Shares of G-III Apparel Group Ltd. jumped 9.8 percent after the company’s beat on third-quarter earnings per share estimates.
But while the third quarter was strong, G-III lowered its full-year guidance based on anticipated softer sales in the fourth quarter.
For the three months ended Oct. 31, net income rose 8.1 percent to $87.2 million, or $1.87 a diluted share, from $80.6 million, or $1.76, a year ago. On an adjusted basis, diluted EPS was $1.85 compared with $1.54 a year ago. Net sales rose 12 percent to $909.9 million from $812.3 million. Wall Street was expecting EPS of $1.78 on sales of $912.9 million.
Morris Goldfarb, chairman, chief executive officer and president, said, “Our organic sales and profit increase clearly differentiate us as a leader in our industry. We achieved this performance in a challenging market environment.”
Goldfarb said on the conference to Wall Street analysts, “While the weather is going to make for a tougher coat season this year, it is manageable. We expect to end the season with clean inventories and acceptable margins, both for us and for our retail partners. Our expectation for full year double-digit top line growth with nearly twice that rate on the bottom line continues to show a very healthy company.”
As for other product categories, Goldfarb said, “Our dress, suits, sportswear and handbag businesses are performing really well. The dress business is strong for us. We’re gaining market share with our existing brands as well as from new power brands in our portfolio. We are the leader in the dress category, and we will build on this position.”
Goldfarb noted that G-III has become “one of the strongest companies in our industry…. An important part of our skill set is the ability to make decisive, accurate decisions that maximize the opportunity both for us and for our customers, basically, in any environment. Even with the revision to our forecast, this will be another record year and we’re positioned with powerful growth initiatives as we move into fiscal 2017.”
The company left unchanged its projection of $2.40 billion in net sales for the full fiscal year ending Jan. 31, 2016. It revised net income and diluted EPS guidance, and now is forecasting that at between $124 million and $131 million, or a range of between $2.67 and $2.82 a share. That’s compared with prior guidance of net income between $129 million and $134 million, or a diluted EPS range of $2.78 to $2.88. Net income for the last fiscal year was $110.4 million, or $2.48 in diluted EPS. The updated guidance is still within Wall Street’s current unrevised consensus estimate of $2.77 in diluted EPS on sales projections of $2.41 billion.
Shares of G-III on Wednesday closed at $52.02.
Separately, the company also revealed the reapproval of its share repurchase program. The company’s board approved an increase in the previously authorized share repurchase program, increasing the number of shares in the program to 5 million from 3.75 million. The timing of the actual number of shares that will be repurchased will depend on a number of factors, such as market conditions and prevailing stock prices. There are currently 45.5 million shares of common stock outstanding.