In the world of investing, popular apparel retailers like Nike (NYSE:NKE) and Under Armour (NYSE:UA) often garner the most attention from investors while lesser-known companies in the space are sometimes ignored. However, this in no way means investors should pass up on small retailers, since they are capable of providing investors with great returns along with significantly less headline risk.

Perhaps no small apparel retailer is better right now than G-III Apparel Group (NASDAQ:GIII). With shares up over 100% in the last year alone, the company remains a much cheaper growth alternative to its larger peers.


Source: Company website. 

Diverse business mix
G-III designs, manufactures, and markets apparel for men and women primarily in the United States. Since G-III markets most of its apparel under proprietary brands, the company has a very diverse product mix, including outerwear, sportswear and accessory items like luggage and handbags. 

G-III makes apparel for popular brands like Andrew Marc, which the company owns itself, Calvin Klein, Guess, Sean Jean and Tommy Hilfiger. In total, G-III markets its products under more than 20 brand names. 

While not as flashy compared to the businesses of Nike and Under Armour, which both rely heavily on new product introduction driven by innovative concepts, G-III's business is a relatively predictable one. The company's diversity means it is not overly dependent on one product segment or brand line.

Small size, big growth
Despite a market capitalization of only $1.56 billion, which is minuscule compared to sneaker giant Nike's market cap of $70.5 billion and apparel maker Under Armour's $13.17 billion, G-III is growing aggressively. The following is a breakdown of the company's projected growth in 2014 compared to Nike and Under Armour: 

CompanyRevenue Growth 2014EPS Growth 2014
G-III 20.1% 19.1%
Nike 8.7% 16.7%
Under Armour 23.7% 23.3%

Note: G-III fiscal year ends in January, fiscal 2015 represented. Nike fiscal year ends in May, fiscal 2015 represented. 

G-III is projected to grow at solid rates in 2014, much faster in fact than Nike, and only slightly slower than the aggressive Under Armour. While it may not be too surprising that the smallest company is growing fast, what is surprising is G-III's cheap valuation compared to peers.

G-III has a forward P/E of only 17.7, which is far below Under Armour's super expensive P/E of 53.6 and even below Nike's P/E of 22.3, which is unusual considering G-III is growing much faster than Nike. This indicates that the market has not fully priced in G-III's future growth.


G-III's Andrew Marc label. Source: Company website.

Growth drivers
In the company's last earnings call, management upped its guidance for the full-year ended January 31, 2014 significantly. The reason for this was better than expected results from the company's recently acquired G.H. Bass business, which is expected to continue going forward. 

Of particular importance was the strength in the company's coats business in brands like Calvin Klein, Guess, and Tommy Hilfiger. President and CEO Morris Goldfarb explained, "This has been a very good coat season thus far with consistent demand and good turning inventory that supports the continuation of that trend into the fourth quarter." 

When coupled with the unusually harsh winter weather conditions in the United States in recent months, the high demand and solid inventory turnover that management witnessed in the early portion of the fourth quarter indicate more robust growth is likely in store for G-III's coat business.

Also, a particular standout was G-III's sportswear business. CEO Goldfarb explained, "Calvin Klein Sportswear was up almost 40% in the quarter, and Calvin Klein Performance grew better than 55%. Calvin Klein Sportswear is now in 890 doors, and Performance in 1,100 doors." 

Finally, the company is continuing to grow its Andrew Marc brand as well. Along with a new president, G-III has a completely new product line set for 2014 along with a high-profile showroom in New York City. 

Bottom line
While certainly not flashy by any stretch, G-III apparel is a rapidly growing business, one that is well diversified and benefiting from its partnerships with popular retail brand names. For investors seeking value alongside their growth, there may not currently be a better investment opportunity than G-III Apparel Group.

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Philip Saglimbeni owns shares of Under Armour. The Motley Fool recommends Nike and Under Armour. The Motley Fool owns shares of Nike and Under Armour. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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