G-III Apparel (GIII) Lags Q2 Earnings, Trims View; Stock Falls

Shares of G-III Apparel Group, Ltd. (NASDAQ:GIII) nosedived nearly 21% after the company reported dismal quarterly numbers for the second quarter of fiscal 2017. Following the weak results, the company also trimmed its fiscal 2017 outlook.

The company’s adjusted earnings of 1 cent per share fell way below the Zacks Consensus Estimate of 17 cents. Moreover, the bottom line also declined sharply from the year-ago figure of 27 cents.

The company reported net sales of $442.3 million, down 6.7% year over year. The top line also fell short of the Zacks Consensus Estimate of $485 million. Notably, this is the fourth consecutive quarter in which the company’s revenues have missed estimates.

Gross profit for the reported quarter decreased 7.5% to $155.6 million, while gross margin contracted 30 basis points (bps) to 35.2%. The company reported operating loss of $5.2 million. In the year-ago quarter, the company had reported operating income of $20.9 million.

Balance Sheet

G-III Apparel ended the quarter with a cash balance of $45 million and stockholders’ equity of approximately $900.1 million. The company had no outstanding debt at the end of the reported quarter. Capital expenditures for the quarter came in at $13 million.

Guidance

Management trimmed its fiscal 2017 guidance. The company expects earnings per share in the range of $2.16–$2.26, down from the earlier estimate of $2.55–$2.65. The company reduced its net sales guidance to $2.48 billion from $2.56 billion for fiscal 2017. The company expects adjusted EBITDA to decrease in the range of 2% to 5% in fiscal 2017 or approximately between $199 million and $206 million. Earlier, the company had expected adjusted EBITDA between $228 million and $236 million.

For the fiscal third quarter, the company expects net sales of nearly $940 million compared with $910 million in the prior-year quarter. Earnings per share are expected between $1.50 and $1.60 compared with $1.87 reported in the year-ago period

The Zacks Consensus Estimate for the fiscal third quarter and fiscal 2017 is currently pegged at $2.00 and $2.57 per share, respectively, and could witness a downward revision.

Zacks Rank & Stock to Consider

G-III Apparel currently has a Zacks Rank #4 (Sell). Some better-ranked stocks in the sector include Delta Apparel Inc. (NYSE:DLA) , PVH Corp. (NYSE:PVH) and Ralph Lauren Corporation (NYSE:RL) . All these stock hold a Zacks Rank #2 (Buy).

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