Here's Why G-III Apparel (GIII) is a Smart Investment Option
G-III Apparel Group, Ltd. GIII has shown remarkable resilience in the past year, with its shares jumping 36.4%. This growth stands in stark contrast to the 6.4% decline witnessed by the Zacks Textile - Apparel industry.
The company's success can be attributed to its robust omnichannel strategies, expansive market reach and adept financial management. Notably, G-III Apparel has outpaced the S&P 500 index, which has risen 25.2% in the same period. With such strong momentum, the stock appears poised to surpass its 52-week high of $35.68.
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Driving Factors
G-III Apparel is upgrading its e-commerce platforms for the DKNY and Karl Lagerfeld Paris brands by modernizing the websites, enhancing CRM capabilities and improving technical operations. Collaborations with major online retailers, such as Amazon and Fanatics, bolster this digital initiative.
Through a strategic partnership with AWWG, GIII is expanding its footprint in Europe by utilizing AWWG's infrastructure in Spain and Portugal. AWWG’s strong presence in the India market also presents growth opportunities for G-III’s brands.
In North America, GIII is transforming its retail business by making substantial marketing investments to enhance global brand awareness and sales. The company is reducing its reliance on PVH brands and increasing market penetration in fast-growing regions like India and China. This fall, G-III plans to add more than 2,500 points of sale at retail partners across better department stores, aiming for significant sales growth.
Performance-wise, G-III Apparel has experienced notable growth. In the first quarter of fiscal 2025, the wholesale segment's net sales rose to $598 million from $587 million the previous year. Despite closing nine stores, the retail segment's net sales increased to $31 million.
Brand Development & Marketing Bode Well
Brand development and marketing efforts have been strong for G-III Apparel. DKNY achieved robust 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 supported European expansion.
Karl Lagerfeld saw nearly 50% growth in North America, expanding distribution to 500 locations and launching the sustainable Karl Lagerfeld Jeans line, with plans to use the upcoming Olympics for brand promotion.
The relaunch of Donna Karan was a significant success, highlighted by high average unit retail, better sell-through rates and substantial retailer margins. Marketing campaigns featuring Cindy Crawford and Karlie Kloss have boosted consumer engagement.
These factors have led G-III Apparel to reaffirm its fiscal 2025 net sales guidance of $3.2 billion, indicating 3% year-over-year growth. This positive outlook is supported by strong brand performance, strategic marketing investments and effective cost management.
Valuation Standpoint
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 7.40, below the five-year median of 7.81 and the industry’s average of 13.06, the stock offers compelling value for investors seeking exposure to the sector. Additionally, the stock currently has a Value Score of B, further validating its appeal.
Zacks Estimate Revision
The positive sentiment surrounding G-III Apparel is reflected in the upward revisions of the Zacks Consensus Estimate for earnings per share. Over the past 30 days, analysts have increased the estimate for the current fiscal year by 8 cents, and the consensus estimate is now pegged at $3.63 per share. The consensus estimate for the next fiscal year has also been raised by 11 cents to $3.73 per share. Also, the Zacks Consensus Estimate for current and next year’s sales is pegged at $3.20 billion and $3.30 billion, respectively, suggesting year-over-year growth of 3.3% and 3.2%.
Conclusion
G-III Apparel, sporting a Zacks Rank #1 (Strong Buy) at present, is a compelling opportunity due to its strategic e-commerce enhancements, key partnerships with Amazon and Fanatics, and international expansion via AWWG. The company's focus on digital transformation, increased market penetration in Europe and India, and substantial marketing investments in North America to boost global brand awareness and sales point to strong growth prospects. This perspective underscores confidence in G-III Apparel's potential to consistently provide long-term value to investors.
3 Other Promising Stocks
A few other top-ranked stocks are Hanesbrands Inc. HBI, Crocs, Inc. CROX and Guess, Inc. GES.
Hanesbrands engages in the designing, manufacturing, sourcing and sale of apparel essentials. The company currently sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for HBI’s 2024 earnings indicates growth of 666.7% from the 2023 reported figures. HBI has a trailing four-quarter average earnings surprise of 10.2%.
Crocs is one of the leading footwear brands with its focus on comfort and style. The company has a Zacks Rank of 2 (Buy) at present. CROX delivered a 17.1% earnings surprise in the last reported quarter.
The consensus estimate for Crocs’ 2024 earnings and sales indicates growth of 5.2% and 4.4%, respectively, from the 2023 reported figures.
Guess designs, markets, distributes and licenses casual apparel and accessories. It has a Zacks Rank of 2 at present.
The Zacks Consensus Estimate for Guess’ fiscal 2024 sales indicates growth of 11.7% from the year-ago period’s reported figures. GES has a trailing four-quarter average earnings surprise of 31%.
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Hanesbrands Inc. (HBI) : Free Stock Analysis Report
Guess?, Inc. (GES) : Free Stock Analysis Report
Crocs, Inc. (CROX) : Free Stock Analysis Report
G-III Apparel Group, LTD. (GIII) : Free Stock Analysis Report
