G-III Apparel Group, Ltd. (GIII – Snapshot Report) is in the wrong place at the wrong time. This Zacks Rank #5 (Strong Sell) provides apparel and accessories to the big department stores.
G-III makes and distributes apparel and accessories under licensed brands and its own brands.
It has fashion licenses for some of the biggest names in fashion including Calvin Klein, Tommy Hilfiger, Karl Lagerfeld, Kenneth Cole, Cole Haan, Guess, Jones New York, Jessica Simpson, Vince Camuto, Ivanka Trump, Ellen Tracy, Kensie, Levi’s and Dockers.
It actually owns its own brands including Vilebrequin, Andrew Marc, Marc New York, Bass, G.H. Bass, Weejuns, Eliza J, Black Rivet and Jessica Howard.
It also operates retail stores under the Wilsons Leather, Bass, G.H. Bass & Co, Vilebrequin and Calvin Klein Performance names.
Warm Weather Hit Q4 of Fiscal 2016
On Mar 22, G-III reported fiscal fourth quarter results ended Jan 31, 2016 and it missed by $0.25 as warm weather crushed its large coat business.
G-III is one of the biggest suppliers of winter coats to the department stores. But the warm winter meant coat sales didn’t materialize.
However, its non-outerwear Calvin Klein businesses as well as its dress and team sport businesses did well in the quarter.
It has partnered with Karl Lagerfeld in what the company is hoping is a long partnership in North America and it has expanded its relationship with Tommy Hilfiger.
Estimates Cut
Despite some of the positives, including positive comps at G.H. Bass, the department store business is being hit.
The analysts have cut estimates since the March report.
5 estimates have been lowered in the last 2 months, pushing the Zacks Consensus down to $2.59 from $3.12 in that time.
That’s earnings growth of just 6.1%, below the company’s estimates.
Shares Hit 52-Week Lows
G-III doesn’t report again until June. Until then, there really won’t be any news out of the company about how things are going.
Instead, investors will listen to what Macy’s and Nordstrom are saying and extrapolate that to G-III.
Because both of them had weaker-than-expected earnings, shares of G-III have sold off, hitting new 52-week lows.
The shares are cheap again, with a forward P/E of 15, but they’re not yet dirt cheap.
The retail sector is out of favor with investors, especially in apparel, but if you’re interested in investing in the sector, you may want to focus on one of the athletic apparel retailers, like lululemon (LULU – Analyst Report), which is on trend. It’s a Zacks Rank #3 (Hold) but earnings are expected to grow by the double digits this year and next.
[In full disclosure, the author of this article owns shares of G-III.]
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