Good afternoon, ladies and gentlemen. Thank you for standing by and welcome to the G-III Apparel Group Limited second quarter 2010 earnings call. (Operator Instructions) I would like to turn the conference to Mr. Neal Nackman, Chief Financial Officer of G-III Apparel Group. Please go ahead, sir.

Thank you. Before we begin, I would like to remind participants that certain 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 conditions of the company to differ are discussed in the document 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 EBITDA, a non-GAAP number. We have provided a reconciliation of our EBITDA numbers 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 afternoon and thank you for joining us to discuss our second quarter results. With me today are Neal Nackman, our Chief Financial Officer, and Wayne Miller, our Chief Operating Officer. We had a good second quarter. Our revenues for the quarter were $135 million, up 20% versus the second quarter of last year. Our revenue performance was driven by continued gains in dresses and sportswear. Both remain strong businesses for us, as well as net sales from our Wilson’s outlet stores which were owned for the whole quarter this year compared to 20 days in last year’s quarter. Our net loss for the quarter was $0.17, a good performance compared to last year’s net loss of $0.23 per share. Please keep in mind that we only had 20 days of Wilson’s losses last year as compared to a full quarter’s normal seasonal loss this year. Our order book is consistent with our expectations and we are currently booked at about 90% to plan, which is comparable to this same time last year. In general, we have posted good results and positioned both our wholesale businesses and our Wilson’s outlet retail stores for the upcoming fall and holiday season with what we think is the right mix and the right level of inventory. The dress category is one of the hot categories at retail today. Our Calvin Klein dresses continue to increase their penetration in the marketplace as the line exceeds expectations for us and our retail partners. Our Jessica Howard dress line is also exceeding expectation. We believe we are on the right track with the design and placement of the Jessica Simpson dress line and are seeing door expansion for holiday and spring. The fall line was showcased in several windows at Macy’s Harold Square. Our sportswear business…

Thank you, Morris. Net sales for the quarter ended July 31, 2009 increased approximately 20% to $135.9 million compared to $113.5 million in the year-ago period. Net sales of wholesale licensed apparel for the quarter were $90.9 million, compared to $67.8 million in the year-ago quarter. Net sales of wholesale non-licensed apparel decreased in the quarter to $28.8 million from $38.4 million in last year’s comparable quarter. Net sales in our retail operations increased by $14 million to $21 million in the quarter. We saw increases in wholesale licensed apparel sales this quarter, primarily as a result of increased sales of Calvin Klein product. The current year is our launch year for Calvin Klein women’s sportswear and we also had increases in dresses, outerwear, and performance wear product. Net sales of wholesale non-licensed apparel decreased due to lower sales in our women’s outerwear division and the closing of our junior denim division. Finally, the acquisition of our Wilson’s outlet retail stores occurred during July 2008 and accordingly last year’s quarterly results did not include Wilson’s sales for the full period. We had a net loss of $2.8 million for the quarter, or $0.17 per share, compared to a net loss of $3.9 million, or $0.23 per share in the year-ago quarter. The Wilson’s operation generated a seasonal loss of approximately $0.16 per share in the current quarter. Our wholesale licensed and non-licensed apparel segments showed an aggregate operating profit of approximately $1.2 million in this year’s quarter, compared to last year’s aggregate operating loss of approximately $4.1 million. Gross margin percentage increased during the quarter to 30% from 25.5% in the prior year’s quarter. Margin percentages increased in our wholesale segments and we operated our retail segment where sales are done at higher margins than wholesale for the entire quarter…

