On Wednesday, Guggenheim initiated coverage on G-III Apparel Group (NASDAQ:GIII) stock, a prominent player in the women's apparel industry, with a Buy rating and a price target of $36.00.
The firm highlighted the company's seasoned management team, led by Chairman and CEO Morris Goldfarb, Vice Chairman and President Sammy Aaron, and EVP Jeff Goldfarb, as a key strength.
Guggenheim noted their long-standing relationships with large retail partners and deep merchant expertise could continue to drive the company's success.
The coverage comes as G-III Apparel navigates the loss of approximately $1 billion in revenue due to the takeback of the PVH (NYSE:PVH) Calvin Klein and Tommy Hilfiger women’s licenses, with about 70% of this impact expected in fiscal years 2027 and 2028.
Despite this challenge, Guggenheim remains optimistic about the company's growth plans for brands like DKNY, Donna Karan, and Karl Lagerfeld. The firm is also encouraged by the addition of a global license for Converse apparel, set to launch in the fall of 2025.
Guggenheim has established earnings per share estimates for G-III Apparel at $4.00 for fiscal year 2025 and $4.05 for fiscal year 2026. The company's North American business, which makes up the majority of its operations, is said to be working closely with retail partners to mitigate the impact of the license takebacks.
In addition to bolstering its brand portfolio, G-III Apparel is looking to expand its European and Asian presence. The company currently owns just under 20% of AWWG, which has revenues of $650 million and is seen as a vehicle to pursue a $200 million sales opportunity in Europe, specifically Spain and Portugal, as well as expansion in Asia, including India.
Guggenheim views this strategic move as an attractive international growth opportunity that will also help G-III reduce its exposure to the US Department Store industry.
InvestingPro Insights
To complement the analysis of G-III Apparel Group, let's take a look at another key player in the apparel industry, Crocs Inc. (NASDAQ:CROX). According to InvestingPro data, Crocs boasts a market capitalization of $8.05 billion and has demonstrated strong financial performance with a revenue of $4.06 billion in the last twelve months as of Q2 2024.
Crocs' P/E ratio of 10.12 and adjusted P/E ratio of 9.59 suggest that the stock may be undervalued relative to its earnings potential. This is further supported by an InvestingPro Tip indicating that Crocs is trading at a low P/E ratio relative to its near-term earnings growth, with a PEG ratio of 0.41.
The company's profitability is noteworthy, with a gross profit margin of 57.11% and an operating income margin of 26.36% in the last twelve months. These figures underscore Crocs' ability to maintain healthy profit margins in the competitive apparel and footwear market.
Another InvestingPro Tip highlights that Crocs has delivered a high return over the last year, which is evident in its impressive YTD price total return of 45.18% and one-year price total return of 59.17% as of the latest data.
For investors interested in a deeper analysis, InvestingPro offers 8 additional tips for Crocs, providing a more comprehensive view of the company's financial health and market position.
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