- Telsey Advisory Group analyst Dana Telsey has reiterated a Market Perform rating on the shares of G-III Apparel Group Ltd (NASDAQ:GIII) with a price target of $22.00.
- The analyst is looking for Q3 EPS of $1.85 versus $2.18 the prior year and guidance of $1.80-$1.90.
- On the topline, the analyst is looking for total sales growth of 5.3% to $1.07 billion, compared to the consensus estimate for 4.7% growth to $1.06 billion.
- The analyst anticipates 80 basis points of gross margin expansion to 35.0%, roughly in line with the consensus of 35.1%.
- Operating margin is expected to be 13.0%, down 250 basis points year-on-year, compared to the consensus of 12.6%.
- Reflecting ongoing inflationary pressures, including incremental costs related to supply chain headwinds and the timing of inventory receipts, GIII took a more cautious view of the back half in September.
- For the full year, the company guided to FY23 sales of around $3.15 billion (down from $3.24 billion previously), representing an increase of approximately 14% over last year’s $2.767 billion.
- The overall increase in inventories is largely comprised of in-demand categories (~75%) for Fall (outerwear, dresses, footwear, and newly launched jeans), as opposed to pandemic-driven categories like athleisure, which management expects to continue trending down.
- Inventories are expected to remain elevated moving into H2, to support anticipated demand and order books.
- An expanding global reach, increased higher margin owned-brand exposure (including the recent acquisition of the entire KL brand), greater DTC penetration, and continued strengthening of the power/status brand portfolio make GIII’s model more resilient than in the past.
- However, the analyst added that earnings visibility remains challenging with a potentially promotional wholesale channel in the back half of the year.
- Price Action: GIII shares are trading lower by 0.59% at $21.12 on the last check Wednesday.
- Photo Via Company
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