G-III Apparel Beats on Q2 Earnings, Records Strong Brand Performance

Core Insights - G-III Apparel Group, Ltd. reported second-quarter fiscal 2025 earnings that exceeded the Zacks Consensus Estimate, while sales fell short of expectations and declined year over year [1][4]. Financial Performance - Adjusted earnings were 52 cents per share, surpassing the Zacks Consensus Estimate of 28 cents, and increased by 30% from the previous year's adjusted earnings of 40 cents per share [4]. - Net sales decreased by 2.3% year over year to $644.8 million, missing the consensus estimate of $650 million [4]. - The wholesale segment generated net sales of $620 million, down from $639 million in the prior year, while the retail segment saw an increase to $37 million from $34 million despite the closure of nine stores [5]. Margins and Expenses - Gross profit decreased by 0.3% year over year to $275.9 million, but gross margin expanded by 90 basis points to 42.8% due to higher sell-throughs and greater penetration of higher-margin owned brands [6]. - The wholesale segment's gross margin improved to 41.2% from 40.6% year over year, while the retail segment's gross margin rose to 54.4% from 50.5% [7]. - SG&A expenses declined by 4.3% year over year to $229 million, with a decrease in SG&A as a percentage of net sales to 35.5% [8]. Financial Position - At the end of the fiscal second quarter, the company had cash and cash equivalents of $414.8 million, total debt of $414 million, and total stockholders' equity of $1.51 billion [10]. - Inventory decreased by 24.1% year over year to $610.5 million [10]. Shareholder Actions - During the second quarter, the company repurchased 1,180,328 shares of its common stock for a total cost of $31.6 million [11]. Future Guidance - For the third quarter of fiscal 2025, the company expects net sales of $1.10 billion and adjusted net income between $98 million and $103 million, with adjusted earnings projected to be between $2.20 and $2.30 per share [12]. - The company reaffirmed its fiscal 2025 net sales guidance of approximately $3.2 billion, indicating a growth of about 3% from the previous year, driven by owned brands and new initiatives [13]. - Adjusted net income for fiscal 2025 is expected to be between $180 million and $185 million, with adjusted earnings projected between $3.95 and $4.04 per share [14]. - Adjusted EBITDA for fiscal 2025 is now projected to be between $305 million and $310 million, an increase from previous estimates [15]. - The outlook anticipates approximately $60 million in additional expenses related to new brand launches and marketing initiatives [16].