Welcome to the G-III Apparel Group Second Quarter Fiscal 2015 Earnings Conference Call. My name is Loraine and I will be your operator for today's call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. Please note that this conference is being recorded. I will now turn the call over to Mr. Neal Nackman. Mr. Nackman, you may begin.

Thank you. Before we begin I would like to remind participants that certain statements made on today's call and in the Q&A session may constitute forward-looking statements within the meaning of the Federal Securities Laws. Forward-looking statements are not guarantees and actual results may differ materially from those expressed or implied in forward-looking statements. Important factors that could cause actual results of operations or the financial condition of the company to differ are discussed in the documents filed by the company with the SEC. The company undertakes no duty to update any forward-looking statements. In addition, during the call we will refer to adjusted EBITDA, which is a non-GAAP number. We have provided a reconciliation of adjusted EBITDA to our net income according to GAAP in our press release and on our website. I will now turn the call over to our Chairman and Chief Executive Officer, Morris Goldfarb.

Good morning. And thank you for joining us. With me today are Sammy Aaron, our Vice Chairman; Wayne Miller, our Chief Operating Officer; Neal Nackman, our Chief Financial Officer and Jeff Goldfarb, our Director of Strategic Planning. We had a strong second quarter with our financial performance beating both last year and our forecast. Our broad diversification, careful planning and ability to focus and execute across the organization enabled us to drive broad growth. I would like to start with a few highlights from the quarter. Our net sales were up 39% to $424 million. This was better than our plan. Similar to the first quarter, our growth reflects significant outperformance in our wholesale business. Our specialty retail sales primarily located in outlet centers were somewhat weaker than planned. We reported net income per diluted share of $0.29 compared to $0.19 per share last year. This was also better than our plan. Our inventory position is clean and this puts us in good shape for the second half. As Neal will detail, we are increasing our net income guidance to reflect the strong second quarter. In June, we successfully completed the secondary offering that resulted in net proceeds to the company of $129 million. This strength in capital base helps to ensure the continued implementation of our long-term growth strategy. Our wholesale business which represented about 76% of our net sales in the quarter performed well. Calvin Klein continues to occupy a strong position with consumers and is prominent across the floor sets of our department to our customers. Our dress business had another strong quarter led by Calvin Klein. We are also pleased with the performance of the balance of our brands in dresses including Eliza J which was a standout performer, Jessica Simpson, Guess?, Jessica Howard and Vince…

Thank you. Net income for the second quarter was $6.2 million, or $0.29 per diluted share, compared to net income of $3.6 million, or $0.17 per diluted share, in the prior year's comparable period. Net sales for the quarter ended July 31, 2014 increased 39% to $424 million from $304 million in the same period last year. Net sales of licensed product increased to $254 million from $202 million, driven by increase sales of Calvin Klein license product primarily in women's performance wear and outerwear categories across several brands. Net sales of non-licensed products increased to $87 million this quarter from $70 million in the comparable quarter of last year. This increase is primarily related to an increase in net sales of private label programs. Net sales of our retail operations increased to $100 million from $41 million in the prior year primarily attributable to the addition of net sales from our G. H. Bass business acquired in November 2013. In addition, Wilsons had increased sales as a result of new stores. Our gross profit percentage was 34.9% in the three-months period ended July 31, 2014 compared to 32.7% in the prior year's period. The gross profit percentage in our licensed product segment was 27.3% this quarter compared to 27.1% in the prior year. The gross profit percentage in our non-licensed product segment was 37.8% compared to 34.9% in the prior year, this increase was attributable to higher gross margins in the Jessica Howard and Eliza J dress lines. The gross margin percentage in our retail operation segment was 45.6% compared to 49% in the prior year's period. The decrease was primarily due to our new G. H. Bass business operating at a lower gross profit percentage than our overall retail business and a higher markdowns granted by Wilsons. Total…

We are pleased to have beaten plan in the second quarter and to be in a position to increase our full year net income guidance. We are executing well in an overall tough retail environment. We continue to challenge ourselves to do better. We are intensely self aware and self critical. This is particularly true in the context of our growth strategy which calls for both organic and acquisition growth. Our latest acquisition project Bass is on a good path. But still requires careful management to achieve our goal. Our long term goals incorporate not only a strong outlet business but also the reestablishment of a full price Bass wholesale business. And as a brand owner the potential for licensing income. I think that before long, this will be another good example of our ability to reinvigorate a struggling or neglected but essentially sound business. I would like to thank our shareholders and analysts on the call today for your continued interest and support. Our customers and partners for their contribution to our success and our employees and management team for their continued hard work and dedication. Our fiscal 2015 is progressing well and we are excited about the opportunities we have in the second half. Thank you, operator. And we are ready to take some questions.