Thank you, Neal. We’ve focused on moving this organization forward. We have some very good opportunities to not only do business but also to grow stronger and more diversified in the process. We have always had a market dominant position in outerwear. Today we also have a dominant position in dresses. We have a well-constructed portfolio of licenses, private label brands, and now our own lifestyle brand. Our presence in every tier of distribution gives us the ability to seek out the stronger zones of retailing. Additionally, we believe that owning our own retail distribution in our core category of product will provide us with additional growth opportunities. Our entry into dresses, women’s suits, and sportswear has been executed very well. This year, these businesses are expected to do more than 30% of our wholesale sales. We are seizing the opportunity to become an all-seasoned diversified apparel company in every tier of distribution. We have accomplished scale, have acquired excellent assets and built the infrastructure for growth. Furthermore, our suite of opportunities is no longer limited by category. Our financial position remains strong and we expect to have additional opportunities to incrementally expand our business. We expect to generate considerable value for our consumers, our customers, and our shareholders. Thank you and I will now open the call to questions.

(Operator Instructions) We will take our first question from Todd Slater with Lazard Capital Markets.

I have a question about the retail piece real quick -- it lost I think did you say $0.16 a share in the quarter?

Yes, that’s right, Todd.

And then last year it lost about $0.05 but I think that was only about 20 days, is that right?

That’s about right, yes.

So if you -- I don’t know if you can do this but you know, if it was sort of you had it for the whole time, you know, what would the comparable performance have been like for LY?

You know, it’s probably not a fair calculation because last year the business certainly was in quite a state of distress. You know, overall what we have been seeing so far at the Wilson’s retail business is slightly worse performance than last year and that’s really because we really feel that the strategies that we’ve implemented have not really just yet taken hold and we are now looking in the back half of this year for that to start to change.

And are you seeing any -- I know that’s your hope and plan but are you seeing any evidence of that maybe towards the latter part of the quarter, or why do you expect that to improve? And my real question is in your guidance, in your $0.95 to $1.05 range, what type of expectations do you have for retail relative to, you know, for this year relative to last year?

Let me start with what we are seeing as far as some proof positive -- we’ve got the month of August sales and we are starting to see some nice lift over the previous year and that starts to give us some comfort that the things that we are doing are working well for us. In terms of what we are looking in the model for the second half of the year, last year was a very difficult year from an economy standpoint and a difficult year for us in terms of being able to strategically get done what we needed to get done at the stores. So we are looking for both top line growth and we are also looking for margin improvement. The margin improvement, if you looked at what we did in Wilson’s last year, it should be pretty easy to accomplish. And as I said, we are looking for the strategies to start to take hold for the last half of the year.

The only month that we can compare to last year is August. We bought the company in mid-July and I will give you the approximate comp increase. The estimated comp increase this year over last year is high single digit. We are very comfortable that we’ve proceeded well with the assortment. We’ve done all the right things. Last year we were encumbered by let’s call it a troubled brand that was being liquidated in 500 locations in the malls. We had a cram down of inventory from those malls that we had to liquidate. There are many factors that entered into the poor performance of retail last year that I think are behind us. So we are comfortable that we can be near break-even this year.

Okay, and if you are near break-even, which is sort of $15 million let’s say turn or inflection, is that what your $0.95 to $1.05 assumes, or are you assuming something more conservative for that?

Let me clarify one thing -- last year we only had Wilson’s for part of the year, so the retail segment, if you looked at it, had about a $6 million operating loss in all of last year in our consolidated results, so that is what we are looking on improvement from going from a loss of about $6 million to a break-even operation.

Okay, great, that’s helpful. And then on the gross margin side, they were much better than we had expected. Is there continued room for gross margin improvement in the back half if the retail division doesn’t quite -- you know it’s only about 15% of your business but if that business sort of doesn’t quite turn as quickly as you would like, is there still room for gross margin improvement from the rest of the business?

We are still comfortable that we can achieve gross margin improvement in the back half on the wholesale business.

Thank you. Great, that’s helpful and have a very good back half of the year.

Your next question is from Jim Duffy with Thomas Weisel Partners.

Can I ask you to speak to some of the things you’ve done with the Wilson’s stores in an attempt to improve the merchandising and maybe give us an example of where you are getting traction in some other areas maybe where your efforts have been disappointing?

