G-III Apparel Group, Ltd. (GIII) announced better-than-expected third-quarter fiscal 2014 results, following which shares rose 13.3% and closed at $66.05. The company’s adjusted quarterly earnings of $2.88 were 10.3% higher than the Zacks Consensus Estimate of $2.61 and up 18.5% year over year.
Including certain one-time items, earnings came in at $2.85 per share, up 20.3% from the prior-year quarter.
Better-than-expected results were driven by robust performance of specialty retail operations and the wholesale business. The company expects acquisition of G.H. Bass & Co. to boost specialty retail operations further, going forward.
Total revenue climbed 23.0% year over year to $668.7 million and handily beat the Zacks Consensus Estimate of $621.0 million.
Gross profit for the quarter was $227.3 million, up 19.5% year over year. Increase in sales was partly offset by nearly 25% rise in cost of goods sold. Gross margin was 34%, down 100 basis points (bps) year over year.
Operating income was $98.7 million, up 21.7% year over year while operating margin was 14.8%, down 10 bps from the prior-year quarter.
Balance Sheet
As of Oct 31, 2013, G-III Apparel had $29.8 million in cash, $323.3 million in inventory and total assets worth $1,004.6 million. On the other hand, the company had long-term debt of $20.3 million and stockholders equity of $505.8 million.
Guidance
Based on robust third-quarter 2014 results and expected synergies from the acquisition of G.H. Bass & Co, G-III Apparel raised its full-year 2014 guidance. The company now anticipates sales to be about $1.73 billion, as against the earlier projection of $1.61 billion.
Further, net income is expected to be $72–$74 million or $3.47–$3.57 per diluted share compared to the previous range of $68.6–$70.6 million or $3.30–$3.40 per share.
On the other hand, adjusted earnings per share are expected to be $3.50 to $3.60 for fiscal 2014. The Zacks Consensus Estimate for fiscal 2014 stands at $3.31 per share, which is likely to witness upward revision. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) are expected to increase 22%–25% and reach around $139.0–$142.5 million compared with the earlier guidance of approximately $132.3–$135.4 million.
Currently, G-III Apparel carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the retail sector include Hanesbrands Inc. (HBI), Michael Kors Holdings Limited (KORS) and Quiksilver Inc. (ZQK). While Hanesbrands and Quiksilver carry a Zacks Rank #1 (Strong Buy), Michael Kors has a Zacks Rank #2 (Buy).
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