(Operator Instructions) And our first question comes from Erinn Murphy from Piper Jaffray. Please go ahead.

Great, thank you, good morning. And congratulation on an excellent second quarter. Morris, I was just hoping for you if you could maybe just help us understand how you are viewing the M&A environment right now? What kind of profile are you looking at if you think about acquisition that some of the money that you raised during your offering could be worked towards?

We are pretty consistent. What we are looking for is a brand that should be a global brand but if not global at least an American brand that we can transition overseas. We'd like it to be a brand that is established, has a management team and has the capability of expanding from where it currently sits in multiple classifications and direct-to-consumer through online initiatives as well as brick-and-mortar.

And in terms of just the overall environment right now, how has that just M&A environment kind of evolved over the last couple of months since the offering?

We have been fairly aggressive. We continue to look at opportunities. There are some that exist. They are not very easy to harness and bring to closure. But we spend a good deal of time looking at appropriate opportunities.

That's great to hear. And then, Neal, for you just on the Bass dilution during the second quarter. Could you just help us break out how dilutive that was? And as we think about the back half of this year, what's the potential for that deal to start being accretive as we get into the third and fourth quarter?

Yes, so Erinn, we are not giving out the specifics because the businesses are now intertwined with the Wilsons' business. It's certainly there were losses at the four wall basis that were greater than we had anticipated, and we are a little disappointed, we thought that this even could have been the best acquisition this year, it could have been somewhat a neutral event. We are thinking that certainly for the full year, this year it will be dilutive. We are still very confident and hopeful that in the fourth quarter we start to see some positive results both top line as well as operating profit on the business. And as Morris indicated, all of the things that we are doing at the store level including changing the merchandising, getting new merchandizing and we hope will help us be able to make that come true in the fourth quarter.

Erinn, I might add that really for the last week or 10 days, we are seeing improvements in Bass as our new product hit stores. I think we've done some amazing things in short period of time. The blunder that we made -- I mean I call it blunder is that we exited the transitional services that PVH was doing for us. We thought that it was time for us to move on and integrated into Wilsons', we could have used another three months. So, the product is now refined. And if you walk into a store today and you have a memory of walking into one six months ago, you'd see a definitive difference in the way you are treated as you walk in, the store appearance and as of the last week or 10 days you are seeing different products. So, I think the combination of all that we achieved is really a great story for the future.

Thank you. And our next question comes from Rick Patel from Stephens, Inc. Please go ahead.

Hi, good morning, everyone. Congrats on the excellent quarter. As we think about the Bass accretion beyond the share, do you see this is something that's more gross profit or SG&A oriented? I am curious whether where the upside is really going to come from? And then beyond this year, how do we think about the growth profile for this concept? Will sales look to grow in the low-single digit range or is it high-single digit? Any kind of color there.

Yes. We stepped into a business that has been trending down and not making money. So, we have lots of improvement across lots of different areas. The sales productivity per square foot is in the mid 200s, mid-to-low 200s. We think that there is surely tremendous amounts of upside in terms of that productivity on the top line. The gross margins are in the low 40% range. We think that there is no reason why those shouldn't improve up into certainly the 50% range. I think that as we continue to do that we will see SG&A leverage. So, there is really a lot of plenty of potential to improve the retail part of the footprint. And then we also think it's a great brand in terms of expanding towards the wholesale as well as potentially international expansion as well. So, really the brand has potential on many different levels and we expect to exploit them all.

