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G-III Apparel (GIII) Gains 29% in a Year: How to Play Ahead?
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G-III Apparel Group, Ltd. (GIII - Free Report) has showcased impressive resilience over the past year, with its shares gaining 28.8%. This growth contrasts sharply with the 10% decline in the Zacks Textile - Apparel industry. The company's success can be attributed to its robust omnichannel strategies, expansive market reach and adept financial management.
GIII’s operational prowess has also helped it outperform the broader Zacks Consumer Discretionary sector and the S&P 500’s respective growth of 6.5% and 26.3%. Closing at $25.89 as of Aug 19, G-III Apparel’s stock is currently trading 27.4% below its 52-week high of $35.68, attained on Dec 15, 2023.
From a valuation perspective, G-III Apparel’s shares present an attractive opportunity, trading at a discount relative to historical and industry benchmarks. With a forward 12-month price-to-earnings ratio of 7.03, which is below the five-year median of 7.71 and the industry’s average of 11.82, the stock offers compelling value for investors seeking exposure to the sector. Additionally, the stock currently has a Value Score of A, thus further validating its appeal.
Image Source: Zacks Investment Research
Decoding the Stock
G-III Apparel is upgrading its e-commerce platforms with a focus on the DKNY and Karl Lagerfeld Paris brands. The improvements include modernizing website design, expanding CRM capabilities and enhancing technical operations. Collaborations with major online retailers like Amazon and Fanatics are also driving this digital initiative.
Through a strategic partnership with AWWG, G-III Apparel is expanding its footprint in Europe by leveraging AWWG's infrastructure in Spain and Portugal. Additionally, AWWG's strong market presence in India presents growth opportunities for G-III's brands.
G-III is transforming its North American retail operations with substantial marketing investments aimed at boosting global brand awareness and sales. This strategy includes reducing reliance on PVH brands and increasing market penetration in rapidly growing regions like India and China. G-III plans to add more than 2,500 points of sale at retail partners in top department stores this fall, which is expected to drive significant sales growth.
Performance-wise, G-III Apparel saw notable growth in first-quarter fiscal 2025, with wholesale segment net sales rising to $598 million and retail segment net sales increasing to $31 million despite store closures.
Brand Development & Marketing Bode Well
G-III Apparel has made significant strides in brand development and marketing. DKNY achieved strong double-digit sales growth in the fiscal first quarter, fueled by marketing campaigns and strategic partnerships, including one with the New York Yankees. International pop-up events have also supported the brand's expansion in Europe.
Karl Lagerfeld saw nearly 50% growth in North America, with the expansion of its distribution to 500 locations and the launch of the sustainable Karl Lagerfeld Jeans line. The relaunch of Donna Karan has been a notable success, characterized by high average unit retail, improved sell-through rates and significant retailer margins. Marketing campaigns featuring Cindy Crawford and Karlie Kloss have driven strong consumer engagement.
As a result of these efforts, G-III Apparel has reaffirmed its fiscal 2025 net sales guidance at $3.2 billion, representing 3% year-over-year growth. This positive outlook is underpinned by strong brand performance, strategic marketing investments and effective cost management.
Near-Term Headwinds
Despite the positive factors, the Zacks Rank #3 (Hold) company has been navigating a tough operating landscape. Fluctuating consumer confidence due to underlying inflationary pressures has significantly altered spending patterns. With the tightening of disposable incomes, consumers are prioritizing essential purchases over discretionary spending, leading to a decline in demand. This might weigh on the company’s performance in the near term.
For the fiscal second quarter, it expects adjusted net income to be in the range of $10-$15 million and adjusted earnings in the band of 22-32 cents per share. Notably, the company reported an adjusted net income of $18.6 million and adjusted earnings of 40 cents per share in second-quarter fiscal 2024.
Conclusion
Nonetheless, G-III's strategic efforts, such as e-commerce enhancements, global expansion and a stronger emphasis on its own brands, are anticipated to adeptly manage the current business landscape. The company's commitment to digital innovation, deeper market reach in Europe and India and significant marketing initiatives in North America aimed at elevating global brand visibility and driving sales indicate robust growth potential. This outlook reinforces confidence in G-III Apparel's ability to deliver sustained long-term value to its investors.
The Zacks Consensus Estimate for Gap’s fiscal 2024 earnings and sales indicates growth of 24.5% and 0.2%, respectively, from fiscal 2023 reported figures. GPS has a trailing four-quarter average earnings surprise of 202.7%.
Skechers designs, develops, markets and distributes footwear. The company has a Zacks Rank of 2 at present.
The consensus estimate for Skechers’ 2024 sales and earnings indicates growth of 11.8% and 19.2%, respectively, from the 2023 reported figures.
American Eagle Outfitters is a specialty retailer of casual apparel, accessories and footwear. It currently has a Zacks Rank of 2.
The Zacks Consensus Estimate for American Eagle Outfitters’ fiscal 2024 earnings and sales indicates growth of 17.1% and 3.3%, respectively, from the year-ago actuals. AEO has a trailing four-quarter average earnings surprise of 28.1%.
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G-III Apparel (GIII) Gains 29% in a Year: How to Play Ahead?
