.. Annual Report DD
I Form 10-k ,LT , LT
PP I 2004
G-III APPAREL GROU APPAREL G-IIIG-III APPAREL GROU G-I WOMEN’S MEN’S SPORTS G-III
C ECE CORD SPORTS
Major League Baseball
National Football League
Major League Baseball
Collegiate
National Football League Jones New York MEN’S Kenneth Cole
Cole Haan
Sean John
Black Rivet
Izod WOMEN’S Siena Studio
Black Rivet
Cole Haan
Nine West
House of Deréon by Beyoncé Jones New York Shareholders' Letter
Dear Shareholders,
While we were not satisfied by the financial results we have positioned our business advantageously for we experienced in fiscal 2005, we believe that our fiscal 2006 and into the future. Company is well positioned for the future. There was a sharp decline in the popularity of fashion In terms of our business mix, we looked to add new vintage sports apparel–which had excellent results in programs and made excellent progress in this regard. fiscal 2004. However, sales of this type of product First, we augmented our mix with some great new busi- decreased dramatically in fiscal 2005. Our results nesses. We are excited to have recently signed a men’s were also impacted by a slow start to the outerwear and women’s outerwear license with Phillips-Van Heusen season in general. Promotional efforts started sooner for the IZOD brand. This line will be inspired by a than normal as retailers looked to rebound from poor culture of sport and leisure and will be targeted at a early season sales. As a consequence, our results of 25 to 45 year-old customer with a modern relaxed operations were negatively impacted by higher levels attitude towards dressing. of off-price sales, allowances and markdowns than we initially anticipated. We have also signed a new license with House of Deréon, a brand by the entertainer, Beyoncé Knowles. For the 2005 fiscal year that ended January 31, 2005, Beyoncé is one of the most sought after entertainers in we reported net sales of $214.3 million compared to our country today. The brand has great style and a $225.1 million last year and net income of $703,000, or clear message for the consumer. We expect to launch $0.09 per diluted share, compared to $8.4 million, or this line for the 2005 holiday season with an 18 to 28 $1.14 per diluted share, last year. year-old target consumer. We also expanded our license with Kenneth Cole to include the men’s outer- Fortunately, these results do not tell the whole story. wear business. Kenneth Cole’s men’s outerwear is We have made good strategic and operational progress already established in the marketplace and will be a over the course of the year. Our main initiative was to good addition to our business. make our Company more competitive and efficient. We took a hard look at our business from a number of Many of our existing lines continue to be well positioned. standpoints and are addressing our business mix, our We are pleased with our core sports business, which is sourcing and our distribution infrastructure. We believe off to a good start this year. Cole Haan and Sean Jean, Net Sales ($000) Gross Profit ($000) Diluted Earnings per Share
250,000 $2.00
70,000 200,000 60,000 $1.50
150,000 50,000
40,000 $1.00 100,000 30,000 $0.50 50,000 20,000 10,000 0 0 0102 03 04 05 0 0102 03 04 05 0102 03* 04 05**
* Includes a charge of $3.4 million, net of tax, associated with expenses related to closing the Company’s manufacturing facility in Indonesia. ** Includes a charge of $.9 million, net of tax, associated with the sale of the Company’s joint venture interest in China.
both of which are strong brands, are also performing While growing the revenue base is important, we have very well. We continue to develop our own Black Rivet also pushed for efficiency. We reviewed our staffing brand and are encouraged by its prospects. Coming levels on a Company-wide basis. In addition, by moving on the heels of a successful launch of the Black Rivet our primary sourcing offices to China from Korea, we women’s line, we expect to introduce Black Rivet men’s will be able to work closer with our vendor base, incur outerwear for the fall 2005 season. Our Jones Wool lower staffing costs, and expect to be able to improve line should deliver another successful year. Finally, we our margins. Additionally, in the year ahead we will be are looking forward to expanding our distribution of almost doubling our internal warehouse capacity to over the CeCe Cord brand, given the continuing strength 200,000 square feet. We believe this expansion will help of the luxury market. us ship better and more efficiently.
Retailers and apparel manufacturers are merging at a With renewed focus on how we allocate our resources, rapid pace and retailers have indicated a desire to more efficient sourcing and distribution operations, and deal with fewer vendors. There is continued pressure initial development of our new properties, we begin the on margins as average retail prices continue to drop. current fiscal year in a much stronger position and expect We believe our strategy of focusing on branded products improved results for our shareholders in fiscal 2006. that are distributed across all retail channels is sound. As a result of our continued attention to design, As always, I would like to again thank our employees quality and value, we believe we are well positioned for their persistent dedication and hard work, our retail to respond to the consolidations taking place. We partners for their continued commitment to us, and, lastly, also believe our strong operational capabilities will our shareholders for their unwavering support. continue to make us a leading vendor of choice for our retail partners.
As part of our growth strategy, we continue to evalu- ate strategic acquisition candidates in order to foster Morris Goldfarb our growth, further diversify our business, and enhance Co-Chairman and Chief Executive Officer shareholder value. Financial Highlights
($000 except per share data)
Fiscal Years Ended January 31 2001 2002 2003 2004 2005
Net Sales (a) $ 187,398 $ 201,855 $ 203,301 $ 225,061 $ 214,278
Net Income $ 11,154 $ 2,364 $ 382(b) $ 8,376 $ 703(c)
Diluted Earnings Per Share $ 1.57 $ 0.32 $ 0.05(b) $ 1.14 $ 0.09(c)
Working Capital $ 41,931 $ 46,140 $ 47,260 $ 57,388 $ 59,868
Total Assets $ 71,952 $ 67,701 $ 70,956 $ 80,696 $ 80,595
Stockholders’ Equity $ 52,142 $ 54,813 $ 55,748 $ 65,272 $ 66,930
Return on Stockholders’ Equity 21.4% 4.3% 0.7% 13.9% 1.1%
Book Value Per Share $ 7.86 $ 8.18 $ 8.11 $ 9.19 $ 9.20
Common Shares Outstanding (excluding shares held in Treasury) 6,633 6,699 6,876 7,103 7,277
(a) Amount for fiscal years 2001 through 2004 have been reclassified to conform to the current year presentation.
(b) Includes a charge of $3.4 million, net of tax, associated with expenses related to closing the Company’s manufacturing facility in Indonesia. (c) Includes a charge of $.9 million, net of tax, associated with the sale of a joint venture interest in China. SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549
FORM 10-K