Rick, I am going to add that a little bit. We have a couple of very important licenses that we've signed. And we have many more that we believe we will be signing for the brand. PVH is doing the men's apparel, they are shipping as a literally as we speak an initiative to Macy's for 300 doors showcasing the men's apparel piece. We generate -- we will generate income from licensing revenue from PVH. And we've signed very unique license for footwear with the UK- based firm called Overland. Overland is in my opinion one of the premier footwear wholesalers in Europe. And they are taking this initiative very seriously. And we plan on taking the women's apparel and developing a strong collection in-house. And there are several other categories that they -- we've seen a good deal of interest to sign licenses for so you will see some major changes over the coming months.

All right. That's great to hear. And then also have a question on sourcing cost going forward. Cotton prices have come down a lot this summer. I am curious what this means for your business in terms of the margin opportunity next year? If you can highlight just how much cotton represents, perhaps as a percentage of your cost-to-good that would be very helpful? And if you can also highlight, if we do see a benefit next year, around which quarter would we see that flow through?

Well, cotton is not an important commodity for us. And if we go back to Bass, the first thing that resonates for me, Bass might be the area of their business that would use fair amount of cotton. And it's not a very big component to our business. So, the impact would be negligible. Our down business which is a big component to our overall outerwear business, we should see a margin enhancement for the future. The price of down has come down as we begin to plan our business for next year, I think the opportunities are significant for enhanced margin for the coming year in the down business.

Thank you. And our next question comes from Edward Yruma from KeyBanc Capital Market. Please go ahead.

Hi, good morning. And congratulations on outstanding quarter. Morris, you mentioned that there were some early receipts of outerwear, I guess from a modeling perspective or flow perspective, how should we think about the implications for the balance of the year given the seasonality of that business?

I can only give it to you by comparison. Our outerwear business year-to-date is little bit stronger than it was a year ago. We get an early read from Nordstrom's in their anniversary sale and one of our items-- actually it was kind of call item was possibly the best outerwear piece in the sale, that's strong indication, it gives comfort classification that we produced for the catalogue that will prove out to be good classification for us for the future. And our business at Macy's is showing strength compared to last year. So, we are comfortable that we are on the road to having good season.

Great. And there seems to be lots of discussion in the industry about weakness in the women's sportswear, I know both Calvin and Kensie had solid quarter, so I guess as we think about those businesses going forward, are you concerned about inventory levels at retail and I guess how do you expect to outperform what looks to be a very struggling sub sector? Thank you.

No. We generally that company that achieves in the struggling environment. We know that we have challenges. We believe that we can enhance our design which we are doing currently for Calvin Klein to help itself design quality and pricing is a key component to how you might perform. We can control those. We can't control weather; we can't control the economic environment. But we do everything that is humanly possible to insulate ourselves from failure. And we are just that company that figures it out and if we are down a path that proves out to be a path that is not profitable we make our changes immediately. We are still small enough where we can react and respond and correct the path that might not be the suitable path for a season. So, we are comfortable with both our sportswear brands. And Ed, you are right, it is a tough classification. It's challenging, delivering are constantly flowing and you need to ensure yourself that your old deliveries are selling through as fast as humanly possible to make room for new deliveries and we do that. We have people on the floor, we spend an enormous amount of time in analyzing pricing, the flow of product, the presentation of product and the combination of all of it seemed to work for us.

Thank you. And our next question comes from Joan Payson from Barclays Capital. Please go ahead.

Hi, good morning and congratulation on the great results. Just in terms of the top line growth, you had very strong organic growth in the first half of the year. And it looks like full year guidance implies some deceleration in the back half. Could you maybe talk a little bit about what's driving that?

What happened in the second quarter was a little bit accelerated shipping on the outerwear side. And we are kind of responding to it. Do we -- we don't want to be too aggressive. We believe we had really good second quarter. But we are still in the early stage of our business cycle is a big percentage of our outerwear business is done in fourth quarter. We have a large dependency on fourth quarter sales through stores and sale- throughs at the store level, when we look at some of our other businesses, we look at Bass, and Bass is kind of a level business throughout the year. And if you look at Wilsons' and you look at our outerwear business skewed quite heavily towards November and December sales. And their visibility is just not clear enough. Today, they respond in more aggressive form but we are comfortable that it's -- we are in really good shape for the year. Our order book is strong. The qualities of the orders are very, very good. So we arrive at what we believe is a fair estimate for the remainder of the year.

