For decades, G-III Apparel had no trouble heating up sales of coats and jackets shipped during the chilly months.

Problem was, as a maker of outdoor clothing, its business cooled during the warmer seasons.

So, a few years ago, G-III (NasdaqGS:GIII - News) began diversifying its lineup beyond its roots in outerwear and create a more balanced, all-season clothing company.

Since 2005, it's made five acquisitions that have broadened its product line, expanded its distribution and added a retail segment to its business.

Now, while outerwear remains the company's biggest business, it's sporting a new look and a more diverse mix. In addition to outdoor clothing, G-III manufactures and markets dresses, sportswear and women's suits under licensed brands, its own brands and private- label brands. It has fashion licenses under well-known brands, including Calvin Klein, Sean John, Kenneth Cole (NYSE:KCP - News) and Guess (NYSE:GES - News).

Wilsons Leather

The company also runs recently acquired retail stores under the Wilsons Leather name.

With the bulk of its sales from the seasonal outerwear business, G-III's strongest profit results historically have been in the third quarter followed by the fourth quarter, says analyst Jim Duffy of Thomas Weisel Partners, which has an investment banking relationship with G-III.

G-III aims to become more profitable in the other quarters by adding clothing for all seasons, such as dresses and sportswear.

"As the dresses and sportswear businesses have grown, it's provided some revenue and profitability offsets to some other seasonal quarters," said Duffy.

G-III has continually expanded its relationship with Calvin Klein, which started with licenses for women's and men's outerwear.

Today, G-III also makes and distributes dresses, women's suits, women's performance wear and sportswear under the Calvin Klein label though separate licensing pacts with Phillips-Van Heusen (NYSE:PVH - News), which owns and markets the brand.

G-III began shipping its first dress line under the Calvin Klein label for the fall of 2006.

The next year, G-III expanded its dress business when it acquired the operating assets of Jessica Howard, which designs and markets dresses under the Jessica Howard and Eliza J. brands, as well as under private- label programs.

Continued gains in the dress and sportswear businesses drove second-quarter sales, which rose 20% to $135.9 million, said Chief Executive Morris Goldfarb on a Sept. 3 conference call.

The increase in total sales helped the company narrow its second-quarter loss to 17 cents a share from 23 cents last year.

"The dress category is one of the hot categories of retail today," Goldfarb added. "Our Calvin Klein dresses continue to increase their penetration in the marketplace as the line exceeds expectations for us and our retail partners. Our Jessica Howard line is also exceeding expectations."

Duffy says Calvin Klein dresses and sportswear, in particular, have been very profitable categories.

"The incremental contribution from those businesses has covered up some slower demand in other categories," he said.

Executives did not comment. But analyst Eric Beder of Brean Murray, Carret & Co. says the company's non-outerwear business will probably grow at a high single-digit or double-digit rate per year, while the business in outerwear will increase at a single-digit rate.

G-III continues to spruce up its dress offerings. Last year, it inked a pact with the Camuto Group to design, develop, manufacture and distribute a line of dresses under pop star Jessica Simpson's label.

G-III launched the line this year with a small spring offering and a fall rollout at over 40 Macy's (NYSE:M - News)stores.

"The Jessica Simpson lines look like one of the few celebrity lines with the authenticity and depth to endure," said Beder in a report.

The reasons? Simpson approves of the line and wears the items. And the collection is well coordinated with other items under the pop star's label, he says.

G-III took a big step toward diversifying its business last year when it acquired certain stores and other assets of Wilsons The Leather Experts, a leather outerwear and accessories retailer. G-III paid $22.3 million for 116 outlet stores, $18.5 million in inventory, distribution center operations and the Wilsons name and related trademarks.

As of Sept. 3, G-III had 121 stores, of which 118 were outlets, under the Wilsons Leather name.

The Wilsons store business had an operating loss last year and for the first half of this year, says the company, without giving details.

The tough retail environment contributed to weaker-than-expected business at Wilsons. G-III also had problems coming up with the right merchandise mix in stores.

Store Merchandise

G-III has taken steps to improve the stores' performance. They include changing the mix to include more leather outerwear than last year's lineup and a bigger assortment of private-label products.

Recent results, which reflect this strategy, are validating the changes, CEO Goldfarb said on the conference call.

Duffy says the Wilsons business presents a good financial opportunity.

"This year, they believe they have the right merchandising strategy and they're facing easier comparisons," he said. "They've targeted break-even for (Wilsons) for the fiscal year which ends in January. If they can do better, that represents some upside opportunity."

Followers expect G-III to resume profit growth in fiscal 2010 ending in January, after seeing earnings drop 24% in fiscal 2009. Analysts polled by Thomson Reuters see fiscal 2010 earnings rising 32% to $1.06 a share. They forecast a 19% gain to $1.26 in fiscal 2011.

"I'm fairly optimistic about their prospects, particularly given the momentum in the dress and the sportswear business," said Duffy.