G-III Apparel Group, Ltd. GIII posted first-quarter fiscal 2016 earnings per share of 15 cents that fared significantly better than the Zacks Consensus Estimate of 7 cents as well as the prior-year quarter figure of 3 cents.
The company’s impressive performance was enough to drive shares up 7.1% during after-market trading hours yesterday. It is to be noted that earnings were in line with the high-end of the company’s guidance range of 5–15 cents a share.
Net sales came in at $433 million, up 18.2% year over year and also ahead of the Zacks Consensus Estimate of $404.7 million. Sales also surpassed the company’s previous guidance of $406 million.
Sales continue to get a boost from the acquisition of G.H. Bass & Co. Also, G-III Apparel’s wholesale business remained solid while retail sales improved year over year. The Calvin Klein brand, together with Eliza J and Vince Camuto brands contributed significantly to sales.
Gross profit for the quarter escalated 18.7% to $154.4 million with gross margin expanding 20 basis points (bps) to 35.7%. Additionally, operating profit advanced to $11.7 million from $3.5 million in the year-ago period. Operating margin for the quarter rose 180 bps to 2.7%.
Balance Sheet
G-III Apparel ended the quarter with cash balance of $85.7 million, total assets worth $952.1 million and stockholders’ equity of approximately $761.2 million.
Capital expenditures for the first quarter came in at $8 million. The company projects capital expenditures in the range of $35–$40 million for the full year, to be allocated toward leasehold improvements for Wilson stores, G.H. Bass, and Vilebrequin stores as well as additional costs at other stores.
Fiscal 2016 Guidance Raised
On account of its strong first-quarter performance, the company has upwardly revised its fiscal 2016 guidance. Management now expects net sales of $2.40 billion for fiscal 2016, up from the previous forecast of $2.37 billion. Adjusted EBITDA is now expected to be in the range of $225–$233 million, up from the prior projection of $214—$224 million.
Earnings per share are now expected to be in the band of $2.66 to $2.76, up from $2.52 to $2.62 projected earlier. Currently, the Zacks Consensus Estimate is pegged at $2.63 per share and may witness upward revisions.
For the second quarter of fiscal 2016, net sales are expected to be approximately $470 million as against $424 million reported in the year-ago quarter. Earnings are expected to be in the range of 15–20 cents per share as against 14 cents earned in the prior-year quarter. The Zacks Consensus Estimate currently stands at 19 cents per share.
Stocks to Consider
G-III Apparel currently holds a Zacks Rank #3(Hold). Some better-ranked stocks in the same industry include Perry Ellis International Inc. PERY, Columbia Sportswear Company COLM and Oxford Industries Inc. OXM. While Perry Ellis International sports a Zacks Rank #1 (Strong Buy), Columbia Sportswear and Oxford Industries carry a Zacks Rank #2 (Buy).
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