Well, if you were in a Wilson’s store a year ago, you would have walked through the door and you would have been hit very hard with a message of highly embellished handbags and probably every style known to man in both men’s and ladies outerwear. It was a very confusing message. We thought, or better said I thought, that a lot of the cures of the business could be helped by some of the brands that we were manufacturing. That didn’t play out. We were in the mode, as I said earlier, of liquidating most of the handbags through the course of the year and correcting our thought of just putting a barrage of product in the store without refining the assortment. Part of it was the encumbrance of buying the business in let’s say August of last year and not having sufficient inventory to flow into the stores or for fall sales, so it was more of a cram-down from wholesale into retail. It did not operate as a standalone retail entity. This year, it is a standalone retail entity. It does have a defined message. It has probably 30% to 35% branded apparel and the balance being private label. The product was well thought out, bought early, bought with I guess great negotiating skill, so you could say the margins are going to pan out to be very good, and the assortment in handbags and accessories really marries the outerwear assortment. It will be fairly core basic, it will be value-driven. The message will be very clear and the consumer is buying into the concept and at least the early reads indicate that. You know, even with a shift in Labor Day, where we had a comp increase for the month of August, which is in my mind a pretty good win.

Okay. Yeah, we’ve been in the stores and certainly the assortments look better than a year ago. Are you doing anything to track store traffic to gauge how much of it is traffic versus transaction type area?

We do have traffic counters. We measure it very closely. We also measure the number of transactions done relative to the traffic and we work hard at improving it. We’ve turned over our sales associates -- I wouldn’t say -- this is a guess but I am going to guess that 40% of our personnel is relatively new and trained differently than the old. When you operate a troubled company as Wilson’s was for several years, you don’t attract the best talent. The confidence level at the employee level is quite right. They are incented differently than they have been in the past and we have a different quality of sales associate today than we did in years past but we see the improvement there to speak to transactions and how they have closed in traffic and how that’s borne out is quite difficult because it is a seasonal business and we are just starting our season today, so most of it is fairly irrelevant. We’ve measured the time of the year where everything was highly promotional, everything in the store was 50 to 70 off and it was out of season. We are now getting into season with the appropriate pricing so I guess the traffic will show itself as time goes on. We see room where all we have to do is approach a $250 square foot performance which I believe is very doable to be in good profit mode in the outlet centers.

With regard to the outlet centers for the second half of the year, do you feel like you have been conservative with the guidance and should traffic show, like you hope that it will, that that represents an area of upside opportunity?

Absolutely. I mean, traffic is what will drive the sales. If the consumer comes out, there’s absolute room to grow both the top line and the bottom line of this business. We have the product to fill the stores with, so should the traffic be there, we have the product to fill it.

Okay. And then just doing some quick back-of-the-envelope calculations, your full year guidance seems to imply a year to year decline in revenue in the second half of the year, second half versus second half. What does the outerwear order book look like that’s causing you to guide in that fashion?

The outerwear order book is pretty much flat -- let’s put it this way. The one piece that shows a reduction in scale is the private label piece. The private label piece is the mast here that would include J.C. Penny, it would include that tier of distribution, and if there’s a mix in the company, that’s where you would prefer to see it. You don’t want to see it anywhere but that’s the lowest margin business in the company. So as far as the guidance that we’ve shown you is affected by top line, the top line mix is created predominantly by the private label piece of the business. The other piece that showed softness, as I stated earlier, is the luxury piece. The luxury piece of that business is not very large. It’s the image piece in two of our sectors and I think we have a good solid business that also has opportunity to beat the forecast.

Just to qualify a little bit more on that, we didn’t go out with a range on the back end of sales, so we are giving you an approximately 770. [If you do the] specific math, you will see that we were up just slightly with the $770 million [inaudible]. And obviously there’s variables for us. I will tell you that we are looking really -- certainly for retail sales improvement and then the wholesale side, while it’s probably plus or minus a small percentage, that business should be flat for the year. So the second half of the year, it should show some top line growth even with the loss of some of the private label outerwear programs.