G-III Apparel Group, Ltd. (GIII - Free Report) has showcased impressive resilience over the past year, with its shares gaining 28.8%. This growth contrasts sharply with the 10% decline in the Zacks Textile - Apparel industry. The company's success can be attributed to its robust omnichannel strategies, expansive market reach and adept financial management.
GIII’s operational prowess has also helped it outperform the broader Zacks Consumer Discretionary sector and the S&P 500’s respective growth of 6.5% and 26.3%. Closing at $25.89 as of Aug 19, G-III Apparel’s stock is currently trading 27.4% below its 52-week high of $35.68, attained on Dec 15, 2023.
From a valuation perspective, G-III Apparel’s shares present an attractive opportunity, trading at a discount relative to historical and industry benchmarks. With a forward 12-month price-to-earnings ratio of 7.03, which is below the five-year median of 7.71 and the industry’s average of 11.82, the stock offers compelling value for investors seeking exposure to the sector. Additionally, the stock currently has a Value Score of A, thus further validating its appeal.
Image Source: Zacks Investment Research
Decoding the Stock
G-III Apparel is upgrading its e-commerce platforms with a focus on the DKNY and Karl Lagerfeld Paris brands. The improvements include modernizing website design, expanding CRM capabilities and enhancing technical operations. Collaborations with major online retailers like Amazon and Fanatics are also driving this digital initiative.
Through a strategic partnership with AWWG, G-III Apparel is expanding its footprint in Europe by leveraging AWWG's infrastructure in Spain and Portugal. Additionally, AWWG's strong market presence in India presents growth opportunities for G-III's brands.
G-III is transforming its North American retail operations with substantial marketing investments aimed at boosting global brand awareness and sales. This strategy includes reducing reliance on PVH brands and increasing market penetration in rapidly growing regions like India and China. G-III plans to add more than 2,500 points of sale at retail partners in top department stores this fall, which is expected to drive significant sales growth.
Performance-wise, G-III Apparel saw notable growth in first-quarter fiscal 2025, with wholesale segment net sales rising to $598 million and retail segment net sales increasing to $31 million despite store closures.
Brand Development & Marketing Bode Well
G-III Apparel has made significant strides in brand development and marketing. DKNY achieved strong double-digit sales growth in the fiscal first quarter, fueled by marketing campaigns and strategic partnerships, including one with the New York Yankees. International pop-up events have also supported the brand's expansion in Europe.
Karl Lagerfeld saw nearly 50% growth in North America, with the expansion of its distribution to 500 locations and the launch of the sustainable Karl Lagerfeld Jeans line. The relaunch of Donna Karan has been a notable success, characterized by high average unit retail, improved sell-through rates and significant retailer margins. Marketing campaigns featuring Cindy Crawford and Karlie Kloss have driven strong consumer engagement.
As a result of these efforts, G-III Apparel has reaffirmed its fiscal 2025 net sales guidance at $3.2 billion, representing 3% year-over-year growth. This positive outlook is underpinned by strong brand performance, strategic marketing investments and effective cost management.
Near-Term Headwinds
Despite the positive factors, the Zacks Rank #3 (Hold) company has been navigating a tough operating landscape. Fluctuating consumer confidence due to underlying inflationary pressures has significantly altered spending patterns. With the tightening of disposable incomes, consumers are prioritizing essential purchases over discretionary spending, leading to a decline in demand. This might weigh on the company’s performance in the near term.
For the fiscal second quarter, it expects adjusted net income to be in the range of $10-$15 million and adjusted earnings in the band of 22-32 cents per share. Notably, the company reported an adjusted net income of $18.6 million and adjusted earnings of 40 cents per share in second-quarter fiscal 2024.
Conclusion
Nonetheless, G-III's strategic efforts, such as e-commerce enhancements, global expansion and a stronger emphasis on its own brands, are anticipated to adeptly manage the current business landscape. The company's commitment to digital innovation, deeper market reach in Europe and India and significant marketing initiatives in North America aimed at elevating global brand visibility and driving sales indicate robust growth potential. This outlook reinforces confidence in G-III Apparel's ability to deliver sustained long-term value to its investors.
Stocks to Consider
Some better-ranked stocks are The Gap, Inc. (GPS - Free Report) , Skechers U.S.A., Inc. (SKX - Free Report) and American Eagle Outfitters Inc. (AEO - Free Report) .
Gap is a premier international specialty retailer that offers a diverse range of clothing, accessories and personal care products. It currently has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Gap’s fiscal 2024 earnings and sales indicates growth of 24.5% and 0.2%, respectively, from fiscal 2023 reported figures. GPS has a trailing four-quarter average earnings surprise of 202.7%.
Skechers designs, develops, markets and distributes footwear. The company has a Zacks Rank of 2 at present.
The consensus estimate for Skechers’ 2024 sales and earnings indicates growth of 11.8% and 19.2%, respectively, from the 2023 reported figures.
American Eagle Outfitters is a specialty retailer of casual apparel, accessories and footwear. It currently has a Zacks Rank of 2.
The Zacks Consensus Estimate for American Eagle Outfitters’ fiscal 2024 earnings and sales indicates growth of 17.1% and 3.3%, respectively, from the year-ago actuals. AEO has a trailing four-quarter average earnings surprise of 28.1%.