We’ve had a lot of winners in the Roadrunner portfolio. One of the best has been G-III Apparel (NasdaqGS: GIII), which recently released yet another strong earnings report.

A while back, the clothing company continued its legacy of growth through acquisition when it agreed to purchase shoe manufacturer G.H. Bass from PVH Corp for $50 million in cash. The purchase price was modest, but the potential synergistic benefits are huge, which is why I loved that deal. G.H. Bass’s 158 retail outlets will be absorbed by the Wilson’s Leather chain of 167 stores, essentially doubling the size of Wilson’s and significantly reducing G.H. Bass’s overhead expenses.

In addition, acquiring a manufacturer of high-quality footwear transformed G-III Apparel from a limited apparel-only company to a full-service “fashion” retailer of apparel and shoes for both men and women. G.H. Bass sells both footwear (65%) and apparel (35%), but its apparel is lackluster and will be vastly improved by G-III’s apparel expertise.

The flip side is that G.H. Bass’s 158 stores will act as customer magnets that give G-III an opportunity to market its traditional apparel offerings to an entirely new demographic of high-end shoe wearers. Analysts at Brean Capital call G.H. Bass a “treasure” and expect its acquisition to be earnings accretive for G-III in fiscal 2015 and add $250 million in sales to G-III’s coffers.   

As I noted, G-III Apparel recently announced operating results for the second quarter of fiscal 2015. For the quarter ended July 31, 2014, G-III reported that net sales, driven by a strong wholesale performance across several categories, increased by 39% to $424.0 million from $304.2 million in the year-ago period.

Of this increase, $53.6 million was the result of net sales by the G.H. Bass business.

The Company’s net income for the second quarter was $6.2 million, or $0.29 per share, compared to net income of $3.6 million, or $0.17 per share, in the prior year’s comparable period.

Morris Goldfarb, G-III’s Chairman, Chief Executive Officer and President, said, “We are pleased to report a strong second quarter. In spite of losses related to the transition and repositioning of our recently acquired G.H. Bass business, we were able to show higher overall profits due to strong shipments in our licensed and non-licensed businesses. There were strong performances by a number of Calvin Klein divisions and several of our outerwear and dress businesses, all of which enabled us to exceed our forecast for the second quarter.”

Goldfarb added, “We intend to continue to execute our growth strategy which calls for both organic growth and for acquisitions. Our recent public offering, which added net proceeds of $128.7 million to our balance sheet, is expected to support our growth initiatives. Our presence in several wholesale businesses, including sportswear, dresses, and handbags, continues to provide us with organic growth opportunities, as does our ongoing initiatives to grow our productivity and store count in each of our major specialty retail businesses. Our new G.H. Bass products are arriving in our stores this month and we are confident in our ability to make this a profitable business. We continue to be well positioned to take advantage of acquisition opportunities, deploy our strategic capital and drive enhanced returns for our shareholders.”

G-III also released a great third-quarter financial report that saw sales grow 23% to a record high, combined with solid earnings growth of 19%. Both figures blew past analyst estimates and marked the fifth earnings beat time in the past seven quarters. Even better, the company raised its guidance for full-year fiscal 2014 (ending Jan. 31^st), with CEO Morris Goldfarb reporting “across-the-board strength in our business.”

Based on the G.H. Bass footwear acquisition and the accelerating rollout of both the Ivanka Trump apparel line and Calvin Klein handbags, analysts expect earnings growth of 17.9% in fiscal 2015, which is above the industry average, and yet G-III still trades at a below-average earnings multiple of 20.6. Good combination!  The Q3 reported prompted Brean Capital to raise its price target on the stock to $80 from $60 and conclude:

We remain buyers of G-III and believe the company is among the best upside-positioned plays in our universe and ideally positioned to beat top- and bottom-line expectations.

The company’ success has resulted in its G-III stock being added to the S&P SmallCap 600 Index on the first trading day of 2014. The company is undergoing a positive transformation into a full-service fashion retailer and continuing to execute flawlessly.

It’s one of the biggest winners in the Roadrunner portfolio – but far from the only one!