G-III Apparel Q4 Earnings Beat, Revs up Y/Y - Analyst Blog

G-III Apparel Group, Ltd. GIII reported fourth-quarter fiscal 2014 earnings of 62 cents a share that surged 55% from the year-ago quarter. The Zacks Consensus Estimate for the quarter was 47 cents a share.

The company's net sales touched a record $472.8 million, soaring 26% year over year. Sales were boosted by the recent acquisition of G.H. Bass & Co. coupled with solid performances witnessed at all categories and tranches of distribution. However, quarterly sales fell short of the Zacks Consensus Estimate of $490.0 million.

Gross profit for the quarter escalated 41.2% to $116.5 million with the gross margin expanding 380 basis points (bps) to 35.2%. Further, operating profit rose 38.1% to $22,187, with the operating margin expanding 40 bps to 4.7%.

Fiscal 2014

For the full year, G-III Apparel's earnings jumped 28% to $3.74 a share, cruising ahead of the Zacks Consensus Estimate of $3.60. Taking certain one-time items, earnings came in at $3.71 per share, up 32.5% year over year.

Net sales for fiscal 2014 were also buoyed by the company's latest acquisition made in November 2013 and various contributions made across its business. Sales advanced 23% to $1.72 billion, coming in line with the Zacks Consensus Estimate. Moreover, full year adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) shot up 29% to $147.1 million.

Fiscal 2014 turned out to be a favorable year for the company, given its solid sales and earnings growth, improved profitability, its acquisition of G.H. Bass & Co., the implementation of its strategic ideas for Vilebrequin and overall consistent growth at a steady pace.

Balance Sheet

G-III Apparel gracefully ended the year with a cash balance of $22.1 million, inventories of $359.6 million and total assets worth $830.9 million. On the other hand, the company had long-term debt of $20.6 million and stockholders' equity of approximately $522.0 million.  

Outlook and Conclusion

Going forward, this Zacks Rank #2 (Buy) company intends to continue with its organized method of diversification and growth along with maintaining cost discipline. Management believes that its constant endeavors of exploiting growth opportunities and its strategic expansion program, both internal and via acquisitions, are likely to drive results and enhance stockholder value.    

Given this optimistic outlook, management envisions net sales in fiscal 2015 to be around $2.05 billion. It forecasts earnings per share to lie in the band of $3.95–$4.10. The Zacks Consensus Estimate for fiscal 2015 earnings is pegged at $4.33 and is subject to a downward revision in the coming days. Also, the company projects EBITDA to range from $166.3 – $171.5 million in fiscal 2015.

However, for the first quarter of fiscal 2015, management foresees a net loss of 10 – 20 cents a share, compared to earnings of 5 cents a share in first-quarter fiscal 2014. Net sales for the coming quarter are expected to be roughly $346.0 million, compared with $272.6 last year. First quarter fiscal 2014 earnings are likely to be negatively affected by the acquisition of G.H. Bass & Co.

Other Stocks to Consider

Other stocks in the retail sector that warrant a look include Hanesbrands Inc. HBI, Michael Kors Holdings Limited KORS and Columbia Sportswear Company COLM. While Hanesbrands and Michael Kors carry a Zacks Rank #1 (Strong Buy), Columbia Sportswear holds a Zacks Rank #2 (Buy).