What happened
Shares of G-III Apparel (NASDAQ: GIII) were moving higher today after the apparel brand licensing company trounced analyst estimates in its second-quarter earnings report.
As of 12:21 p.m. ET, the stock was up 18.7%.
So what
In a challenging environment in the apparel industry, G-III posted 9% revenue growth to $659.8 million, easily beating the analyst consensus at $592.3 million.
On the bottom line, the company reported adjusted earnings per share (EPS) of $0.40, up from $0.39 in the quarter a year ago, which was well ahead of expectations at just $0.01 per share. The strong performance was driven by a sharp reduction in inventories, falling 23%, which helped support a surge in gross margin as the company reduced markdowns. Gross margin jumped 410 basis points to 41.9%, helping the company overcome higher selling, general, and administrative expenses.
The company also signed a deal with Hanesbrands to license Champion, adding another well-known brand to its portfolio.
CEO Morris Goldfarb said, "For the second quarter of fiscal 2024, we once again beat both our top- and bottom-line guidance and made progress on our strategic priorities. Our first-half performance further validates G-III's ability to successfully navigate what remains a dynamic environment."
Now what
Looking ahead, the company raised its guidance once again. For the current fiscal year, it now expects revenue of $3.3 billion, up 2% from last year, and it forecast adjusted EPS of $3.20-$3.30, up from $2.85 in fiscal 2023. Both figures were ahead of analyst estimates.
For the third quarter, its seasonally strongest period due to sell-in from the holiday season, the company expects adjusted EPS of $2.03-$2.13, up from $1.35 in the quarter a year ago.
Given the strong beats on the top and bottom lines and the guidance raise, it's not surprising to see the stock soaring today. The company is clearly executing on its inventory and margin goals, gaining market share, and expanding its brand portfolio. If it can maintain its current momentum, the stock looks like a bargain at a forward P/E of just above 7.
10 stocks we like better than G-III Apparel Group
When our analyst team has a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*
They just revealed what they believe are the ten best stocks for investors to buy right now... and G-III Apparel Group wasn't one of them! That's right -- they think these 10 stocks are even better buys.
*Stock Advisor returns as of September 5, 2023
Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends G-III Apparel Group. The Motley Fool has a disclosure policy.
