global distribution network and will expand into a broad range of additional categories over the next few years. We believe Nautica can predominantly fill the void of our current Tommy Hilfiger business. Halston is coming to life. Our designers extensively reviewed the archives, which helped develop our sophisticated and modern take on the collection, which was very well received in fall market. As the master licensee, we can sub-license to expand into additional categories and share in the revenue, generating another income stream. With full control of the business, we see the annual net sales potential of over $500 million. Our new champion, Attawear, had a good first market with deliveries available for fall of 2024. For fiscal 2024, our go-forward brands, excluding Calvin Klein and Tommy Hilfiger, registered high single-digit growth, while our total sales declined 4%. In fiscal 2025, we're expanding into new lifestyle categories to extend their reach and see a tremendous opportunity to capture market share, particularly internationally. Specifically, we're working with new distribution partners to grow into new categories. We believe the overall sales and profitability for the go-forward brands have a runway for expansion, and we are investing to deliver outsized growth. These go-forward brands will account for almost 70% of our revenues in fiscal 2025. One of our most important initiatives this year was the development of Donna Karan, which just launched at retail in the US. Inspired by the archives, we've designed a collection centered on empowering women that captures the brand's ethos timeless elegance, and accessible luxury, tailored to meet the full lifestyle needs of today's customer. We invested heavily to support the launch in several ways. First, with an incredible marketing campaign featuring eight iconic models spanning several generations, all of whom have a connection to the brand. I'm thrilled we have some of the biggest names in fashion, including Cindy Crawford, Linda Evangelista, Carolyn Murphy, Amber Valletta, Karlie Kloss, along with renowned photographer Annie Leibovitz. Second, we enhanced the Donna Karan website with a new look and feel where consumers can better experience the power of the brand. With our fragrance partner, Interparfum, we launched the cashmere collection to complement the brand's iconic cashmere mist fragrance, which will extend the brand's presence. I'm extremely pleased at the reaction to the new Donna Karan collection. Our marketing campaign received major excitement and global attention with over 5.5 billion impressions in the United States and growing. We're already seeing the results with the initial product. A Donna Karan product commands higher AURs than most of our other brands and is resonating with consumers and selling through almost immediately. Retailers have already increased their buys for the second half of the year. This launch is just the beginning of a new era of fashion for Donna Karan, and we're committed to building a lasting brand equity. We plan to expand the brand globally and now see a billion dollar annual sales opportunity over time. DKNY is well established in the contemporary fashion space and is known for merging modern tailoring with sophisticated ease, celebrating the aspirational and practical spirit of New York. In North America, DKNY grew high single digits and we saw strength across most of its core categories. The total brand grew low single digits as we repositioned our international presence. We pruned some of our non-core accounts and product offerings. In Europe, we're focused on elevating our wholesale presence through capsule collections and pop-up experiences to expand the brand. In addition, we're also accelerating our digital footprint with Zalando and other key pure player partners. We brought renewed energy to DKNY with new investments this spring by designing contemporary styles that are fashion forward for younger consumers that complement our core offerings of the collection. We launched a new highly relevant spring marketing campaign with supermodel and actress Kea Gerber, Cindy Crawford's daughter, as the global face of the brand. This campaign taps into the younger appeal of DKNY and generated over 626 million press and social media impressions. Additionally, at the end of the month, We're activating a new capsule collection, Heart of New York, with CAIO, which will create buzz and excitement around DKNY. These initiatives will all drive global awareness and are focused on energizing the brand to connect with consumers. We see many untapped growth opportunities, particularly internationally, and believe there's a billion-dollar annual net sales potential for the brand over the next few years. As a reference point, when we launched the brand in 2017, it did virtually no sales in North American wholesale channel. As a result of our team's execution, DKNY sales approached $650 million, and if you include our licensees, a global retail sales to consumers were over $2 billion for fiscal 2024. With a full year of owning Karl Lagerfeld, we're pleased with the brand's performance. Karl was an icon in the fashion industry. The international business experienced mid-teen growth in fiscal 2024 as we expanded its reach in Europe through wholesale and retail store openings and entry into new markets and categories. Here in North America, Karl Lagerfeld Paris also performed well. growing in high single digits with