G-III Apparel Beats, Lifts Guidance

Sep. 2.10 | About: G-III Apparel (GIII)

G-III Apparel Group Ltd. (NASDAQ:GIII) swung to a net income of $3.0 million or 15 cents per share in the second quarter of fiscal 2011 from a net loss of $2.8 million or 17 cents per share in the year-ago period. Quarterly result also surged past the Zacks Consensus Estimate for a loss of 2 cents per share.

Bolstered by the strong quarterly performance, G-III Apparel also lifted its fiscal 2011 earnings forecast. The company now expects earnings of $2.60 to $2.70 per share in the fiscal, compared to the earlier guidance of $2.20 and $2.30 per share. The Zacks Consensus Estimate for fiscal 2011 is currently pegged at $2.65 per share.

G-III Apparel’s quarterly net sales jumped 39.0% to $189.0 million from $135.9 million in the year-ago quarter. The growth was primarily driven by strong sales of women’s dresses, sportswear and suits coupled with higher sales from the Wilsons retail business.

G-III Apparel’s gross profit posted a growth of 48.9% year-over-year to $60.8 million, while gross margin expanded 210 basis points (bps) to 32.2%. Selling, general and administrative expenses increased 24.7% to $53.8 million from $43.2 million in the year-ago period. However, robust sales and gross margin more than offset the impact of increased overheads. Consequently, the company swung to an operating profit of $5.6 million, compared to an operating loss of $3.8 million in the year-ago quarter.

At quarter-end, the company had cash and cash equivalents of $6.1 million, compared to $5.7 million last year. Total borrowings also reduced to $77.4 million at the end of the quarter from $111.3 million in the year-ago period.

G-III Apparel is engaged in the manufacturing and distribution of outerwear, dresses, sportswear and women's suits under own brands, licensed brands and private label brands. The company’s own brands include Andrew Marc, Marc New York and Marc Moto brands. G-III Apparel also has fashion licenses for brands, such as Calvin Klein, Sean John, Kenneth Cole, Cole Haan, Jones New York, Jessica Simpson, Nine West, Ellen Tracy and Tommy Hilfiger.

G-III Apparel has a Zacks #3 Rank (short-term Hold rating), while in the long-term we have a Neutral recommendation on the company.