G-III Apparel Group, Ltd. (GIII Quick QuoteGIII - Free Report) reported first-quarter fiscal 2027 results, wherein the top and bottom lines surpassed the Zacks Consensus Estimate. Also, both metrics decreased year over year. The quarterly performance reflected the planned exit of Calvin Klein and Tommy Hilfiger licensed businesses. 

However, the company highlighted continued momentum across G-III’s go-forward portfolio, which includes owned brands, such as DKNY, Donna Karan, Karl Lagerfeld and Vilebrequin. Strong full-price selling, improved inventory management and a greater mix of owned brands contributed to margin improvement despite a challenging macroeconomic backdrop.

Management also announced the acquisition of the Marc Jacobs brand in partnership with WHP Global, a move that is expected to accelerate G-III’s transformation into a more brand-led fashion company and expand its long-term growth opportunities. The company raised its earnings outlook for fiscal 2027.

More on GIII's Q1 Results

G-III reported an adjusted loss per share of 21 cents, which was narrower than the Zacks Consensus Estimate of an adjusted loss of 30 cents. In the year-ago quarter, the company reported adjusted earnings of 19 cents.

Net sales declined 8.2% year over year to $536 million but surpassed the Zacks Consensus Estimate of $530 million. The decrease primarily reflected lower sales from the Calvin Klein and Tommy Hilfiger licensed businesses as the company continues its portfolio transition. However, results benefited from growth across the go-forward portfolio and stronger full-price selling.

Net sales in the wholesale segment were $515 million, which surpassed the Zacks Consensus Estimate of $506.9 million. This compares with the $563 million reported in the prior-year period. The decrease was mainly attributable to lower sales from the Calvin Klein and Tommy Hilfiger licensed businesses, partially offset by growth in owned brands and the company’s go-forward license portfolio.

Net sales in the company’s retail segment were $41 million in the fiscal first quarter, which beat the consensus estimate of $38.6 million and compared with $36 million in the prior-year quarter. The improvement was driven by robust direct-to-consumer performance across the company's owned brands, including Donna Karan, DKNY, Karl Lagerfeld and Vilebrequin. During the quarter, Donna Karan delivered approximately 40% growth, while digital sales at donnakaran.com and dkny.com increased nearly 60% and more than 40%, respectively.

Management noted that the go-forward portfolio continued to gain momentum across North America and Europe despite macroeconomic challenges, supported by healthy consumer demand and higher full-price sell-throughs.

Insight Into G-III's Margins & Expenses

Gross profit increased 41% year over year to $347.7 million in the fiscal first quarter. The gross margin expanded to 64.9% from 42.2% in the prior-year quarter, primarily driven by a $102.7-million benefit related to the expected recovery of previously incurred tariffs under the IEEPA on inventory sold in the prior year. Excluding this benefit, the adjusted gross margin was 45.7%, representing a 350-basis-point year-over-year increase. The improvement reflected healthy full-price selling, strong inventory management, a favorable mix shift toward owned brands and tariff mitigation efforts.

SG&A expenses totaled $255.3 million in the fiscal first quarter, reflecting a 10.3% increase from $231.5 million in the prior-year quarter. The rise was primarily driven by investments in marketing, brand-building initiatives and growth strategies across the company's owned-brand portfolio. As a percentage of net sales, SG&A expenses increased 790 basis points year over year to 47.6%.

GIII’s Financial Snapshot: Cash, Debt & Equity Overview

G-III ended the quarter with cash and cash equivalents of $394.2 million compared with $257.8 million in the prior-year period. Inventories declined 8% year over year to $417.9 million, demonstrating continued inventory discipline.

Total debt stood at $15.4 million at the quarter-end, while stockholders’ equity increased to $1.82 billion. During the quarter, G-III returned $4.2 million to shareholders through dividend payments. The company ended the quarter with net cash of $378.8 million and more than $800 million of total liquidity, providing significant financial flexibility to support future growth initiatives, including the pending acquisition of Marc Jacobs.

GIII’s Q2 Outlook

For the second quarter of fiscal 2027, G-III expects net sales of $570 million, whereas it reported $613.3 million in the prior-year quarter. Management anticipates a year-over-year gross-margin expansion of 450 basis points.

Adjusted net income is expected between $7 million and $11 million, or 15-25 cents per share, whereas it reported adjusted net income of $11.2 million, or 25 cents per share, in the prior-year quarter.

G-III’s FY27 Guidance

Encouraged by the stronger-than-expected fiscal first-quarter performance, management raised its fiscal 2027 earnings outlook.

For fiscal 2027, the company expects net sales of $2.71 billion, whereas it reported $2.96 billion in fiscal 2026. The decline primarily reflects the loss of approximately $470 million in sales from Calvin Klein and Tommy Hilfiger products.

Management expects a gross margin expansion of 400 basis points for fiscal 2027 compared with the prior mentioned 300 basis points. The improved outlook reflects stronger-than-expected fiscal first-quarter gross margin performance and anticipated benefits from lower inventory carrying costs associated with the tariff refund, which are expected to favorably impact cost of goods sold during the remainder of the year.

The company anticipates SG&A expense deleverage in fiscal 2027 as it invests in growth initiatives and scales newer businesses. However, management expects the degree of deleverage to improve sequentially throughout the year. GIII also reiterated plans to generate $25 million of run-rate cost savings in fiscal 2028 through ongoing efficiency initiatives.

G-III expects net income between $171 million and $175 million, or earnings per share of $3.85-$3.95. Previously, the company projected net income between $88 million and $92 million, or earnings per share of $2-$2.10. This compares with net income of $67.4 million, or $1.51 per share, reported in fiscal 2026.

GIII Stock Past 3-Month Performance

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Adjusted net income is projected between $95 million and $99 million, or $2.15-$2.25 per share. Previously, the company forecast adjusted net income between $88 million and $92 million, or $2-$2.10 per share. Fiscal 2026 adjusted net income was $116.2 million, or $2.61 per share.

The company increased its adjusted EBITDA outlook to $178-$182 million from the previously stated $158-$162 million. Adjusted EBITDA was $192.4 million in fiscal 2026. The company’s guidance assumes tariff levels remain similar to those under the IEEPA regime and excludes any impact of the pending Marc Jacobs acquisition. Capital expenditure is expected to be $40 million.

Shares of this Zacks Rank #3 (Hold) company have gained 15.6% in the past three months against the industry’s 7.8% decline.

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