Update: GIII-Apparel Earnings

Sep. 5.14 | About: G-III Apparel (GIII)


The company beat 2Q consensus on the top and bottom lines sending shares up 4%.

We are still bullish on the company’s margin improvement but note the valuation isn’t as compelling now.

We expected the company to start seeing marked earnings growth as it boosted margins.

GIII-Apparel (NASDAQ:GIII) posted 2Q earnings of $0.29 a share - topping $0.16 consensus - and revenues were $424 million - besting $391 million consensus. Sales were up 39% y/y and net income was up 72% y/y.

Fiscal 2015 guidance was also upped, with sales expected to be around $2.1 billion and EPS of between $4 and $4.15. Compare that to consensus of $2.08 billion for revenues and $4.08 for EPS.

Shares are up 63% since we first covered the company in September of last year, at the time noting that it was a unique player in apparel with owned and licensed brands. As we noted,

For its licensed brands, the company has relationships with Calvin Klein, Guess?, NFL, NBA, MLB, NHL, Cole Haan, Dockers, Jessica Simpson, Kenneth Cole, Levi's, Tommy Hilfiger, Ivanka Trump and many others. The company operates retail stores under the Wilsons Leather, Vilebrequin, Calvin Klein Performance and Andrew Marc names.

The company remains an interesting candidate for a takeout, but it should continue outperforming if it remains independent. Shares are now trading at 18x forward earnings, which is slightly above our justified 16x P/E. We feel that there's still a lot to love with the company but wouldn't suggest taking a new long position at these levels.

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