Okay, great. And then on the promotional side, could you just talk a little bit about the promotional environment in the quarter? Maybe what you have seen in August since then? And then you did mention the clean inventory position right now, is there a way for us to think about the inventory increase or what has been excluding G. H. Bass? And also if just the overall marketplace is better positioned on inventory?

Just taking the last part of the question first. I indicated that the increase in inventory without G. H. Bass is about 16% which is certainly more in line with the forecasted sales growth.

Addressing the promotional component of our business. We are highly depended on department store margins and when business is tough the tendency is our retailer response with creating a unique promotion to drive business. As the foot traffic is not what retailers expected to be, they tend to promote product and try to bring foot traffic in. But everybody's goal is to maximize margin and come out with the profitable year, one does what one needs to do when there is no traffic. We believe that there is nothing unique about this here. We believe that the promotions that are planned, they are all acceptable and we believe that margins that will attain and the department stores will attain will be very acceptable for the market.

Thank you. And our next question comes from Eric Beder from Wunderlich Securities. Please go ahead

Good morning. Let me add my congratulation on solid quarter. Would you talk a little bit about some of the new initiatives like Ivanka Trump? Where do you see that going? How has been acceptance of that rollout been for you?

Well, I'll start with Ivanka herself, she is an amazing partner. She is very, very much engaged in the process. She does her appearance as she needs to and she is eager to help in any form that's necessary. We shipped dresses, the dresses get okayed and no difference then when we launch Calvin or Guess? or any of their brands. We found some items that were exceptionally good and we found some that weren't. So what we do is we expand the areas that was good and we eliminate the ones that were bad, and we build a collection the second time that's better than the first time. Our coats have yet to be shipped; we will be shipping this month. We are proud of what we've created. The order book is strong and it's different than -- it's got its own DNA, it's different than the rest of what we do in the company. And we are comfortable that it will be strong brand on the selling floor in the coat area. And we shipped a little bit of swimwear that did quite well. So, the brand is still on track, we believe to break a $100 million in business over a short period of time. And we are very happy with the association. We are happy with the brand. And the brand is widely accepted by our retail customers.

Thanks. In terms of dresses, so we are now doing kind of this second season for dresses. Usually it's not as strong as first half of the year. Kind of how do you look at the dress business for the back half of this year? And could you give us -- how are you thinking about for next terms in terms of growth prospects?

Well, the dresses had -- this is not the second year. This is the third or fourth year of solid good dress business. And what we've done historically is we have combinations in our licenses of suits and dresses as dresses become less desirable which we haven't seen the slowdown at all. We are doing so many different fabrications. We are doing upon this, we are doing knits and they are stronger today than they were a year ago. We don't see a slowdown at all. What we are working at hard is the design to be different and deliver a different collection every eight weeks is a major feet. And we are doing it. We've showed up our design, our design is travel to both to define creative and to work on production overseas, more aggressively than in any other classification that we do. And I don't believe there is a slowdown. Our dresses have been here forever. I think the solution is design, fabrication and just being pure to the brand that you are producing. So I don't really see or have a concern for the dresses in slowing down. I guess what we have done as a company is to become less volatile in any one classification than ever before. We've shored up our business where today we can say we are in all composing apparel company. You got to remember Eric, we were a leather company then a coat company then maybe a dress company then maybe a little sportswear then maybe outlet or retailer and today we are proficient in every area. So, I don't -- I no longer have concern for one classification slowing down.

Okay. And finally so outerwear, so you mentioned that you had some strong initial orders. What has your thought process on inventory? Are you going to chase on the outerwear? What are your plans and thoughts on how you are going to manage the outerwear inventory going forward?

Outerwear is one of the areas that we can respond quickly. We have relationships with their factories where they take the burden of risk on owing piece goods and they respond incredibly quickly in that area. They have had a lot of experience with us. They have never gotten hurt. So, we put ourselves in one might classify in chase mode in the coat area on a regular basis. We have a fair amount of inventory to go through. We are comfortable with the levels that we are at. And we have the ability of addressing unique sales that might occur. So, again it's an area that we are very, very comfortable with, we can contract and we can expand almost at will.

