G-III Apparel Group, Ltd. GIII reported mixed financial numbers for the first quarter of fiscal 2017. The company’s reported adjusted earnings of 6 cents per share surpassed the Zacks Consensus Estimate of 2 cents. However, the bottom line declined sharply from the year-ago figure of 15 cents.
The company reported net sales of $457.4 million, up 5.6% year over year. The top line, however, fell short of the Zacks Consensus Estimate of $475 million. Notably, this is the third consecutive quarter in which the company’s revenues have missed estimates. The year-over-year increase in sales was primarily driven by robust wholesale business. Nonetheless, the company is optimistic about growth in the second half of the year.
Gross profit for the reported quarter rose 7.3% to $165.7 million on the back of higher sales, while gross margin expanded 50 basis points to 36.2%. Operating profit plunged 54.1% to $5.4 million, while operating margin came in at 1.2% as against 2.7% in the year-ago quarter.
Balance Sheet
G-III Apparel ended the quarter with cash balance of $95.4 million and stockholders’ equity of approximately $901.7 million. The company had no outstanding debt at the end of the reported quarter. Capital expenditures for the quarter came in at $6 million.
Guidance
Management reiterated its fiscal 2017 guidance. Earnings per share are estimated in the band of $2.55–$2.65 per share compared with $2.46 in fiscal 2016. The company maintained its net sales guidance at $2.56 billion for fiscal 2017. The company expects adjusted EBITDA to increase in the range of 9% to 12% in fiscal 2017 or approximately between $228 million and $236 million.
For the fiscal second quarter, the company expects net sales of nearly $485 million compared with $473.9 million in the prior-year quarter. Earnings per share are expected between 15 cents and 19 cents as against 27 cents in the previous year quarter.
Zacks Rank & Stock to Consider
G-III Apparel currently has a Zacks Rank #4 (Sell). Some better-ranked stocks in the sector include Delta Apparel Inc. DLA, Oxford Industries Inc. OXM and Perry Ellis International Inc. PERY. Delta Apparel and Oxford Industries sport a Zacks Rank #1 (Strong Buy), while Perry Ellis International holds a Zacks Rank #2 (Buy).
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