What happened

Shares of G-III Apparel Group (GIII 0.03%) were moving higher today after the apparel licensing company exceeded expectations in its first-quarter earnings report.

As of 1:35 p.m. ET, the stock was up 22.6%.

So what

G-III reported a decline in revenue and profits, but that was anticipated as it rightsized its inventory and dealt with a more challenging macroeconomic environment.

Overall revenue fell 11.9% to $606.6 million, but that was much better than estimates for $557.8 million. G-III also announced a new long-term license for the Halston brand, signing an agreement with owner Xcel Brands.

Gross margin improved significantly from 35.7% to 41.2%, and the company reduced inventory by $80 million from the previous quarter, though it was up $80 million from the prior-year period. 

Selling, general, and administrative expenses were up substantially and its adjusted per-share profit fell from $0.72 to $0.13, but that still easily beat estimates for a per-share loss of $0.10.

CEO Morris Goldfarb said:

G-III continues to deliver positive results and we are off to a good start to the new fiscal year. Looking ahead, we are optimistic about our business and, as a result, are raising our guidance. We remain focused on driving our key strategic priorities and continuing to develop new growth opportunities.

Now what

In its guidance, G-III called for revenue and profits to be essentially flat this year. It expects $3.29 billion in revenue, up 2% from a year ago, and it sees adjusted earnings per share between $2.80 and $2.90, which compares to last year's total of $2.85. 

Both numbers were better than analysts' consensus estimates for $3.19 billion in revenue and EPS of $2.54.

G-III has long been a volatile stock, and shares fell sharply last year, setting up a buying opportunity on the potential turnaround. Even after today's jump, the stock trades at a forward price-to-earnings ratio of just 7.