Many fashion retailers have shifted their focus to offering more trendy and unique collections, because customers look for variety, and are willing to spend on innovative products. Also, each player is spending a lot on promotions so that they can attract more and more customers. Hence, the retail environment has become highly competitive. Moreover, severe weather conditions in the month of January hampered retail sales.

Nonetheless, some retailers managed to perform well despite such hardships; G-III Apparel Group (NASDAQ:GIII) is one of them. G-III Apparel posted great fourth-quarter and fiscal-year numbers, and its stock price surged after the announcement.

A good quarter
Driven by growth across all of the company's three segments, revenue surged 26% to $473 million during last year's quarter. For fiscal year 2014, revenue jumped 23%, to $1.4 billion. The licensing segment, which makes more than 60% of G-III Apparel's revenue, grew 17%, whereas the non-licensing segment grew 22% during the year. Higher demand for licensed brands such as Calvin Klein, and non-licensed products such as Vilebrequin, boosted the retailer's top line. Moreover, FY 2014 included full-year results of the newly included Vilebrequin business, whereas FY 2013 included five months of operation.

Even the retail segment performed remarkably well, registering an increase of 52% in sales during last year. One of the key drivers for the retail business was the acquisition of G.H. Bass & Co. from PVH Corp (NYSE:PVH), made in November 2013, which added to the revenue. PVH Corp, owner of brands such as Calvin Klein and Tommy Hilfiger, sold the G.H. Bass business mainly because it wanted to concentrate on its lifestyle apparel business. On the other hand, G.H. Bass diversified G-III's portfolio of branded footwear.

However, even if we exclude the effects of acquisition, 65% of the overall revenue growth was organic in nature. Also, comparable-store sales grew 10.7% for the Wilsons business, resulting in higher revenue.

Moving down to the bottom line, earnings jumped 55% over the prior year, clocking in at $0.62 per share. The increase in the bottom line came in despite higher advertising costs, as well as costs related to the acquisition of G.H. Bass. The apparel retailer managed its costs efficiently, as evidenced from the expansion in gross margin. The gross margin for the quarter stood at 35.2% as compared to 31.4% last year because of lower costs and higher margin products.

Competitive scenario
When compared to other retailers such as Gap (NYSE:GPS), G-III Apparel has been an undisputed outperformer. In the last year, G-III has provided much higher returns than its peer Gap, as indicated in the chart below:

GIII Chart

Source: GIII data by YCharts

Clearly, G-III takes the cake with 94.2% growth in its stock price, whereas Gap's stock price increased 3.2% during the same period. This is mainly because of G-III's strive for expanding its product portfolio and providing unique products to customers. Moreover, the company has a diversified range of products, and is able to attract customers to its stores through its marketing strategies.

Although Gap has a diversified product portfolio and has been providing innovative and fashionable products, factors such as cold weather and lower mall traffic hampered Gap's fourth-quarter results. Revenue decreased 3.2% to $4.6 billion, over the prior year, as same-store sales inched up by only 1%. Also, higher discounts given to lure customers into the stores affected the bottom line, which dropped to $0.68 per share from $0.73 per share last year. Nonetheless, the retailer has been making a number of efforts, such as expanding its presence in the international market, offering new products, and providing extra services to customers. These moves are expected to boost Gap's sales in the coming months.

Bright future
There are plenty of reasons to believe in G-III Apparel's future. First, it has entered into a partnership with PVH Corp for designing and marketing men's sportswear for the newly acquired G.H. Bass business. The licensing agreement will be helpful for G-III because PVH Corp already has experience and knowledge about G.H. Bass' business. The range of menswear is planned to make its debut in the fall season of 2014, and will be catering to North America's department store customers. The new collection will help G-III Apparel in strengthening its position in the casual and outdoor segment for men.

Also, the fashion retailer plans to bring in more new and innovative products according to the changing tastes and preferences of customers. Moreover, effects of the buyout of G.H. Bass' 160 stores will be seen in the months to come.

According to ShopperTrak data, traffic in malls surged 10% in the first week of April, highlighting growing customer interest in spending. Hence, retail consumer spending is expected to increase in the coming months. Also, promotions in malls have also jumped 25% over last year, as per Morgan Stanley research. Therefore, retailers are expected to witness better spring days as compared to the prior year.

Key takeaway
Along with posting a great quarter, there are a number of reasons to invest in G-III Apparel. Acquisition of other business, organic growth, and new partnerships are some points to look forward to. Moreover, it has been outpacing other retailers in terms of stock price performance. Also, growth in mall traffic makes the retail industry even more attractive. I see no reason to stay away from this company.