- Telsey Advisory Group Analyst Dana Telsey has reiterated a Market Perform rating on the shares of G-III Garment Group Ltd GIII with a Price target of $22.00.
- The analyst is expecting Q3 EPS of $1.85 versus $2.18 a year ago and guidance of $1.80 to $1.90.
- Overall, the analyst expects total revenue to grow 5.3% to $1.07 billion, compared to the consensus estimate of 4.7% growth to $1.06 billion.
- The analyst expects gross margin to increase 80 basis points to 35.0%, around 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%.
- GIII took a more cautious view of the back half in September given continued inflationary pressures, including additional costs related to supply chain headwinds and the timing of inventory receipts.
- For the full year, the company forecast FY23 revenue of about $3.15 billion (up from $3.24 billion previously), up about 14% from last year’s $2.767 billion .
- The overall increase in inventories consists mostly of in-demand categories (~75%) for fall (outerwear, dresses, shoes and newly launched jeans), as opposed to pandemic-related categories like athleisure, which management expects to trend further down.
- Inventories are expected to remain elevated at the start of the second half to support expected demand and order books.
- Growing global reach, stronger higher-margin private label presence (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 with a potentially promotional wholesale channel, earnings visibility remains difficult in the second half of the year.
- Price promotion: GIII shares trade 0.59% lower at $21.12 on the last check Wednesday.
- Photo via company
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