G-III Apparel (GIII) Q3 Earnings Beat, Sales Improve Y/Y
G-III Apparel Group, Ltd. GIII posted better-than-expected earnings in third-quarter fiscal 2024, wherein the bottom line beat the Zacks Consensus Estimate and improved year over year. However, sales missed the consensus mark and fell year over year. Adjusted earnings of $2.78 per share outpaced the consensus estimate of earnings of $2.08 per share. Also, the bottom line increased from the year-earlier quarter’s earnings of $1.35 per share.
Quarterly results reflected the company's ability to successfully navigate tough market conditions. Also, moderation in freight costs and disciplined inventory management were tailwinds. Management remains focused on growing brands, including the company’s own brands. Its brands represented $1.3 billion in annual revenues last year and the company is on track to reach $1.5 billion this year. G-III Apparel aims to grow these brands to more than $3 billion in annual revenues over time.
The company’s long-term license for Nautica in North America, initially with jeans and later expanding to a wider range of additional categories, is set to launch in early 2024 to more than 200 doors. Further, a master global license with the option to buy Halston is likely to launch in the fall of 2024.
Shares of this Zacks Rank #3 (Hold) company have surged 51.6%, outperforming the industry’s 12.4% rise in the past three months.
Q3 in Detail
Net sales dipped 1% year over year to $1,067.1 million and missed the Zacks Consensus Estimate of $1,131 million. Lower sales at the wholesale division, offset by higher sales at the retail unit, aided the overall top line. Net sales for the Wholesale segment were $1.05 billion, down from $1.07 billion recorded in the last-year period and the metric at the Retail segment was $33 million, up 13.8% from the prior-year quarter’s reported figure.
G-III Apparel Group, LTD. Price, Consensus and EPS Surprise
G-III Apparel Group, LTD. price-consensus-eps-surprise-chart | G-III Apparel Group, LTD. Quote
The company’s brands, DKNY, Karl Lagerfeld, Donna Karan and Bergan experienced another period of sturdy double-digit increase year over year. Its key international brands also saw robust sales growth.
Moreover, gross profit jumped 25.8% year over year to $433.4 million. SG&A expenses dipped 1.5% year over year to $236.3 million. Further, operating income was $190.3 million in the fiscal third quarter compared with $97.2 million in the year-earlier quarter.
The company has announced that it has appointed Dana Perlman as its new Chief Growth and Operations Officer, who will oversee Strategy, Finance, Communications, Information Technology, and other Operating functions.
Other Financial Details
G-III Apparel ended third-quarter fiscal 2024 with cash and cash equivalents of $197.4 million and total debt of $461.9 million. Total stockholders’ equity was $1,503.2 million. Inventory declined 34% to $592 million at the end of the reported quarter. It had a net debt position of about $265 million at the quarter end.
The company exited the quarter in a solid financial position with $840 million in cash and availability. It utilized $100 million to pay down $75 million of debt and $26 million of share repurchases. G-III Apparel had 10 million shares available in its buyback program.
Outlook
Management raised GAAP and non-GAAP net income per share guidance for fiscal 2024. For fiscal 2024, management projects net sales to be about $3.15 billion and net income to be $175-$180 million, or between $3.75 per share and $3.85 per share. This compares with net sales of $3.23 billion and a net loss of $(133.1) million, or $(2.79) per share, for fiscal 2023.
The company envisions adjusted net income in the band of $182-$187 million, or between $3.90 per share and $4.00 per share. This compares with adjusted net income of $138.8 million, or $2.85 per share, for fiscal 2023. Management estimates adjusted EBITDA to be $317-$322 million for fiscal 2024 versus adjusted EBITDA of $266.1 million in fiscal 2023.
The company anticipates ending the year with the gross margin up nearly 600 bps from fiscal 2023. It expects SG&A will deleverage in the fiscal fourth quarter owing to the inflationary pressures on costs. It estimates a tax rate of 28% for the rest of the fiscal year.
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