Branded apparel and accessories maker G-III Apparel Group is to close all of its Wilsons Leather and GH Bass stores as it restructures its retail operations to try to reduce losses and position the segment as a profitable contributor to the business.
The company expects to incur a charge of about US$100m in the second quarter in relation to the move, which will see the closure of 110 Wilsons Leather and 89 GH Bass stores.
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It has hired Hilco Global to assist in the liquidation, which will begin immediately or as stores reopen.
“We have completed a comprehensive review of our retail operations segment. With a focus on enhancing shareholder value, we have made the difficult decision to close all of the Wilsons Leather and GH Bass stores and have entered into agreements for the early lease termination of a significant majority of these stores. We believe that this restructuring plan will enable us to greatly reduce our retail losses and to ultimately have this segment become profitable,” said chairman and CEO Morris Goldfarb.”
G-III Apparel’s wholesale business, anchored by its five global “power” brands – DKNY, Donna Karan, Calvin Klein, Tommy Hilfiger and Karl Lagerfeld – will continue to be the primary growth and profit engine for the company.
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Once the restructuring is complete, the company’s retail operations segment will initially consist of 41 DKNY and 13 Karl Lagerfeld Paris stores, as well as the e-commerce sites for DKNY, Donna Karan, Karl Lagerfeld Paris, Andrew Marc, Wilsons Leather and GH Bass.
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By GlobalDataThe news comes as the company reported a net loss for the first quarter ended 30 April of $39.3m. This compares to net income of $12m in the prior year period. Net sales, meanwhile, tumbled 36.1% to $405.1m from $633.6m last year.
While the company did not provide any guidance for fiscal 2021, Goldfarb added: “We are in a strong financial position. We believe we will demonstrate our leadership position in the fashion industry as we emerge from this crisis.”
Susan Anderson, analyst at B Riley, notes: “We were impressed with G-III’s ability to shift sales online through its wholesale partners as management noted that online sales will likely make up 33% of revenue now in 2020. We expect G-III to continue to shift sales to where the consumer wants to purchase, including potentially to other off-mall department stores and even mass longer term.
“While we still see near-term pressure from Covid, with G-III’s strong brands we expect them to take market share as the retail sector consolidates.”
