G-III Apparel Q3 Earnings Beat Estimates, Retail Sales Rise Y/Y

G-III Apparel Group, Ltd.’s GIII third-quarter fiscal 2025 earnings beat the Zacks Consensus Estimate but sales missed the same. The company’s top line increased and bottom line declined year over year. In the fiscal third quarter, G-III Apparel Group focused on expanding its owned brands like DKNY, Karl Lagerfeld, Donna Karan and Vilebrequin while introducing new licensed products, such as Nautica and Champion outerwear. Enhanced marketing efforts, particularly digital campaigns, boosted consumer engagement and supported key launches. Operational improvements included reducing reliance on China-based manufacturing to more than 30% and streamlining warehousing. The North American retail segment transformation progressed, nearing profitability through management and merchandising changes. Internationally, the company prioritized growth with partnerships like AWWG in Europe. These strategic initiatives demonstrate G-III’s commitment to brand development, efficiency and market expansion. Shares of this Zacks Rank #3 (Hold) company have risen 34.1% in the past six months compared with the industry’s 19.1% growth.G-III Apparel Group, LTD. Price, Consensus and EPS Surprise G-III Apparel Group, LTD. price-consensus-eps-surprise-chart | G-III Apparel Group, LTD. QuoteMore on G-III Apparel's Q3 ResultsAdjusted earnings of $2.59 per share surpassed the Zacks Consensus Estimate of $2.26. The bottom line decreased 6.8% from the year-earlier quarter’s adjusted earnings of $2.78 per share.Net sales increased 1.8% year over year to $1,086.8 million and missed the consensus estimate of $1,100 million.Net sales in the wholesale segment reached $1.07 billion, up from $1.05 billion in the previous year. This was driven by the strong growth of owned brands in North America, partially offset by a decline in the Calvin Klein and Tommy Hilfiger businesses. In the retail segment, net sales totaled $42.3 million for the quarter compared with $32.7 million in the third quarter of the prior year. The increase was driven by strong double-digit comparable sales growth, despite the closure of seven stores during the quarter.The Zacks Consensus Estimate for wholesale and retail segment net sales was pegged at $1.09 billion and $34.3 million, respectively, for the quarter under review.Insight Into GIII’s Margins & ExpensesGross profit decreased 0.3% year over year to $432.1 million in the fiscal third quarter. We note that the gross margin contracted 80 basis points (bps) year over year to 39.8%. The wholesale segment's gross margin was 38.4% compared with 39.6% in the third quarter of the previous year. As expected, gross margins were lower due to a mix of factors, including a higher concentration of sales from licensed brands. In the retail segment, the gross margin was 52.3%, up from 49.1% in the prior year, driven by the positive impact of merchandising changes.SG&A expenses improved 9.7% year over year to $259.2 million. As a percentage of net sales, this metric increased 180 bps year over year to 23.9%. Adjusted EBITDA was $174.4 million in the fiscal third quarter compared with $196.1 million in the year-earlier quarter. We note that the adjusted EBITDA margin was 16%, down 240 basis points year over year.GIII’s Financial Snapshot: Cash, Debt & Equity OverviewG-III Apparel ended the fiscal third quarter with cash and cash equivalents of $104.7 million and a total debt of $224.2 million. Total stockholders’ equity was $1.65 billion. Inventory declined 10% year over year to $532.5 million at the end of the quarter.GIII Stock Past Six-Month PerformanceImage Source: Zacks Investment ResearchG-III Apparel’s FY25 GuidanceFor the fourth quarter of fiscal 2025, net sales are expected to grow approximately 6% compared with the previous year. SG&A expenses are anticipated to increase by a similar amount to the rise seen in the fiscal third quarter, reflecting continued investments in marketing and operational capabilities. Adjusted earnings per share are expected to grow more than 25% compared with the prior year.For fiscal 2025, net sales are now expected to reach approximately $3.15 billion, reflecting around 2% growth compared with the previous year's net sales. This growth was driven by the expansion of owned brands and the launch of new initiatives, which more than offset the anticipated decline of about $200 million in net sales from the Calvin Klein and Tommy Hilfiger brands as the company transitioned out of those licenses. Sales from the go-forward portfolio are expected to account for approximately 70% of total net sales in fiscal 2025.The company expects adjusted net income to be between $186 million and $191 million compared with the previous estimate of $180-$185 million. Adjusted earnings per share are expected to be between $4.10 and $4.20 compared with the previous anticipation of $3.95-$4.04. In fiscal 2024, the adjusted net income was $189.8 million and adjusted earnings were $4.04 per share.  Adjusted EBITDA for fiscal 2025 is now projected to be between $309 million and $314 million, up from the previous estimate of $305-$310 million. This compares to an adjusted EBITDA of $324.1 million in fiscal 2024.This outlook continues to anticipate approximately $55 million in additional expenses, mainly tied to the launches of Donna Karan, Nautica and Halston. About 60% of these expenses are allocated to marketing initiatives for the Donna Karan and DKNY brands, while the remaining costs are primarily associated with investments in technology and talent to enhance operational capabilities.Key PicksSome better-ranked stocks are The Gap, Inc. GAP, Abercrombie & Fitch Co. ANF and Steven Madden, Ltd. SHOO.Gap is a premier international specialty retailer offering a diverse range of clothing, accessories and personal care products. It presently flaunts a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.The Zacks Consensus Estimate for Gap’s fiscal 2025 earnings and sales indicates growth of 41.3% and 0.8%, respectively, from fiscal 2024 reported figures. GAP has a trailing four-quarter average earnings surprise of 101.2%.Abercrombie is a specialty retailer of premium, high-quality casual apparel. It sports a Zacks Rank of 1 at present.The Zacks Consensus Estimate for Abercrombie’s fiscal 2025 earnings and sales indicates growth of 67.8% and 15%, respectively, from the fiscal 2024 reported levels. ANF has a trailing four-quarter average earnings surprise of 14.8%.Steven Madden designs, sources, markets and sells fashion-forward name-brand and private-label footwear. It currently has a Zacks Rank of 2 (Buy). The Zacks Consensus Estimate for Steven Madden’s 2024 earnings and sales indicates growth of 8.6% and 13.6%, respectively, from the year-ago actuals. SHOO has a trailing four-quarter average earnings surprise of 9.8%.Only $1 to See All Zacks' Buys and SellsWe're not kidding.Several years ago, we shocked our members by offering them 30-day access to all our picks for the total sum of only $1. 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