G-III Apparel Rallies on Q1 Earnings Beat - Analyst Blog

G-III Apparel Group, Ltd. GIII reported first-quarter fiscal 2015 earnings of 6 cents per share, significantly better than the Zacks Consensus Estimate of a loss of 16 cents per share. Year over year, earnings grew 20%, driving up shares over 8% on the index yesterday.
 
The company's reported net sales of $366.2 million, which increased 34.3% year over year and was way ahead of the Zacks Consensus Estimate of $346.0 million. Sales continue to get a boost from the acquisition of G.H. Bass & Co. Also, G-III Apparel's wholesale business remained robust while retail performed comparatively well. Calvin Klein brand contributed significantly to sales.  

Gross profit for the quarter escalated 40.8% to $130.2 million with the gross margin expanded 160 basis points (bps) to 35.5%. However, operating profit fell 1.9% to $3,509.0 million.

Selling, general and administrative expenses came in $122.4 million, up 42.6% year over year. Rise was mainly due to higher personnel, facility and advertising expenses related with G.H. Bass acquisition.

Balance Sheet

G-III Apparel ended the year with a cash balance of $23.6 million and total assets worth $803.1 million. As per management, inventories increased 33.3% year over year to $342.6 million in consistence with the projected sales growth. The company had long-term debt of $20.5 million and stockholders' equity of approximately $526.5 million.  

Capital expenditures came in at $10 million for the quarter.

Outlook and Conclusion

Going forward, this Zacks Rank #3 (Hold) company intends to continue with its organized method of diversification and growth along with maintaining cost discipline. Management believes that its constant endeavors to exploit growth opportunities and its strategic expansion program, both internal and through acquisitions, are likely to drive results and enhance stockholder value.    

This optimistic outlook led management to raise its guidance for fiscal 2015.  Net sales for the year are expected to be around $2.06 billion, as against $2.05 billion projected earlier. Earnings per share will be in the band of $4.05–$4.20 compared with $3.95–$4.10 projected earlier. The Zacks Consensus Estimate for fiscal 2015 earnings is pegged at $4.12. Also, the company projected EBITDA to grow 16.0%–19.0% and range from $170.2 – $175.5 million in fiscal 2015.

For the second quarter of fiscal 2015, management foresees net earnings of 13–17 cents per share, compared with earnings of 17 cents a share in second-quarter of fiscal 2014. Net sales for the coming quarter are expected to be roughly $392.0 million, compared with $304.2 reported year over year.

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. All of these carry a Zacks Rank #2 (Buy).