Thank you. (Operator Instructions) And our next question comes from John Kernan from Cowen & Co. Please go ahead. John Kernan - Cowen & Co.: Hi, good morning, guys. Just sounds like Vilebrequin had the best comp out of all your retail businesses. Can you remind us of the brand extension average you have gone there along with where you are in the profitability curves for that brand? I think it used to operate at double digit operating margin; I'm just trying to understand how much is contributing to your profitability at this point?

Well, the numbers that you see on Vilebrequin goes through -- they have a different yearend, they go through June, so you don't have the visibility of July and August. It was okay, we are pleased with it. I wouldn't classify as our best area. We've got a lot of work to do in Vilebrequin as well. We are pleased with it. If we look at the scale of Vilebrequin as a whole, it is -- it's maybe 5% -- less of 5% of what the total company does. So the impact of its earnings currently is not sensational. The brand is amazing. The management team that is running the brand matches the brand, they are also amazing. What we are working on is a solution for the ready-to-wear. We are licensing several classifications. And we have a footwear license in Europe with the same end that has Bass. PVH is launching in a soft ways and very unique, very high end ties that will retail for Bergdorf Goodman and Neiman Marcus and Saks. So the visibility of the brand will increase dramatically over time. But the focus on its current earnings would be inappropriate. We are expanding our door count. We are buying back some of our franchisees in different parts of the world for different reasons. Some are under capitalized and this is an initiative we've started today. We bought the company. So it takes a little while but simultaneously with refining the organization and the structure of the stores, we are building great products. So again we give you visibility as we have it. And I think you will see better product in ready-to-wear within the stores this coming year and that will make an impact on -- that will make an impact for stores. And maybe a little bit more so for G-III as a whole.

John, just to add in terms of the operating margins of the business. What we've said is Vilebrequin last year was about mid-single digit operating performer, this year we expect it to be high-single digit operating margin performer and perspectively we think this branding in a luxury space will be probably one of the higher operating margin in the business in the 15% to 20% range ultimately when it's at maturity. John Kernan - Cowen & Co.: Okay, that's really helpful. And then just for further clarification on Bass, particularly in the fourth quarter, I believe it lost $2 million to $3 million last year in the fourth quarter. And given the new products starting to flow to the stores, what's your expectation for profitability for Bass in that fourth quarter?

Yes. So again I don't think we broke that last year and we are not breaking it out this year, John. It was somewhat neutral event towards last year and this year we are certainly expecting the profitability to be strong as we -- as our initiatives start to take hold in this year's fourth quarter.

Thank you. And our next question comes from Jim Duffy from Stifel. Please go ahead.

Thanks, good morning. Very nice results on the wholesale business. Handful questions for you. Trends in the outlet centers that pressure the comp, was that a factor of traffic or conversion?

It was clearly traffic. Conversion rate is gone up. And part of the take down actually in if you look at Wilsons, I guess I deal with Wilsons is independently of Bass for the moment. We have about 25 stores in mall locations today. And if I were to give credit to Wilsons I would tell you that the outlets performed okay. The miss was really in their mall locations. We had initiative for testing mall to see if they were expandable. We saw an opportunity to open hundreds of stores in regional malls. And as of I would say July, August, we weren't feeling that was the approach that we are going to take for the future. We weren't getting good reads and the miss was mostly attributed to the miss in mall. As of late, I will tell you again as new product hit the store at Wilsons even the mall stores are doing much better. So we are still under review as to what we do with those stores. The outlet centers, we are doing okay. The product mix again I encourage you to walk into Wilsons and see the difference year after year, we are very proud of the product, we are proud of the organization and it was the-- the miss was clearly the mall locations and foot traffic.

That's helpful.

That's improved as of August, I stated earlier, the month of August we saw a 6% comp increase.

Good to hear. Morris, with respect to Bass, you called out new Bass product and its early influence. Can you elaborate some on the products strategy to improve the line and merchandizing?

