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G-III Apparel Group Ltd. (GIII - Free Report) has taken it on the chin as apparel sales have slumped industry wide and investors worried about department stores. But this Zacks Rank #1 (Strong Buy) could be on the verge of seeing things turn around.

G-III Apparel owns and distributes apparel and accessories under some of the most iconic brands in the fashion industry including Donna Karan, DKNY, Vilebrequin, Bass, Weejuns, Eliza J and Jessica Howard.

It has licenses with other well-known brands including Calvin Klein, Tommy Hilfiger, Karl Lagerfeld, Kenneth Cole, Jones New York, Jessica Simpson and others.

It addition to its wholesale business it operates retail stores under the Donna Karan, Wilsons Leather, Bass, G.H. Bass & Co., Vilebrequin and Calvin Klein Performance names.

Is the Worst Over?

G-III Apparel has struggled as department store and outlet mall sales have dropped.

But on June 6, it reported fiscal first quarter results and beat the Zacks Consensus by 19 cents. It reported a loss of $0.18 versus the consensus of a loss of $0.37.

Net sales rose 16% to $529 million compared to $457.4 million in the year ago quarter. It saw some additional costs due to the acquisition of Donna Karan International, which closed on Dec 1, 2016.

The wholesale business continues to be strong with sales up in the double digits. However, it's own retail brands which includes Wilson's Leather and the Bass stores, continued to see negative comps.

As a result, it announced it was closing and repurposing some stores.

It's also in the middle of rolling out new Donna Karan and DKNY merchandise.

G-III Apparel is optimistic about the next few years with those brands. The Donna Karan brand could, eventually, be one of its largest.

Earnings Rebounding

In fiscal 2017, G-III Apparel earned $1.42 but is only expected to earn $1.27 this year. That's a drop of about 10%.

But the analysts have been revising their estimates higher in the last 60 days. The Zacks Consensus has risen to $1.27 from $1.01 in that time.

The rebound is expected to continue next year as earnings are expected to rise to $1.72.

A Buying Opportunity?

Shares plunged the last 2 years and are down 18% year-to-date.



But they seem to have stabilized.

But even with the sell-off, G-III Apparel isn't dirt cheap. It trades with a forward P/E of 18.5 which is about in line with the overall market.

Still, G-III Apparel owns some of the top retail names in apparel.

For investors looking to take a contrarian play on the industry, this is one to keep on the short list.

[In full disclosure, the author of this article owns shares of GIII in her personal portfolio.]

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