G-III has enough liquidity for acquisitions despite challenging times

By Devika Patel

Knoxville, Tenn., Sept. 7 – G-III Apparel Group Ltd. has sufficient liquidity to pursue acquisitions and growth, management reported Wednesday, despite having taken on millions of dollars of debt last quarter to acquire fashion brand Karl Lagerfeld, expected financial impact from inflationary pressures and supply-chain challenges.

G-III Apparel, a New York-based designer, manufacturer and marketer of branded apparel and accessories, had cash and availability under its credit agreement of over $730 million at the close of the quarter.

“We ended the quarter in a net debt position of $425 million compared to $8 million in the prior year,” treasurer and chief financial officer Neal Nackman said on the company’s second quarter ended July 31 earnings conference call on Wednesday.

“This increase is predominantly related to the Karl Lagerfeld acquisition in the quarter, which we funded with cash on hand as well as the increase in our inventory position.

“We believe that our liquidity and financial position provide us the flexibility to take advantage of acquisition opportunities and invest in our future growth,” Nackman said.

On May 2, the company said it has entered into an agreement to purchase the remaining 81% interest that it did not previously own in Karl Lagerfeld for €200 million, or $210 million. On June 2, the company said it had completed the acquisition.

The retail industry environment is changing and the company is taking a more conservative outlook for the rest of the year.

“The environment we operate in continues to be dynamic,” Nackman said.

“Accordingly, we are taking a more conservative outlook for the balance of the year and revising our guidance to include the expected impact from inflationary pressures on consumers and incremental costs associated with the current supply chain conditions, including the timing of receipts,” he said.

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