Yahoo Finance Why Is G-III Apparel (GIII) Down 5.1% Since Last Earnings Report?
It has been about a month since the last earnings report for G-III Apparel Group (GIII). Shares have lost about 5.1% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is G-III Apparel due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
G-III Apparel’s Q1 Earnings Beat, Sales Down Y/Y
G-III Apparel posted better-than-expected results in first-quarter fiscal 2024, wherein the top and the bottom line beat the Zacks Consensus Estimate. Adjusted earnings of 13 cents per share outpaced the consensus estimate of a loss of 9 cents per share. However, the bottom line compared unfavorably with the year-earlier quarter’s earnings of 72 cents per share.
Q1 in Detail
Net sales fell 11.9% year over year to $606.6 million but surpassed the Zacks Consensus Estimate of $560 million. Lower sales at the wholesale division, offset by higher sales at the retail unit, aided the overall top line. Net sales for the Wholesale segment were $587 million, down roughly 14% year over year and the metric at the Retail segment was $30 million, up 7.1% from the prior-year quarter’s reported figure.
Moreover, gross profit jumped 1.5% year over year to $249.8 million. Meanwhile, the gross margin of 41.2% increased 550 basis points (bps). The wholesale segment’s gross margin was 39.9%, up 580 bps year over year. The Retail unit’s gross margin was 50.9%, up 100 bps from the year-ago period on lower inflationary pressures in product and transit expenses.
Selling, general and administrative expenses increased 23% year over year to $228 million. Further, operating profit came in at $15.3 million in the fiscal first quarter, compared with $54.5 million in the year-earlier quarter.
Other Financial Detail
G-III Apparel ended first-quarter fiscal 2024 with cash and cash equivalents of $289.7 million and total debt of $543 million. Total stockholders’ equity was $1,380.4 million.
It ended the fiscal first quarter in a net debt position of roughly $250 million versus $83 million in the prior year. The increase in net debt was buoyed by the $170 million in net cash utilized to complete the Karl Lagerfeld buyout and $44 million for stock repurchases. The company had cash and availability of about $800 million under its revolving credit agreement at the end of the quarter. The company has returned $17 million to its shareholders via stock repurchases.
Outlook
The fiscal 2024 outlook includes the inflationary pressures on consumers and on the company’s operations, along with incremental costs related to managing increased levels of inventory. Management expects solid cash flows this year as the inventory levels normalize.
For fiscal 2024, management projects net sales of about $3.29 billion compared with $3.23 billion reported in fiscal 2023.
Management anticipates gross-margin improvement in fiscal 2024, up nearly 350 bps year over year, driven by highly moderated freight costs. SG&A will de-lever on higher warehousing costs related to higher inventory levels and inflationary pressures.
Further, the company predicts adjusted EBITDA between $267 million and $272 million, compared with the adjusted EBITDA of $266.1 million in fiscal 2023. Adjusted net income is anticipated in the range of $132-$137 million, or $2.80-$2.90 per share for the current fiscal year versus net income of $138.8 million, or $2.85 per diluted share in fiscal 2023.
For the fiscal second quarter, management expects net sales of nearly $595 million, compared with $605.2 million in the prior-year quarter. The company forecasts a net loss for the same quarter in the band of $(5.0) million and break even or between $(0.10) per share and $0.00 per share, versus a net income of $36.3 million, or 74 cents per share, in the prior year’s quarter.
The company envisions an adjusted net loss of $3 million and net income of $2 million, or between a loss of 6 cents per share and earnings of 4 cents per share for the fiscal second quarter, versus an adjusted net income of $19 million, or 39 cents per share recorded in the second quarter of fiscal 2023.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month.
The consensus estimate has shifted -91.86% due to these changes.
VGM Scores
Currently, G-III Apparel has a nice Growth Score of B, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, G-III Apparel has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.
Performance of an Industry Player
G-III Apparel belongs to the Zacks Textile - Apparel industry. Another stock from the same industry, Lululemon (LULU), has gained 6.2% over the past month. More than a month has passed since the company reported results for the quarter ended April 2023.
Lululemon reported revenues of $2 billion in the last reported quarter, representing a year-over-year change of +24%. EPS of $2.28 for the same period compares with $1.48 a year ago.
Lululemon is expected to post earnings of $2.52 per share for the current quarter, representing a year-over-year change of +14.6%. Over the last 30 days, the Zacks Consensus Estimate has changed -0.1%.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #2 (Buy) for Lululemon. Also, the stock has a VGM Score of D.
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G-III Apparel Group, LTD. (GIII) : Free Stock Analysis Report
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