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Why Is G-III Apparel (GIII) Down 23.2% Since Last Earnings Report?
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A month has gone by since the last earnings report for G-III Apparel Group (GIII - Free Report) . Shares have lost about 23.2% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is G-III Apparel due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
G-III Apparel posted sturdy first-quarter fiscal 2023 results. Both the top and the bottom line beat the Zacks Consensus Estimate and grew year over year. Results gained from strength in GIII’s brands and digital business.
G-III Apparel delivered earnings per share of 72 cents, beating the Zacks Consensus Estimate of 57 cents. Also, the reported figure rose 28.6% from the year-ago quarter’s reading.
Net sales jumped 32.5% year over year to $688.8 million and came above the Zacks Consensus Estimate of $601.4 million. The top-line outperformance can be attributed to a healthy sales performance at the Wholesale and Retail divisions. Digital sales of G-III Apparel’s product grew approximately 60% from the pre-pandemic levels. Direct-to-consumer sales grew in solid double digits from the pre-pandemic levels and wholesale almost doubled.
Vilebrequin also had a good quarter. G-III Apparel is expanding the brand’s presence by introducing nearly 10 company-owned and partner-operated stores in Europe and North America.
A Sneak Peek at Margins
Gross profit increased 25.8% year over year to $246 million. However, gross margin of 35.7% contracted 190 basis points (bps) from the prior-year period’s reading, mainly due to inflationary increases in costs, including higher freight expenses.
SG&A expenses grew 30.9% year over year to $185.4 million. G-III Apparel reported an operating income of $54.5 million, up 16.5% from the year-ago quarter’s number.
Segmental Performance
Net sales at the Wholesale segment were $681 million, up 33% from the year-earlier quarter’s figure. However, the segment’s gross margin declined nearly 220 bps from the year-ago quarter’s level to 34.1%.
Net sales at the Retail segment totaled $28 million, up 44% from the prior-year quarter’s level. However, the segment’s gross margin fell 30 bps from the year-earlier quarter to 50%.
Financial Details
G-III Apparel ended the fiscal first quarter with cash and cash equivalents of $438.4 million and s long-term debt of $521.4 million. Total stockholders’ equity was $1,558.3 million. Inventories increased 58.7% to $550.1 million at the end of the reported quarter.
GIII’s board raised its earlier authorized share repurchase program. There were 2.3 million shares remaining under its prior program, now increased to 10 million shares. Currently, 47.9 million shares are outstanding.
Outlook
For fiscal 2023, G-III Apparel expects net sales of $3.24 billion and a net income of $205-$215 million or $4.23-$4.33 per share. This compares to net sales of $2.77 billion and a net income of $200.6 million or $4.05 per share, recorded last year. Adjusted net income for fiscal 2023 is projected between $213 million and $223 million or between $4.40 and $4.50 per share. Adjusted EBITDA for the full fiscal is forecast in the band of $360-$370 million, indicating growth from $350.2 million reported in fiscal 2022.
For the fiscal second quarter, GIII expects net sales of $600 million, higher than $483.1 million recorded in the same period last year. Net income for the quarter is envisioned in the range $20-$25 million or 42-52 cents per share. This indicates growth from the net income of $19.2 million or 39 cents per share in the year-ago period.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended upward during the past month.
The consensus estimate has shifted 32.48% due to these changes.
VGM Scores
At this time, G-III Apparel has a poor Growth Score of F, however its Momentum Score is doing a lot better with a C. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise G-III Apparel has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.
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Why Is G-III Apparel (GIII) Down 23.2% Since Last Earnings Report?
A month has gone by since the last earnings report for G-III Apparel Group (GIII - Free Report) . Shares have lost about 23.2% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is G-III Apparel due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
G-III Apparel's Q1 Earnings Beat, Sales Increase Y/Y
G-III Apparel posted sturdy first-quarter fiscal 2023 results. Both the top and the bottom line beat the Zacks Consensus Estimate and grew year over year. Results gained from strength in GIII’s brands and digital business.
G-III Apparel delivered earnings per share of 72 cents, beating the Zacks Consensus Estimate of 57 cents. Also, the reported figure rose 28.6% from the year-ago quarter’s reading.
Net sales jumped 32.5% year over year to $688.8 million and came above the Zacks Consensus Estimate of $601.4 million. The top-line outperformance can be attributed to a healthy sales performance at the Wholesale and Retail divisions. Digital sales of G-III Apparel’s product grew approximately 60% from the pre-pandemic levels. Direct-to-consumer sales grew in solid double digits from the pre-pandemic levels and wholesale almost doubled.
Vilebrequin also had a good quarter. G-III Apparel is expanding the brand’s presence by introducing nearly 10 company-owned and partner-operated stores in Europe and North America.
A Sneak Peek at Margins
Gross profit increased 25.8% year over year to $246 million. However, gross margin of 35.7% contracted 190 basis points (bps) from the prior-year period’s reading, mainly due to inflationary increases in costs, including higher freight expenses.
SG&A expenses grew 30.9% year over year to $185.4 million. G-III Apparel reported an operating income of $54.5 million, up 16.5% from the year-ago quarter’s number.
Segmental Performance
Net sales at the Wholesale segment were $681 million, up 33% from the year-earlier quarter’s figure. However, the segment’s gross margin declined nearly 220 bps from the year-ago quarter’s level to 34.1%.
Net sales at the Retail segment totaled $28 million, up 44% from the prior-year quarter’s level. However, the segment’s gross margin fell 30 bps from the year-earlier quarter to 50%.
Financial Details
G-III Apparel ended the fiscal first quarter with cash and cash equivalents of $438.4 million and s long-term debt of $521.4 million. Total stockholders’ equity was $1,558.3 million. Inventories increased 58.7% to $550.1 million at the end of the reported quarter.
GIII’s board raised its earlier authorized share repurchase program. There were 2.3 million shares remaining under its prior program, now increased to 10 million shares. Currently, 47.9 million shares are outstanding.
Outlook
For fiscal 2023, G-III Apparel expects net sales of $3.24 billion and a net income of $205-$215 million or $4.23-$4.33 per share. This compares to net sales of $2.77 billion and a net income of $200.6 million or $4.05 per share, recorded last year. Adjusted net income for fiscal 2023 is projected between $213 million and $223 million or between $4.40 and $4.50 per share. Adjusted EBITDA for the full fiscal is forecast in the band of $360-$370 million, indicating growth from $350.2 million reported in fiscal 2022.
For the fiscal second quarter, GIII expects net sales of $600 million, higher than $483.1 million recorded in the same period last year. Net income for the quarter is envisioned in the range $20-$25 million or 42-52 cents per share. This indicates growth from the net income of $19.2 million or 39 cents per share in the year-ago period.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended upward during the past month.
The consensus estimate has shifted 32.48% due to these changes.
VGM Scores
At this time, G-III Apparel has a poor Growth Score of F, however its Momentum Score is doing a lot better with a C. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise G-III Apparel has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.