G-III shares tumble on downbeat outlook

Investors dumped shares of G-III Apparel, after the company behind brands like Ivanka Trump and Calvin Klein, issued disappointing outlook and swung to a loss in the fourth quarter.

G-III shares fell more than 13 per cent to $19.90 on Monday and were poised for their steepest one-day drop since August 2016 after the company said it expects to report a loss between 35 to 45 cents a share in the current quarter. That was wider than Wall Street expectations for a loss of 9 cents.

G-III also forecast net sales of about $500m, shy of analysts’ estimates of $555.6m.

The New York-based company fell to a loss of $20.1m or 42 cents a share in the three months ended in January, compared with a profit of nearly $8m or 17 cents a share in the year ago period. Adjusting for one-time items the company reported a loss of 16 cents that missed analysts, estimates of a smaller loss of 10 cents a share.

The company’s bottom-line was impacted by charges tied to its acquisition of the Donna Karan business last year and $10.5m in asset impairments.

Net sales rose 14 per cent from a year ago to $603.3m and included $29m in sales from Donna Karan, but for the full-year, they were up a more modest 2 per cent.

“Achieving revenue growth this past year has been challenging across the industry,” Morris Goldfarb, chief executive, said. “A second consecutive year of soft retail traffic and unseasonably warm weather combined with accelerated consumer migration to e-commerce all caused pressure to traditional retailers this past year”.

The retailer also said it was closing a third of its Wilsons and Bass stores — with 60 expected to be shuttered by the end of this fiscal year and another 55 the following year.

The company made no mention of how the Ivanka Trump brand performed. The brand was dropped by Nordstrom earlier this year, after the department store said the brand was selling too poorly and a handful of others followed suit. US president Donald Trump took to Twitter to defend his daughter’s brand and say that she was being treated unfairly by the department store.

Ms Trump’s brand has been targeted by the #GrabYourWallet campaign which encourages consumers to boycott stores that do business with the Trump family.

With Monday’s drop G-III shares are now down nearly 33 per cent so far this year.