Brean Murray Carret Cuts Price Target on G-III Apparel (GIII), Poor Q2 Results and Margins
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Price: $33.78 +1.81%
Rating Summary:
10 Buy, 8 Hold, 3 Sell
Rating Trend:
Up
Today's Overall Ratings:
Up: 8 | Down: 5 | New: 26
Rating Summary:
10 Buy, 8 Hold, 3 Sell
Rating Trend:
Up
Today's Overall Ratings:
Up: 8 | Down: 5 | New: 26
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Brean Murray Carret & Co. is reiterating its Buy rating on shares of G-III Apparel (NASDAQ: GIII) while lowering its price target from $45 to $35.
The company released its second quarter earnings well below expectations with EPS of $0.08 when the firm and Street was forecasting $0.21 and $0.20. The miss was due to GIII trying to rid their inventory of weak dresses. As a result, operating margins fell 130 bps year-over-year to 1.7 percent.
Revenue for the quarter grew 22 percent due to strong dress sales, new Calvin Klein luggage and handbags.
Going forward the firm is optimistic with fall sales as everything is currently on track. Management now believes that Calvin Klein handbags will make up $50 million in sales in its first year and could climb to $200 million in time. The firm also noted that dress sales do not seem to be slowing down and that any issues earlier were due to fashion mistakes.
For 2012 and 2013, Brean Murray Carret is reducing its EPS estimates from $3.27 and $3.76 to $3.08 and $3.50, which reflects current margin assumptions.
An analyst at Brean Murray Carret comments, "We continue to believe G-III management is creating a more robust business model with an emphasis on high margin new categories as key growth drivers; that said, given worries over the consumer, we can easily see why investors will now be even more jaundiced over GIII as it enters the heart of the highly crucial outerwear season."
For more ratings news on G-III Apparel click here and for the rating history of G-III Apparel click here.
Shares of G-III Apparel closed at $28.66 yesterday.
The company released its second quarter earnings well below expectations with EPS of $0.08 when the firm and Street was forecasting $0.21 and $0.20. The miss was due to GIII trying to rid their inventory of weak dresses. As a result, operating margins fell 130 bps year-over-year to 1.7 percent.
Revenue for the quarter grew 22 percent due to strong dress sales, new Calvin Klein luggage and handbags.
Going forward the firm is optimistic with fall sales as everything is currently on track. Management now believes that Calvin Klein handbags will make up $50 million in sales in its first year and could climb to $200 million in time. The firm also noted that dress sales do not seem to be slowing down and that any issues earlier were due to fashion mistakes.
For 2012 and 2013, Brean Murray Carret is reducing its EPS estimates from $3.27 and $3.76 to $3.08 and $3.50, which reflects current margin assumptions.
An analyst at Brean Murray Carret comments, "We continue to believe G-III management is creating a more robust business model with an emphasis on high margin new categories as key growth drivers; that said, given worries over the consumer, we can easily see why investors will now be even more jaundiced over GIII as it enters the heart of the highly crucial outerwear season."
For more ratings news on G-III Apparel click here and for the rating history of G-III Apparel click here.
Shares of G-III Apparel closed at $28.66 yesterday.
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