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What Makes G-III Apparel (GIII) an Attractive Investment Bet

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G-III Apparel Group, Ltd. (GIII - Free Report) is one of the players in the Textile – Apparel industry, which is presently placed in the top 4% of the Zacks Classified industries.

Shares of this renowned New York-based company have returned 136.3% in a year, outperforming its industry’s 40.6% rally.

The stock’s bullish run on the bourses is justified by the company’s solid execution of its strategies including digital progress and brand strength. Its recently reported second-quarter fiscal 2022 earnings performance is further boosting its presently Zacks Rank #2 (Buy) stock.

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Delving Deeper

G-III Apparel’s digital business is constantly making a significant contribution to its results. Digital sales of the company’s products have been accelerating for a while now. On the company’s retail partners' and its own sites, sales of the products surged more than 70% during second-quarter fiscal 2022 from the level achieved two years ago. In China, digital sales were stronger than the store sales in the reported quarter. Vilebrequin brand’s digital sites were up about 70% from the level recorded two years ago.

Management is on track to launch the revamped websites of DKNY and Karl Lagerfeld Paris. These sites are likely to offer an immersive brand content to engage consumers, thus facilitating conversion to sales tools, such as virtual selling. It is steadily investing in data analytics capabilities to better know the consumers across channels and boost their shopping experiences. Management informed that the company is partnering with GEODIS, its logistics provider, to boost the direct-to-consumer capabilities.

Speaking of brand power, G-III Apparel is quite optimistic about its diversified portfolio anchored by the five global power brands, namely DKNY, Donna Karan, Calvin Klein, Tommy Hilfiger and Karl Lagerfeld Paris. Management expects the annual net wholesale sales potential for these five brands to be $4 billion. For the second half of fiscal 2022, G-III Apparel is incorporating a wider functionality in fabrics, intending to serve broader lifestyles. It is on track to add collections focusing on particular sports activities and high-performance fitness.

G-III Apparel is also witnessing momentum in casual categories with a potential to expand into the outdoor and sports market. The shoes and handbag categories are also growing steadily. The jeans category is a bright spot too. With respect to athleisure and sportswear, the company is consistently expanding its collections to cash in on the consumers' growing demand. The company had also successfully launched the Karl Lagerfeld Paris women's brand across 75 doors at Macy's (M - Free Report) . It remains on course to triple the distribution of its sportswear line to 250 doors by the end of fiscal 2022 and introduce a dress line to 75 doors by the forthcoming spring.

Stellar Q2

In second-quarter fiscal 2022, G-III Apparel’s sales and earnings beat on the Zacks Consensus Estimate and improved year over year. Results also exceeded management’s expectations. Solid gains from the company’s assortments and digital business drove the quarterly results. Higher sales at the Wholesale unit aided the overall performance. However, its retail business has been sluggish for a while and the segment’s sales plunged 22.9% in the fiscal second quarter. Nonetheless, management completed the division’s restructuring and the new retail model is poised to attain profitability.

A stellar quarter helped management provide an upbeat outlook for the third quarter of fiscal 2022 and the full fiscal. For the same period, G-III Apparel projected net sales of $1 billion and earnings per share of $1.65-$1.75. These views suggest growth from the recorded net sales of $826.6 million and earnings per share of $1.29, respectively, in the year-earlier quarter.

For fiscal 2022, the company guided net sales of $2.70 billion, up from $2.57 billion predicted earlier and also indicating a rise from $2.06 billion delivered in fiscal 2021. It envisioned earnings per share in the band of $3.10-$3.20, higher than $2.60-$2.70 guided previously.

Given all the aforesaid tailwinds, we believe, G-III Apparel will continue to perform well and retain its solid momentum on the bourses.

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