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G-III Apparel's (GIII) Brands & Digital Business Appear Solid

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Zacks Equity Research
·4 min read
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G-III Apparel Group, Ltd. GIII appears strong on the back of its robust business strategies, including digital expansion and strength in brands. Management also undertakes strategies, including acquisitions and licensing of well-known brands, to expand product portfolio. Additionally, the company has completed the restructuring of its retail segment and the new retail model has been positioned on a path to profitability.

Encouragingly, the Zacks Rank #1 (Strong Buy) stock is seeing strength, increasing 129.6% and surpassing its industry’s 24.7% rally in the past six months. Also, the New York-based company’s shares have outpaced the broader Consumer Discretionary sector’s 20.5% rise and the S&P 500 Index’s 22.9% growth in the same time frame. You can see the complete list of today’s Zacks #1 Rank stocks here.

Let’s Find Out More

We note that G-III Apparel is focused on growing the digital business with expansion in the distribution channel. Impressively, the company’s own websites generated solid results for both DKNY and Karl Lagerfeld Paris, with comparable sales growth of about 40% during the fourth quarter of fiscal 2021. In addition, its power brands are adding up to the digital businesses of its retail partners, wherein digital sales penetration is currently approaching 40%, up from about 25% seen last year. Management is on track to drive growth across the digital landscape via investments in internal talent, re-platformed e-commerce sites, improved logistics capabilities and loyalty program.

Meanwhile, G-III Apparel boasts a robust brand portfolio of well-known brands and management is optimistic about its five global power brands like DKNY, Donna Karan, Calvin Klein, Tommy Hilfiger and Karl Lagerfeld Paris. Also, it has been witnessing accelerating demand for athleisure across its brands. The company’s casual offerings have also been driving the sportswear category. Also, the footwear and handbag businesses continued to remain strong. Moreover, the company’s Donna Karan International acquisition appears encouraging. Moving along, it is on track with the process of bolstering brands across channels with new launches, efficient marketing strategies and broader consumer reach.

Markedly, the completion of the restructuring of its retail segment included permanently shutting down of the Wilsons Leather and G.H. Bass stores. This restructuring is believed to cut losses from underperforming locations and make the division profitable. Management had earlier stated that post restructuring, the retail unit will comprise 41 DKNY and 13 Karl Lagerfeld Paris outlets. It would also include e-commerce sites for Donna Karan, Andrew Marc, Karl Lagerfeld Paris, DKNY, Wilsons Leather and G.H. Bass. It also added a capsule collection, which is exclusive to the company’s DKNY direct-to-consumer channels.

Outlook

The aforesaid strengths have aided management to offer upbeat sales view for the first quarter of fiscal 2022. For the same quarter, net sales are projected roughly at $460 million, which suggests an increase of 13.6% from $405.1 million in the year-ago quarter. Excluding sales of $19 million from the shuttered Wilsons Leather and G.H. Bass outlets in the first quarter of fiscal 2021, net sales would have been about 19% higher. Also, gross margins are likely to significantly improve year over year for the impending quarter.

We note that the Zacks Consensus Estimate for quarterly sales is pinned at $460.1 million. Moreover, the consensus mark for the fiscal first quarter has moved up to earnings of 13 cents from a loss of 5 cents over the past 30 days. Also, the consensus estimate for earnings currently stands at $2.33 for fiscal 2022 and $2.79 for fiscal 2023, up 4.5% and 9%, respectively, over the past 30 days.

Well, a VGM Score of B with an expected long-term earnings growth of 11.6% further speak of the company’s inherent potential. With that said, we expect G-III Apparel to continue with its momentum given the aforementioned strengths and sound fundamentals.

Don’t Miss These Solid Bets Too

Gildan Activewear GIL has a long-term earnings growth rate of 9% and currently sports a Zacks Rank #1.

Crocs CROX has a long-term earnings growth rate of 15% and currently has a Zacks Rank #2 (Buy).

Ralph Lauren RL, also a Zacks Rank #2 stock, having a long-term earnings growth rate of 8.2%.

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