Sure. It's an entire environment that we are creating. In the past it was -- it was almost free for all as to what the merchants were able to buy and putting through the stores. And today if it doesn't have the Bass DNA the marching orders are, you just don't buy it the apparel. The apparel is consistent with the brand image. The footwear will be consistent and the accessories most of all will be appropriate for Bass. We cleared out and marked down all the accessories that were in the store and what we couldn't was a wall of socks, we put in luggage, we put in some travel product, we put in small leather goods that were appropriate for the brand. And what we are seeing in the -- clearly in the travel area, in the luggage area is that 130% increase over last year in comp sales. What we are seeing in overall accessories is about 40% comp increase. Those businesses aren't very large but they are sufficient enough to have an impact on the business. The struggling pieces are where we still don't have an impact in the store so footwear isn't right for what we believe the brand stands for. And clearly the apparel is, we step back a moment because we weren't able to design in the timely fashion the men's apparel. So we bought it from PVH, that product is hit and we see a definitive difference in the performance of men's versus women's. So, we are very happy with the progress. The women side of it is -- will be skewed a little top heavy on the coat area because G-III as a company has a skill set to accommodate the coat side easily. And we are transitioning into a more appropriate sportswear collection in the women's for the brand. So by fourth quarter, should be able to walk into a Bass and say, oh now I understand what he is talking about. We will get there. And there is a high demand at wholesale for this brand. We've had many calls with great interest for when we are going to launch the wholesale side of women's and we've had calls for licensing the brand in many different classifications. This is a good acquisition for us.

Okay. Final question, with the recent M&A commentary you've expressed more interest in global businesses. How are you thinking about the infrastructure needed to support overseas expansion? Is that part of the acquisition agenda to acquire an overseas infrastructure foundation?

Well, if either acquiring or something that was overseas the organization would be essential. We have an organization in Europe currently that manages the Vilebrequin business, but it doesn't transition into a management team that would handle the brands that we have in mind. If we were to acquire an American brand that was staffed here and managed here, I would tell you we are not ready to expand into Europe. That wouldn't be an immediate initiative, but it would be an important component to the brand that would give us the opportunity when we thought the timing was right. It is not right for us today.

Thank you. And our next question comes from Mike Richardson from Sidoti & Company. Please go ahead. Mike Richardson - Sidoti & Company: Yes, good morning and thanks for taking my questions. I just two quick ones for you. First, can you give us an idea of how inventory levels are at retail? And have you seen any change in buying patterns from your retail partners? And I'm just curious as to what share count you're assuming for the balance of the year. Thanks.

Well, we believe that inventory levels at the department store levels are going to be manage a little tighter than usual. Their task is similar to us. To manage inventory appropriately and get better sell-throughs and better turn on their inventory and not to pressure the organization into marked down initiative that hurt margins. So, I think the retailer is playing a little closer to the vest in their inventory levels. And fortunately for us, we have some brands that are in high demand and work a little bit contrary to the department store need.

In terms of share account, Mike, you got the share buyback of 1,725,000, you can add that to your Q3, Q4 then in the proportion of that for the full year and then there will some additional dilution. For the full year, we are probably just north to $22.5 million. Mike Richardson - Sidoti & Company: Okay. So add 1.7 million to the second quarter.

Third to the Q3, Q4 prior year figures, plus some additional dilution.

Thank you. And our final question comes from David Glick from Buckingham Research Group. Please go ahead.

Yes, thank you. Morris, you mentioned the improvement in the outlet traffic in August. I'm just wondering if that's something you're seeing across retail. You mentioned inventories are tied and I'm just wondering if there's more of a reason to be optimistic from direct-to-consumer and department store trend for the back half. Thank you.

Well, we saw better traffic throughout for the month of August. We saw better sell-throughs and so little bit of relief. I can't tell you that June and July were better months for us. But it's great to see as new product hits, traffic did perk up, and sell-throughs are quite good and it's not all driven by promotional business. When foot traffic isn't there, the stores tend to try to promote product. As foot traffic is there, the promotion, they are little bit different than they -- it is not thrust to turn your inventory overnight. Foot traffic really is a good indicator of how stable your inventory is and how you value your inventory or you are told to value inventory. So, I would say that there is a good improvement in foot traffic.

Thank you. We have no further question at this time. I will now turn the call over to Morris Goldfarb for closing remarks. Please go ahead.

Well, thank you all for spending some time with us this morning. And thank you for your interest in our company. Have a good day.

Thank you. And thank you ladies and gentlemen. This concludes today's conference. Thank you for participating. You may now disconnect.