Wunderlich Bullish on G-III Apparel

In a recent report by Wunderlich Securities, analysts reiterated their Buy rating on G-III Apparel Group Ltd GIII and set a $105.00 target for the stock. After a generally upbeat day of presentations at the 2015 ICR XChange Conference, analysts are optimistic about the prospects for G-III.
Strong holiday performance
According to analysts, G-III management was excited about the company’s performance during the holiday season, as outerwear numbers by Calvin Klein, Jessica Simpson and Tommy Hilfiger drove sales in 4Q14. The holiday numbers were an encouraging sign that management’s goal of mid-single digit revenue growth for the outerwear segment is within reach.
GH Bass driving 2015 growth
Analysts believe that G-III’s recent acquisition of shoe company GH Bass will have a positive earnings impact in 2015. “The company will begin to see gains from new licenses for GH Bass (shoes) and, beginning in Fall 2015, the rollout of women’s for the wholesale channel.”
Possible acquisition
Analysts believe that G-III is actively looking to acquire a brand that could generate $100 to $500 million in annual revenues, particularly a domestic women’s brand. However, the benefit of a potential acquisition was not incorporated into Wunderlich's price target.
Double-digit operating margins
According to analysts, there are multiple parts to G-III’s plan to achieve double-digit operating margins. First, the company will look to expand its wholesale divisions and gain market share in the space. Second, the company expects to continue to add high-margin revenue from its GH Bass acquisition. Finally, G-III’s expansion of Vilebrequin will likely add additional 15-20 percent operating margin revenue to the overall mix.
Outlook
With its leading brands, strong positioning in the wholesale space and aggressive growth strategies, analysts see G-III Apparel as a leader in the apparel sector in 2015.