G-III Apparel Group, Ltd. GIII is slated to report second-quarter fiscal 2019 results on Sep 6. The company outperformed the Zacks Consensus Estimate in all of the trailing four quarters. Let’s see how things are shaping up prior to this announcement.
Which Way Are Top & Bottom-Line Estimates Headed?
The Zacks Consensus Estimate for the quarter under review stands at 2 cents, reflecting a sharp improvement from a loss of 15 cents. We note that the Zacks Consensus Estimate has gone down by a penny in the last seven days. However, G-III Apparel’s bottom-line history has been encouraging. The company’s first-quarter fiscal 2019 results marked its fifth consecutive quarter of beat.
The Zacks Consensus Estimate for revenues of $590.5 million indicates an increase of 9.8% from the year-ago quarter. If all goes well, this may be the third straight quarter of top-line beat for the company. We note that total revenues of this New York-based company increased 15.6% in the last reported quarter.
Well, the obvious question that comes to mind is whether G-III Apparel will be able to sustain its positive surprise streak in the second quarter of fiscal 2018. Though the past trend indicates a beat, it will not be wise to jump to a conclusion without analyzing the factors at play.
G-III Apparel Group, LTD. Price and EPS Surprise
Factors Influencing Q2
G-III Apparel remain poised on acquisitions and partnerships along with its international expansion efforts. Some of its notable collaboration include Tommy Hilfiger, Karl Lagerfeld, Calvin Klein, Amlon Capital B.V, Macy’s and PVH Corp. It is undertaking efforts to expand business globally. In this regard, the company has opened two stores in Europe, one in the Netherlands and one in Spain in sync with its expansion plans.
Management had earlier announced plans to open six more stores in Mainland China and two stores in the Middle East. The company also signed a licensing agreement with Giada to produce 100% made in Italy premium denims that are likely to launch in 2019 spring.
Further, the growing DKNY and Donna Karan brands are encouraging. Per management, the company now generates significant portion of its revenues from licensing of the DKNY and Donna Karan brands. Some prominent licensees include PVH, Estée Lauder, Hanes brand, Fossil and Luxottica. The company is looking forward to improve profits and margin structure of business through licensing.
However, stiff competition and foreign exchange fluctuations still remain woes. We note that the company generates a significant amount of net sales outside the United States. Per management, some of the foreign operations purchase products from suppliers denominated in U.S. dollars and Euros. This may expose such operations to rise in cost of goods sold, in turn, resulting in low-profit margins.
What Does the Zacks Model Say?
Our proven model does not conclusively show that G-III Apparel is likely to beat estimates this quarter. A stock needs to have both — a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) and a positive Earnings ESP — for this to happen. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
G-III Apparel has a Zacks Rank #3 but an Earnings ESP of -33.33%, making surprise prediction difficult.
Stocks With Favorable Combination
Here are some better-ranked companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:
Ollie's Bargain Outlet Holdings, Inc. OLLI has an Earnings ESP of +2.74% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Dave & Buster's Entertainment, Inc. PLAY has an Earnings ESP of +1.49% and a Zacks Rank #3.
NIKE, Inc. NKE has an Earnings ESP of +3.56% and a Zacks Rank #3.
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