Dress Up Your Portfolio With This Apparel Retailer

Himanshu is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.

The retail industry has become increasingly interesting recently. Each quarter brings a different set of challenges and opportunities which offer different directions to the industry players. Cost inflation was the biggest challenge some time back and it was the cause of all problems in retailers’ lives. Coupled with the problem of increasing input prices, was the difficult economic environment which was not letting people spend.

However, with economic recovery and a better job environment people started opening up their wallets which came in as a relief to retailers. Then came the opportunity of attracting more and more customers through better strategies and measures such as increased promotions, innovative products, expansion and acquisitions. A true example here is G-III Apparel (NASDAQ: GIII), provider of outerwear and accessories, which has managed to come out of every situation healthily. Let us get into the details.

G-III posted its third quarter results which were beyond expectations. Not only were the results worth noting but also was the guidance. G-III upgraded its guidance upward giving investors even more confidence in the company.

Snapshot of the Quarter…

Both the top line and bottom line surged almost 7% and 13%, respectively, over last year. Great performance by the licensed wholesale segment and the retail segment drove revenue north to $544 million. Only the non-licensed wholesale segment was a laggard which was more than offset by the other two segments’ sizzling performance.

The retail segment grew well because of expansionary measures taken and higher customer traffic at the retailer’s stores. Also, its effort of expanding in the right regions such as emerging markets, have been quite fruitful. PVH’s licensed brand Calvin Klein has played a very important role in boosting G-III’s revenue. Considering the popularity and success of Calvin Klein, G-III has partnered with it to expand in other emerging markets which are expected to beget great results.

However, the most surprising improvement was at the bottom line. Adjusted earnings rose to $2.43 per share as the retailer managed its costs efficiently. Its commendable cost control efforts paid off which showed up in its results. This is highly impressive considering G-III Apparel’s bleeding bottom line some time back. Even the margins improved during the quarter.

Well Stacked Against Peers…

G-III Apparel’s has been providing great returns to its investors as compared to its peers such as Ralph Lauren (NYSE: RL) and Columbia Sportswear Company (NASDAQ: COLM). This can be depicted by the stock price performance chart below:

<img src="http://media.ycharts.com/charts/111cd2f86b007c9be9522c1de5968eee.png" />

GIII data by YCharts

Clearly, G-III tops expectations with an appreciation of 151.3% in its stock price. Its acquisition strategy has paid off well along with its expansionary moves.

However, even Ralph Lauren has provided great returns to its investors through its premium offerings. Its innovative product offerings have been customer favorites. Moreover, even Ralph Lauren has been experiencing increased customer interest showing up on its wholesale and retail operations. The company has plans to expand largely by opening new stores and strengthening its online operations.

Columbia Sportswear, on the other hand, has not been very bright with only 18.6% stock price appreciation in the last 5 years. Though it has been highly innovative in its products, its performance has not been very good. Nonetheless, the company still continues to create new things, such as battery-powered jackets which keep people warm during cold weather, which might help the company in future.

Some Enticing Factors…

Coming back to G-III Apparel, it has some interesting points to ponder. Firstly, its acquisition of Vilebrequin, retailer of men’s luxury resort wear, seems like a great opportunity to strengthen its men’s segment. Moreover, it’s a popular brand with premium resort wear for the higher-end market.

Its expansion plans also look reasonable enough as it gets into the emerging markets where there is huge potential and the market is highly untapped. Its partnership with Calvin Klein has already started off and the number of new stores, under the agreement, is expected to rise soon.

Winding Up…

The company looks good and has been becoming more interesting with each passing quarter. It has managed to outshine its competitors through impressive strategies. Acquisition has played a very crucial role in G-III’s growth and definitely paves the path for a brighter future. Plans of expansion and a rocking guidance have made me think positively about the company. Investors should definitely not ignore this retailer for a long-term investment.


justhimanshu has no positions in the stocks mentioned above. The Motley Fool has no positions in the stocks mentioned above. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!

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