Shares of the clothing giant G-III Apparel Group Ltd (NASDAQ: GIII) rose by over 23 per cent on Thursday after posting financial results that significantly exceeded expectations. They come from the second quarter of fiscal 2025, ending Jul 31, 2024.
Investors responded favourably to a few different points listed on the company’s report.
G-III reported earnings per share (EPS) of US$0.52, immensely exceeding the US$0.27 expected by analysts. Furthermore, G-III raised its earnings per share outlook for the fiscal 2025 year by about US$0.37, thereby surpassing analyst expectations.
The major fashion company also managed to cut its inventories by 24 per cent year-over-year. These were valued at US$804.9 million during Q2 of the 2024 fiscal year and have now been trimmed to US$610.5 million. As investors tend to favour operational efficiency, this was a positive key point.
Also, G-III announced a new partnership with the renowned footwear company Converse, Inc. Although benefits of this new agreement are yet to be realized, this may have contributed to today’s stock surge.
“This new partnership represents a significant opportunity to expand our active lifestyle category while leveraging our core capabilities to build a global apparel business,” chief executive Morris Goldfarb said. Two of his company’s many brands were particularly successful during the quarter, he said.
“DKNY and Karl Lagerfeld collectively grew double-digits,” Goldfarb explained in the report.
From classic literature to iconic movies to music from every genre imaginable, perhaps no city in the world has inspired more written words.
This is #DKNY: New York Stories featuring @kaiagerber pic.twitter.com/za8ZBJkvSo
— DKNY (@dkny) August 19, 2024
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Not the only clothing operator exceeding EPS expectations
On Aug. 28, Seattle’s luxury department store chain Nordstrom Inc (NYSE: JWN) reported earnings per share of US$0.96. The anticipated EPS were only US$0.71. This fiscal Q2 result caused a 10 per cent stock surge during market hours at the time.
Nordstrom reported revenue of USD$3.9 billion during the quarter — a 3.5 per cent increase year-over-year.
However, the company’s annual free cash flow has dropped immensely since the pre-COVID days. Nordstrom went from having approximately US$669 million per annum back then to under US$100 million this year.
Nordstrom closed all of its Canadian stores mid-way through 2023 due to lack of profitability. Despite having favourable EPS in the last financial report, the company has had to navigate challenges in recent years.
But, Nordstrom shares have performed very well over the past year, rising by nearly 45 per cent. The family that owns the company is currently considering taking it private for a sum of US$3.8 billion.
BREAKING: Nordstrom stock, $JWN, soars over 10% after reporting stronger than expected quarterly earnings.
The retailer reported EPS of $0.96, above expectations of $0.71, on revenue of $3.9 billion.
This marks a 3.5% increase in year-over-year revenue, even as consumer… pic.twitter.com/E0yOcubECn
— The Kobeissi Letter (@KobeissiLetter) August 27, 2024
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Notable occurrences in the clothing sector
Shoe and clothing major Nike Inc (NYSE: NKE) has recently faced significant backlash for employing the transgender influencer Dylan Mulvaney. This controversial move was a major factor leading to significant financial losses. Nike’s shares have dropped over 24 per cent since the beginning of 2024.
Meanwhile, other clothing retailers have been stepping up their game to combat an increasing rate of theft. Target Corp (NYSE: TGT), for instance, recently partnered with the Department of Homeland Security for this purpose. In October, Target closed nine stores across four states due to what it considered an unacceptable number of thieves.
In addition to the companies discussed, some of the most valuable clothing stocks include Lululemon Athletica Inc (NASDAQ: LULU), Adidas AG – ADR (OTCMKTS: ADDYY) and Tapestry Inc (NYSE: TPR).
rowan@mugglehead.com
