Yahoo Finance G-III CEO Morris Goldfarb Breaks Down His New Investment
Morris Goldfarb is standing on his own and loving it — looking beyond G-III Apparel Group’s now fading partnership with PVH Corp.’s Tommy Hilfiger and Calvin Klein and building a fashion empire of his own.
And it’s an empire clearly in growth mode.
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G-III, which topped first-quarter earnings projections and raised its outlook for the year, said it bought a 12 percent stake in Madrid-based All We Wear Group.
That stake is expected to grow to 20 percent over the next month or so and G-III has the opportunity to buy the company outright, significantly bolstering its international presence and adding some 500 stores to its business.
All We Wear Group, which is owned by M1 Group, L Catterton and founder Carlos Ortega, generates revenues of more than $650 million across 86 countries through its Hackett, Pepe Jeans and Façonnable brands.
All We Wear will now become the agent for G-III’s DKNY, Donna Karan and Karl Lagerfeld brands in Spain and Portugal, while the company also has the opportunity to tap into G-III’s operations in North America.
All together, it’s a very different deal than one Goldfarb, G-III’s longtime chairman and chief executive officer, once envisioned.
In an interview with WWD, Goldfarb, looking to describe where the company is today and how it got here, went back to before G-III’s $650 million acquisition of Donna Karan International in 2016.
“We were negotiating with PVH at one point to possibly combine both companies and their prior CEO, Manny Chirico, cited the fact that we don’t have a chit — the value of a brand as great as the value of the entity that we operated,” Goldfarb said. “Without the brand, we didn’t really have much. I went back home and said, ‘You know, maybe he’s right.’”
A deal to bring G-III and PVH never came together, but Goldfarb did go out and buy DKNY and Donna Karan, Vilebrequin and Karl Lagerfeld.
And owning those brands was vital for G-III when Chirico’s successor at PVH, Stefan Larsson, decided to undertake his own reinvention and moved in late 2022 to take back its licenses for Tommy Hilifger and Calvin Klein, which at the time made up about half of G-III’s sales.
If the move was a shock, it also clearly set Goldfarb free.
“Currently, most of our [capital expenditures go] into our own brand and our own business with assurance that we know what we’re doing,” Goldfarb said. “We have security in the assets that we’re building. We are clearly gaining market share with our brands.”
This year, the company has put big marketing dollars behind its DKNY business with the Heart of NY capsule collection and spring marketing campaign with Kaia Gerber and relaunched Donna Karan. (Last year, G-III’s Karl Lagerfeld brand stepped into the spotlight as the brand’s late namesake was the focus of the Met Gala).
“It’s the first time that we got a big vote, or maybe the only vote, on how marketing money is spent,” Goldfarb said of the boost to DKNY and Donna Karan. “Our people in the marketing area have stepped up.
“All the pieces are fitting right into place,” he said.
That’s true with the company’s finances too.
G-III’s first-quarter net income rose 79 percent to $5.8 million, or 12 cents a diluted share, from $3.2 million, or 7 cents a year ago, driven by a 130 basis point improvement in gross margins and cost efficiencies.
The bottom line was not just a big improvement from a year ago, but much better than the 3 cent loss analysts had penciled in, according to Yahoo Finance.
Sales for the three months ended April 30 inched up 0.5 percent to $609.7 million from $606.6 million, while inventories at the end of the quarter were down about 24 percent from a year earlier.
DKNY, supported by its Heart of NY capsule collection, saw double-digit sales increases. And the Karl Lagerfeld brand grew by almost 50 percent in North America, where it is now in 1,200 better department store doors.
G-III is getting back into its groove.
The company nudged up its guidance for adjusted earnings this year to a range of $3.58 to $3.68 a share, up from the $3.50 to $3.60 previously forecast.
The company also reaffirmed its sales guidance for the year, which calls for the top line to expand by 3 percent to $3.2 billion.
As the company syncs up with All We Wear, more international opportunities will present themselves.
“This collaboration is serious,” Goldfarb said. “It’s not only distributing our brands throughout Iberia [which includes Spain and Portugal], it is also collaborating and bringing Pepe, Hackett and Façonnable to the U.S. and parts of the world where they are not penetrated.”
Marcella Wartenbergh, CEO of All We Wear, said: “We are incredibly proud to have G-III, an industry leader with a track record of scaling brands, as our shareholder. We look forward to partnering together to propel the growth and European expansion of DKNY, Donna Karan and Karl Lagerfeld, leveraging our global brand platform, operational excellence and Indian market capabilities.”
For G-III, all of this change is happening in what has become an increasingly tricky consumer market. But for Goldfarb, that’s besides the point.
“The consumer goes to product that they want,” the CEO said. “We all use weather as an excuse. We’ll use the economy, anything that’s available as an excuse for business that just doesn’t achieve its projections.
“But at the end of the day, you create great product, great value, great fashion, something that the consumer can differentiate from run of the mill — you win.”
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