Okay, I’ll leave it at that and jump back in the queue.

Your next question is from Eric Beder with Brean Murray. Mr. Beder, if you would check your mute function -- at this time we cannot hear you. Getting no response from that line, we’ll move on to our next question -- that’s from Mimi [Barto] with the Telsey Advisory Group.

-- assume the license was driven by the Calvin Klein businesses but I was pleasantly surprised on the non-licensed side, what was really driving that?

Mimi, the beginning part of your question got cut off. Could you just repeat that?

Sure. Just looking at the gross margin, it came in better than we had expected and I was just wondering if you could talk about what we some of the dynamics on the license side. I assume that’s on the Calvin Klein business and then also on the non-license side, which came in better than we had expected.

On the licensed business, it really was driven by the Calvin Klein sportswear business. That really drove the gross margin percentage increase. And on the non-license side, our Jessica Howard dress business also was significantly stronger than the previous year. It performed very well at retail.

Okay, and then just on the SG&A dollar side, if we think about the guidance for the year, how should we be thinking about that, not that obviously we are going to be anniversarying the Wilson’s business first full quarter in the third quarter? Should we be kind of thinking that the rest would be sort of flat, given some of the cost cuts you guys had made earlier, but obviously putting some money behind some of the new Calvin Klein stuff?

Yeah, I think that’s exactly right, Mimi.

Okay, and I think that was it. Thank you.

Your next question is from Edward [Aruma] with Keybanc.

Thanks very much for taking my question. To follow-up on Wilson’s, have you given any thought to potentially resizing the store base? Do you think you are in the right location and at what point do you need to consider the potential for store closures?

We think we are in most of the appropriate locations. There are several stores that we would prefer not to be in and some of those leases are coming due and as they come due, we’ll certainly not renew or maybe renegotiate. But we believe that this is a good concept, it’s a concept that we want to be in and we are there. It’s the first time that we’ve become somewhat vertically integrated. There’s an intangible that supports us in trouble times from transferring inventory from wholesale to retail and having the ability to liquidate it with better margins in a closeout. So I would say that we are okay with it. Very few stores will not have a positive four-wall contribution, assuming that strategy works.

Gotcha, and then maybe discuss some of the improvements you made to the Mark New York line. Can you talk about the core Andrew Mark and given some of the weakness in [inaudible], if you had to make any adjustments to that product lineup?

We brought down price point slightly, not dramatically. It still addresses the luxury tier. It addresses it really well. We have not lost any accounts to my knowledge. We are in the right accounts. We are in with the right assortment and we are in there in what could be viewed as not the best of all times for luxury. We are careful with our inventory. We are not aggressively buying for back-end opportunity because there’s a level -- a great level of risk should retail not perform. But we need that product out there at that tier to promote the brand, to show the specialness of the brand for positioning for licenses for both Andrew Mark and for Mark New York. What we have done is we have adjusted the price point from Mark New York and have gotten, as Neal would say, great lift in orders from our department stores. So Mark New York will show an increase. Our licensing revenue will begin to hit us for maybe first quarter of next year. But we’ve positioned it fairly well. We’ve signed on four licenses. We have spent a fair amount of money advertising the brand and we’ve positioned it really well for growth, and for the future. We’re proud of that investment.

Great. Thank you very much.

And we’ll return to Eric Beder with Brean Murray. Eric Beder - Brean Murray, Carret & Co.: Could you talk a little about how you are seeing in terms of gains from, essential gains from better sourcing and take advantage of the weak economic times on the sourcing side?