ample runway as we expand into additional categories. This year, we'll launch suit separates and expand sportswear and dresses into additional doors. Karl Lagerfeld, as the theme of the Met Gala, received global recognition and exposure, which was complemented by capsule collections along the many global activations. Further, we opened its first five-star luxury hotel in Macau and have six projects in the works. We're leveraging the power of the Karl Lagerfeld name and his vision to extend the lifestyle appeal and global awareness of the brand while delivering incremental licensing revenue. In fiscal 2024, the brand approached $500 million in reported net sales including our licensees, global retail sales to consumers, were over 1.5 billion. In fiscal year 2025, Karl Lagerfeld is expected to grow solid double digits. We see greater than a billion dollars in annual net sales opportunity for the brand. Villebrecan, our luxury brand inspired by the sea and Saint-Tropez lifestyle, experienced double-digit increases in fiscal 2024, driven by growth into new markets through distribution partners and new stores. The newly opened location in Paris, Rue de la Paix, which offers a higher penetration of our luxury line, enabled us to increase our store AURs by double digits. We will incorporate this luxury product into wider range of our stores and distribution channels. We're very pleased with the first ever beach club and restaurant for Vilbercon in Cannes, bringing the brand to life on the water. We've quickly leveraged the concept to additional initiatives. In fiscal 2025, we have a newly opened beach club in Abu Dhabi and a few more in the works. Going forward, we're focused on expanding the lifestyle product assortment to extend our consumer reach and now believe there's an annual net sales potential north of $500 million over the long term. As we transition from Calvin Klein and Tommy Hilfiger over the next few years, our brands, Donna Karan, DKNY, Karl Lagerfeld, Nautica, Halston, and Vilbreken will be our core brands. They have significant opportunities across the board, including internationally, where they're underpenetrated. Digital remains an important priority, and we made significant investments to grow our capabilities this year. We've put an increased focus on rapid expansion with the PurePlay channel, where we've added dedicated talent to support these platforms. PurePlay sales for the year increased 10%, and our Amazon business further outpaced this performance. These efforts helped offset the moderation in traditional retail partners' digital channels. The speed at which PurePlay sales have grown makes clear the market share opportunity we have with this channel. Our European brands have built successful digital businesses with Zalando and other third-party digital marketplaces And we're leveraging these capabilities across our portfolio to build the digital business of our other brands. We're also accelerating a drop ship in partner programs to further provide tailored brand assortments on our third-party marketplaces. And we're also upgrading our own digital websites to enhance consumer engagement, conversion, and site performance. In our retail business segment, we were disappointed in the results. We're already executing on plans that include management changes, reducing our store footprint, and more importantly, rebasing the merchandising strategy for the retail business to present a better brand experience to consumers. We expect these changes will enable us to significantly reduce losses from fiscal 2024 levels. In conclusion, we ended our fourth quarter and full year delivering non-GAAP earnings that beat our expectations. We've laid out the foundation for our path forward. Our team's versatility, best-in-class design and merchandising experience, and retail relationships have allowed us to move quickly to develop our new initiatives and bring them to market. Looking ahead, we're optimistic about fiscal year 2025 with our new launches and continued growth of our own brands. As we build new brands this year, we will invest in high-impact global marketing to continue excitement, storytelling, and momentum for these fashion collections. And we'll also invest in infrastructure and talent to expand our operational capabilities to deliver our long-term strategies. As we've entered fiscal 2025, we continue to believe that the consumer environment will remain under pressure. We expect net sales to be approximately $3.2 billion, a growth of over 3% compared to this past year. We expect non-GAAP earnings per share in the range of $3.50 to $3.60 which reflects the investments I just spoke about. Our objectives are clear. Leverage our unique culture and continue to grow on a global scale. Focus our investments on key brands to drive long-term growth as we transition out of Calvin Klein and Tommy Hilfiger. Invest and involve how we operate by leveraging technology and data while identifying efficiencies across our organization to support our global growth. Implement and execute the retail business segment around the plan. We believe our strong financial position provides us flexibility to invest in our growth, explore strategic transactions, and opportunistically return capital to our shareholders. I'm confident in G3's future as a global leader in fashion. I'll now pass the call to Neil for a discussion of our fourth quarter and full year financial results, as well as our fiscal 2025 outlook.