G-III Apparel Group, Ltd. (NASDAQ:GIII) Q1 2024 Earnings Conference Call June 6, 2023 8:30 AM ET

Company Participants

Neal Nackman - Chief Financial Officer

Morris Goldfarb - Chairman and Chief Executive Officer

Conference Call Participants

Edward Yruma - Piper Sandler

Will Gaertner - Wells Fargo

Mauricio Serna - UBS

Janet Joseph Kloppenburg - JJK Research Associates

Paul Kearney - Barclays

Noah Zatzkin - KeyBanc Capital Markets

Dana Telsey - Telsey Advisory Group

Operator

Good day and thank you for standing by. Welcome to the G-III Apparel Group First Quarter Fiscal 2024 Earnings Conference Call. [Operator Instructions] Please be advised that today’s conference is being recorded. I would now like to hand the conference over to your speaker today, Neal Nackman, CFO. Please go ahead.

Neal Nackman

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.

Morris Goldfarb

Thank you, Neal, and thank you, everyone, for joining us. We had a good start to the year. In the first quarter, our team worked hard to successfully navigate what remains a challenging environment where we exceeded both our top and bottom line guidance.

For the first quarter of fiscal 2024, net sales were $607 million, above our guidance by approximately $45 million. Non-GAAP net income per diluted share was $0.13, exceeding the midpoint of our guidance by $0.23. As expected, gross margins were significantly better than last year’s first quarter.

We made strong progress rightsizing our inventory position by reducing future buys to account for the product that we’re carrying. We sequentially decreased inventory from last quarter by $80 million and ended with balances up approximately 15% to last year or up 8%, excluding the acquired Karl Lagerfeld inventory. Further, as port congestion and lead times have normalized, we adjusted our warehouse space appropriately. Importantly, we expect this trend to continue throughout the year, driven by freight costs moderating and not needing to anniversary significant logistical costs, primarily incurred in last year’s third quarter.