Dress and sportswear sales helped G-III Apparel Group Ltd. past Wall Street expectations for its third quarter and raise its outlook for the year.
In the three months ended Oct. 31, the New York-based apparel maker said Wednesday that profits increased 12 percent to $32.3 million, or $1.87 a diluted share, from $28.8 million, or $1.68, in the 2008 quarter. Sales increased 3.4 percent to $363.5 million from $351.6 million.
On average, analysts polled by Yahoo Finance expected earnings per share of $1.64 on revenues of $352.4 million.
On a morning conference call, chairman and chief executive officer Morris Goldfarb said double-digit sales gains in dresses and sportswear, as well as the company’s Wilsons division, contributed to higher revenue. Goldfarb said he expects the dress and sportswear categories to serve as “growth engines” for the company, adding G-III has expanded its infrastructure for both.
The firm, best known in the past as an outerwear supplier, upgraded its full-year guidance to EPS of $1.31 to $1.35 from estimates of 95 cents to $1.05. The new outlook implied that the company expects fourth-quarter results to land between a loss per share of 2 cents and a profit of 2 cents. Before the revision, analysts had estimated the apparel would suffer a loss of 4 cents a share in the current three months, on average.
The better-than-anticipated results and an optimistic fourth-quarter outlook lured investors to G-III’s stock Wednesday. Shares of the firm were up 5.9 percent, gaining $1.03 to close at $18.53.
Analysts at both Lazard Capital Markets and Brean Murray, Carret & Co. issued “buy” ratings for G-III.
“We believe that 3Q results validate the company’s growth strategies into dresses and sportswear, and augur well for an acceleration in revenue, cash flow, and EPS in 2010, while also helping to diversify the earnings stream into three of its four quarters,” Lazard analyst Todd Slater wrote in a research note.
For the nine months, G-III’s profits rose 25.5 percent to $22.7 million or $1.33 a share, from $18.1 million, or $1.07 a share, in 2008. Sales rose 12.3 percent in the three quarters to $607 million from $540.5 million a year ago.