Shares of G-III Apparel Group, Ltd. GIII jumped 14.3% during the trading hours on Mar 17, following the sturdy fourth-quarter fiscal 2022 results. Both the top and the bottom line beat the Zacks Consensus Estimate and grew year over year. This marked the seventh straight earnings beat for GIII. Results gained from strength in the company’s brands and digital business.
Over the past six months, shares of this presently Zacks Rank #3 (Hold) player have increased 5.6%, outperforming the industry’s 0.9% dip.
Q4 in Detail
G-III Apparel delivered earnings per share of 98 cents, beating the Zacks Consensus Estimate of 64 cents. Also, the reported figure rose sharply from 30 cents a share delivered in the year-ago quarter.
We note that G-III Apparel completed the restructuring of its retail segment during the last fiscal year and shuttered the Wilsons Leather and G.H. Bass stores. The prior-year quarter’s results included net loss of $8.6 million or loss of 17 cents per share from the Wilsons and G.H. Bass store operations.
Net sales jumped 42% year over year to $748.2 million and came above the Zacks Consensus Estimate of $735 million. The top-line outperformance can be attributed to healthy sales performance at the Wholesale and Retail divisions.
GIII Apparel Group, LTD. Price, Consensus and EPS Surprise
GIII Apparel Group, LTD. price-consensus-eps-surprise-chart | GIII Apparel Group, LTD. Quote
G-III Apparel has been accelerating the digital growth and strives to become the best omni-channel organization. Two years ago, fourth-quarter digital sales rose 35% on the company’s partners’ sites, and more than 60% on its own DKNY and Karl Lagerfeld Paris sites. In China, digital sales exceeded store sales. Vilebrequin’s digital sales registered solid double-digits increases versus last year.
A Sneak Peek Into Margins
Gross profit increased 34.5% year over year to $252.3 million. However, gross margin of 33.7% contracted 190 basis points (bps) from the prior-year period’s reading. The year-ago period's gross margins included gains from the pandemic-related adjustments.
SG&A expenses grew nearly 17% year over year to $177.2 million. G-III Apparel reported an operating income of $67.2 million, up 144.4% from the year-ago quarter’s number.
Net sales at the Wholesale segment were $719 million, up 47% from the year-earlier quarter. However, the segment’s gross margin declined nearly 360 bps from the year-ago quarter’s level to 31.9%.
Net sales at the Retail segment totaled $45 million, relatively flat with the prior-year quarter’s level. Nonetheless, the segment’s gross margin grew sharply to 51.3% from 32.2% registered in the year-earlier quarter.
G-III Apparel ended the fiscal second quarter with cash and cash equivalents of $466 million and long-term debt of $519.6 million. Total stockholders’ equity was $1,519.9 million. Inventories increased 23% to $512.2 million at the end of the reported quarter.
The company’s board raised its earlier authorized share repurchase program. There were 2.3 million shares remaining under its prior program that has been increased to 10 million shares. Currently, it has about 47.9 million shares outstanding.
Management provided its outlook for fiscal 2023. This view takes into account the anticipated impact of the ongoing supply-chain conditions with the expectations of higher shipping costs and delays in receipt of goods. It expects higher gross margins in fiscal 2023 in comparison to fiscal 2022. The company anticipates slightly deleveraged SG&A expenses based on inflationary pressures, elevated headcount and warehousing costs.
For fiscal 2023, G-III Apparel projects net sales of $3 billion, up from $2.77 billion reported in fiscal 2022. On adjusting for the closed Wilsons and Bass stores sales of $252 million in fiscal 2020, this view exceeds the pre-pandemic sales levels in fiscal 2020 by nearly 4%. It forecasts net income between $205 million and $215 million compared with $200.6 million generated last fiscal. Management envisioned earnings per share of $4.20-$4.30, higher than $4.05 earned last fiscal.
For the fiscal first quarter, management expects net sales of nearly $600 million versus $519.9 million recorded in the year-earlier quarter. Net income is anticipated in the band of $25-$30 million and adjusted earnings per share of 50-60 cents. In the first quarter of fiscal 2022, the company delivered net income of $26.3 million and earnings per share of 53 cents.
Eye These Solid Picks
Some better-ranked stocks are Gildan Activewear GIL, Columbia Sportswear COLM and Delta Apparel DLA.
Gildan Activewear, which manufactures and sells various apparel products, sports a Zacks Rank #1 (Strong Buy) at present. Shares of Gildan Activewear have increased 2.4% in the past three months. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Gildan Activewear’s 2022 sales and EPS suggests growth of 8.9% and 3.3%, respectively, from the year-ago reported figure. GIL has a trailing four-quarter earnings surprise of 66.6%, on average.
Columbia Sportswear currently has a Zacks Rank #2 (Buy). The company has a trailing four-quarter earnings surprise of 203.3%, on average. Shares of COLM have increased 5.4% in the past three months.
The Zacks Consensus Estimate for Columbia Sportswear's current financial-year sales suggests growth of 17.7% and that for EPS indicates growth of 8.1% from the year-ago period's reported figure.
Delta Apparel currently carries a Zacks Rank #2. The company has a trailing four-quarter earnings surprise of 21.3% on average. Shares of DLA have increased 3.6% in the past three months.
The Zacks Consensus Estimate for Delta Apparel's current financial year’s sales and earnings per share suggests growth of 12.3% and 19.1%, respectively, from the year-ago period's reported numbers.
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