- 20 июля 2018, 22:30
- Zacks Investment Research
Shares of G-III Apparel Group, Ltd. GIII have not only rallied in the past three months but have also outperformed the industry and the overall sector. Notably, this Zacks Rank #1 (Strong Buy) stock has gained 35%, outperforming the industry’s rise of 14.4% and the overall sector’s increase of 7%.
The upside has been primarily attributable to the company’s focus on acquisitions and partnerships along with its international expansion efforts. Further, the growing DKNY and Donna Karan brands are encouraging.
Let’s look at the factors driving the stock.
The company is taking several strategies to expand its product portfolio and make itself a diversified apparel and accessories company. In February 2016, the company extended its relationship with Tommy Hilfiger via a new license for womenswear including sportswear, suit separates, dresses, performance wear and denim apart from other licenses for Tommy Hilfiger dresses, men’s and women’s outerwear and luggage. Further, in December 2016, the company acquired DKI, the owner of DKNY and Donna Karan.
Apart from these, the company is focusing on partnerships. In August 2017, G-III Apparel partnered with Amlon Capital B.V. to produce and market women’s and men’s apparel as well as accessories under a long-term license for DKNY and Donna Karan in the People’s Republic of China, including Macau, Hong Kong and Taiwan. In May 2017, the company announced a multi-year license agreement with PVH Corp. Per the deal, PVH will design and distribute menswear for the DKNY brand in the United States and Canada.
The company is leaving no stone unturned to drive its top line. It is putting effort to expand its business globally as well. In this regard, we note that the company has extended its reach internationally by opening two new stores in Europe, one in the Netherlands and one in Spain. Management has also expressed plans to open six more stores in Mainland China and two in the Middle East.
The company has also signed a licensing agreement with Giada to produce made in Italy premium denims. These denims are likely to be launched in 2019 spring through premier departments and specialty stores in Europe, North America, the Middle East, Africa, Japan and Korea.
Growing DKNY and Donna Karan Business
Management is optimistic about DKNY and Donna Karan brands’ performance as net sales in the categories doubled in the last reported quarter. The company is highly encouraged about the new rollouts of DKNY dresses and DKNY luggage in 200 Macy’s stores, which diversifies the brand into a lifestyle category. Per management, the company now generates significant portion of its revenues from licensing of the DKNY and Donna Karan brands.
Some prominent licensees include PVH, Estée Lauder, Hanes brand, Fossil and Luxottica. Management is looking forward to improve profits and margin of business through licensing. PVH, a DKNY men's sportswear licensee, launched the men's collection at 150 Macy's outlets. Management expressed plans to continue investing in marketing and distribution partnerships.
3 Other Stocks Hogging the Limelight
Lululemon Athletica Inc. LULU has a long-term earnings growth rate of 14.3% and sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Under Armour, Inc. UAA has a long-term earnings growth rate of 20.7% and carries a Zacks Rank #1.
Guess', Inc. GES has a long-term earnings growth rate of 15% and carries a Zacks Rank #1.
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