G-III Apparel Group, Ltd.
) reported adjusted earnings of 13 cents per share in the second
quarter of fiscal 2013, breezing past the Zacks Consensus Estimate
of 7 cents. Reported results were also above the company's guided
range of 4 cents to 8 cents.
On a GAAP basis, including expenses associated with the acquisition
of Vilebrequin, the company recorded earnings of 7 cents per share,
a penny below the year-ago earnings of 8 cents per share.
G-III Apparel's net sales surged 9.4% year over year in the quarter
to $251.5 million, driven by double-digit comps growth in the
category of dresses, sportswear, suits, handbags, team sports, and
specialty retail operations.
The significant growth in net sales was chiefly aided by improved
performance of wholesale licensed apparel (up 13.0% year-over-year)
and retail operations (up 16.0%), partially offset by a dip of 4.7%
in the wholesale non-licensed segment.
The robust wholesale licensed apparel sales were driven by higher
sales of Calvin Klein products as well as increased sales of new
Kensie sportswear line. Retail sales surged on the back of unit
growth as well as comp store uptick of 13.0% in the quarter.
During the quarter, G-III Apparel's gross margin expanded 130 basis
points (bps) to 29.8%, due to a decline in cost of sales as a
percentage of revenue. Margins at wholesale license segment and
wholesale non-licensed segment enhanced 70 bps to 26.2% and 90 bps
to 24.7%, respectively. Moreover, gross margin at retail operations
improved 290 bps to 48.0%.
At the end of the quarter, G-III Apparel had cash of $22.7 million
and shareholders' equity of $364.2 million, compared with $8.7
million and $309.7 million in the year-ago quarter, respectively.
The company also has no long-term debt on its balance sheet. As of
July 31, 2012, short-term revolving debt was $87 million compared
to $142 million a year ago.
For the third quarter of 2013, G-III expects earnings per share in
the range of $2.25 to $2.35 and net sales between $510 million and
Based on strong second quarter results, the company raised its
outlook for 2013. G-III now anticipates earnings per share in the
range of $2.68-$2.78, up from the previous forecast of $2.62 to
$2.72 and expects net sales to be $1.41 billion versus the earlier
projection of $1.35 billion. On an adjusted basis, the company
expects earnings per share in the range of $2.74 to $2.84.
G-III remains optimistic regarding the second half of 2013 based on
impressive booking for the key fall season, expansion through unit
growth, strong demand for its core products and new business
initiatives. Management also remains positive regarding the
acquisition of the leading luxury resort brand, Vilebrequin.
The acquisition might not be accretive until next year, but based
on the company's pricing power, it is likely to support the
development of a high margin multi-category business as well as
expand G-III's business in the domestic and international markets
such as China and Japan. Moreover, based on better-than-expected
second quarter results and increased outlook, we expect estimates
to go up in the coming days. The Zacks Consensus Estimates for 2013
and 2014 are pegged at $2.87 and $3.16, respectively.
G-III, engaged in apparel business, currently retains a Zacks #2
Rank, which translates into a short-term Buy rating. We are also
maintaining our long-term Neutral recommendation on the stock.
G-III peers include
Columbia Sportswear Company
COLUMBIA SPORTS (COLM): Free Stock Analysis
G-III APPAREL (GIII): Free Stock Analysis
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