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G-III Apparel stock rallies on stronger-than-expected Q4 earnings

Shares of G-III Apparel Group (GIII) rallied in pre-market trading Thursday after its fourth-quarter earnings more than doubled and topped expectations, aided by a 7% growth in sales. The company also provided guidance for the first quarter and fiscal 2020.

Earnings, adjusted for one-off items, climbed to $0.55 per share from $0.26 per share in the corresponding quarter of 2018, far exceeding the estimates. On a reported basis, the clothing maker posted earnings of $24.1 million or $0.48 per share for the January quarter, compared to a loss of $0.5 million or $0.01 per share a year earlier.

The company, which manufactures popular brands like Calvin Klein and Tommy Hilfiger, said net sales moved up 7.3% annually to $766.8 million in the fourth quarter. It was broadly in line with the market’s prediction. Meanwhile, the bottom-line was negatively impacted by higher selling costs, which was more than offset by a decline in operating expenses.

The bottom-line negatively impacted by higher selling costs, which was more than offset by a decline in operating expenses

Morris Goldfarb, CEO of G-III Apparel, said, “With the current power brands we have today, we believe we can continue to achieve significant organic growth opportunities over the next several years. In addition, the strength of our balance sheet allows us to capitalize on the right acquisition opportunity.”

Related: G-III Apparel Group Q3 2019 Earnings Conference Call Transcript

Looking ahead, the management expects sales to increase to $3.28 billion in fiscal 2020. Adjusted profit is estimated to be between $167 million or $3.25 per share and $172 million or $3.35 per share. The forecast for unadjusted earnings is $3.18-$3.28 per share.

In the first quarter of 2020, sales are expected to grow 6.3% year-on-year to $650 million. Adjusted earnings are forecast to be between $0.15 per share and $0.25 per share, the mid-point of which comes slightly below the prior-year number. The company is looking for unadjusted profit in the range of $7 million or $0.13 per share to $12 million or $0.23 per share in the current quarter.

Among the other apparel makers, Nike (NKE) is scheduled to publish its third-quarter earnings report Thursday after the closing bell. Analysts see a 6% year-over-year decline in earnings to $0.64 per share, on revenues of $9.57 billion.

G-III Apparel shares surged more than 8% Thursday following the announcement, after closing the previous day’s session lower. The stock, which is currently trading broadly at the levels seen a year earlier, gained about 23% so far this year.


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