New York-based G-III Apparel Group Ltd on Wednesday posted a sharp fall in annual profits as it was hit by the economic fall-out of the US terrorist attacks and mild weather.

The firm, known for its leather and non-leather outerwear apparel, reported net income of $2.4 million, or $0.32 per diluted share, in fiscal 2002, compared to net income of $11.2m, or $1.57 per diluted share, in fiscal 2001.

Net sales for fiscal 2002 increased to $201.4m from $187.1m in fiscal 2001, but fourth quarter net sales slipped to $30.7m from $41.1m in the year-ago period.

Morris Goldfarb, G-III's CEO, commented: "This past fiscal year was hallmarked by one of the warmest winters on record, a slowing economy, and the tragic events of September 11th.

"While any of these events individually would have had an impact on our business, the combination of them created challenges unlike any year in our history. While our results certainly reflect the adverse conditions we were operating under, I am proud of the way we managed through these conditions and believe that our organisation is more focused than ever before. Our inventories have been pared down and are in good shape and our balance sheet remains strong."

He continued: "We are cautiously optimistic about the current fiscal year as we seek to capitalise on several new opportunities that we have developed. Even in the current challenging environment, we believe we can deliver good results."

He added the company, which has fashion licenses with Kenneth Cole Productions, Nine West Group, Timberland, Cole Haan, Jones Apparel Group and Sean John, expects revenue to drop five per cent in fiscal 2003, but sees earnings growth in the second half of fiscal 2003.