Why G-III Apparel Group Ltd. Shares Jumped as Much as 13% Today

Markets Motley Fool

What happened

Continue Reading Below

Thanks to a solid second-quarter report, shares of G-III Apparel Group (NASDAQ: GIII) soared on Wednesday morning. The stock peaked at $31.19 shortly after 10:30 a.m. EDT -- a 13.3% gain from Tuesday's closing price. At around 1:40 p.m., the gains had moderated to 9.8% at $30.49.

So what

The clothing maker and retailer saw second-quarter sales rising 22% year over year to $538 million. On the bottom line, it moved from an adjusted loss of $0.03 per share a year ago to an even larger $0.18 loss per share. However, those figures beat Wall Street's consensus estimates, which called for a $0.26 loss per share on sales near $523 million.

Now what

G-III's surging sales rested on the recent acquisition of the Donna Karan brand and the related network of DKNY apparel stores. Management sees this deal as a game-changer in the long run, and it's willing to take some short-term losses on the profit line in order to prepare the Donna Karan assets for the upcoming holiday season.

Continue Reading Below

"We are fortunate to have developed a diverse business, anchored by Calvin Klein and supported by other brands including Tommy Hilfiger and Karl Lagerfeld Paris," said CEO Morris Goldfarb in a prepared statement. "Donna Karan and DKNY, both global power brands, will help us capture additional opportunities."

Looking ahead, G-III raised its full-year guidance on both the top and bottom lines. Adjusted third-quarter earnings should land close to $1.50 per share, roughly flat compared to the year-ago period.

The stock has now bounced back from 52-week lows with a 67% surge, but with shares in the neighborhood of $30, G-III still has a long way to go before investors revisit the all-time highs of more than $70 per share that were set in the summer of 2015.

10 stocks we like better than G-III Apparel Group
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*

David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and G-III Apparel Group wasn't one of them! That's right -- they think these 10 stocks are even better buys.

Click here to learn about these picks!

*Stock Advisor returns as of September 5, 2017

Anders Bylund has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.