We took advantage of tough economic times I would tell you from November of last year through maybe March, April of this year in the outerwear area. We were fortunate to get early orders, our bookings were very strong early and we took advantage of buying offshore both raw material and production space were at a discount. Today that’s really not the case. There’s been a cleansing of the troubled factories so production is [inaudible] and quite honestly if we were in a position to chase for product for the back end of the year, we’d probably have to sacrifice some margin. The factory structure is not abundant and raw material, when you first have to put it into work in rush mode, you do pay a little bit more for it. So there would be a contraction for -- possible contraction should we have to go out further from the inventory levels that we currently have.

And we can make our numbers without going out and chasing business, so we have sufficient inventory to support the current margin position. Eric Beder - Brean Murray, Carret & Co.: Okay, and in terms of the Calvin Klein sportswear business, is that primarily a second half business historically? I mean, how should we look at that in terms of the second half?

Yeah, it’s pretty well-rounded. It’s a 12-month a year business. We deliver every approximately 10 weeks. We monitor it very carefully and it’s a good balance. We need to remember that the first piece of sportswear that this company shipped was in February of this past year. We’re new to it, we are doing extremely well with it. We’ve got our seasoned staff managing it, designing it, and we’ve gotten double the door count that we started with. Eric Beder - Brean Murray, Carret & Co.: Okay and just conceptually, you know, for us kind of try and figure out what the split is between Q3 and Q4, you know, a lot of crazy things in Q4. How should we conceptually look at Q4 in terms of relative performance versus Q3 and other pieces here?

You know, Eric, the issue for us when Q3 and Q4 split to such a primetime part of our business in terms of the wholesale side, so we really don’t give guidance on that, only because there’s such a significant amount of volume that’s happening in the last week of October and the first week of November. Ideally, our business should be relatively steady with last year. Of course, Q4, we’re expecting some more volume from the retail business to kick in. Eric Beder - Brean Murray, Carret & Co.: And should we be looking for I guess the next quarter for profitability to be Q2 down the road?

Yeah, that’s a strong possibility. I think we’ve just shown that the wholesale side of our business was very close to break-even, which is a great accomplishment. I am certain that we could improve on that and if we improve on the retail, which we will, we’ll be in a lesser liquidation mode than we had been. It’s a strong possibility that we are profitable for second quarter of next year. Eric Beder - Brean Murray, Carret & Co.: Okay, congratulations.

(Operator Instructions) We’ll now return to Todd Slater with Lazard Capital Markets.

Thanks. I just wanted to return quickly to Calvin Klein sportswear, because perhaps one of your biggest needle movers, should it pan out. Can you just remind us again sort of how it’s doing, tracking relative to your plan? What you plan and what you think it can do this year? And it sounds like you doubled the door count -- remind us again how many doors you have now and how many more doors or retailers, what you need to get sort of the next leg up, which is let’s say to the $100 million plus level? Thanks.

I will tell you that when we negotiated the situation and gave some guidance to PVH, who I must add are just amazing partners. They have done incredible things with us and for us. We will achieve close to double what we laid out for them in our first year of performance. We don’t segregate volume by sector but needless to say, it’s a great achievement. We have -- we went out to the major department stores in the country, met with them and got immediate support. There were department stores that did not carry the brand for three years that stepped up to the plate the moment that we took over and are every day increasing the door count. I could tell you it would not be unbelievable to see a $200 million business in two years in the sportswear side of our business.

So if I understand, so you’re running at a rate double what you had originally minimally planned? And so does that -- so 200 in a couple of years is about -- I’m assuming that’s over $100 million then potentially next year?

That’s a possibility as well. That is doable.

Okay, so we’re probably more like closer to 50, 60 now -- is that a fair estimate in terms of run-rate?

That’s a hard one to respond -- the other two were easier.

Okay. All right, all the best.

And that does conclude our question-and-answer session. At this time, I would like to turn the call back to management for any additional or closing remarks.

Thank you all for being part of G-III and have a great Labor Day weekend.

That does conclude today’s conference. Thank you for your participation.