New York-based
G-III Apparel Group, Ltd (
GIII
)
posted earnings per share of 25 cents in the fourth quarter of
fiscal 2012, missing the Zacks Consensus Estimate of 29 cents and
the year-ago quarter earnings of 62 cents per share. In full-fiscal
2012, earnings were $2.46 per share versus $2.88 in the prior
year.
G-III Apparel's net sales surged 9.0% year over year in the
quarter to $294.3 million. In full-fiscal 2012, revenue jumped
15.8% year over year to $1.23 billion.
Quarter Highlights
Sales growth was chiefly aided by improved performance of
wholesale licensed apparel (up 2.3%), wholesale non-licensed
segment (up 28.3%) and retail operations (up 15%), partially offset
by warm weather during its peak selling period.
The robust wholesale licensed apparel sales were driven by
higher sales of Calvin Klein products and theintroduction of the
three new Calvin Klein product lines, whereas the wholesale
non-licensed segment benefited from an increase in private label
outerwear sales. Retail sales surged on the back of unit growth as
well as comp store increase of 4.8% in the quarter.
During the quarter, G-III Apparel's gross margin plunged 400
basis points (bps) to 28.3%, due to steep discounting, product mix
and pricing pressures. Margins at wholesale license segment,
wholesale non-licensed segment and retail operations fell 560 bps
to 21.1%, 130 bps to 22.6% and 230 bps to 45.6%, respectively.
Financials
At the end of 2012, G-III Apparel had cash of $24.7 million and
shareholders' equity of $358.0 million, as compared to $10.0
million and $303.5 million in 2011, respectively.
Outlook
For the first quarter of 2013, G-III expects a loss per share in
the range of 2 cents to 6 cents and net sales of $215 million.
Based on the 2012 results, the company initiated its guidance
for fiscal 2013. G-III expects earnings per share in the range of
$2.62 to $2.72 and net sales of $1.33 billion.
Our Take
G-III remains optimistic regarding 2013 considering its unit
growth, strong demand for its core products and new business
initiatives. Management also remains positive regarding the
extension of NFL license that will expand distribution rights in
the mid tier department stores and the sporting goods channel.
However, the upcoming quarter remains seasonally weak; hence we
expect estimates to go down in the coming days. The Zacks Consensus
Estimates for 2013 and 2014 are pegged at $2.67 and $3.30,
respectively.
G-III engaged in apparel business, currently retains a Zacks #5
Rank, which translates into a short-term Strong Sell rating. We are
also maintaining our long-term Neutral recommendation on the stock.
G-III peers include
Columbia Sportswear Company
(
COLM
) and
Nike Inc.
(
NKE
).
COLUMBIA SPORTS (
COLM
): Free Stock Analysis Report
G-III APPAREL (
GIII
): Free Stock Analysis Report
NIKE INC-B (
NKE
): Free Stock Analysis Report
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