GIII Stock Drops 11% Following Q4 Earnings Below Expectations and Year-Over-Year Sales Decline

G-III Apparel Group Reports Weak Q4 Fiscal 2026 Results

G-III Apparel Group, Ltd. (GIII) posted disappointing results for the fourth quarter of fiscal 2026, with both revenue and earnings falling short of analyst expectations. The company saw declines in both net sales and profits compared to the previous year, largely due to ongoing changes in its business portfolio, external challenges, and a gradual move away from older licensed brands.

During the quarter, G-III continued to phase out major licensed brands and shifted its attention to its own labels, including DKNY, Donna Karan, and Karl Lagerfeld. These proprietary brands experienced strong demand and robust sales at full price, but the loss of revenue from ending licensing deals negatively affected overall performance.

Further impacting results, G-III stopped shipments to a key wholesale customer before that retailer filed for bankruptcy, resulting in lost sales and a significant bad debt expense that weighed on earnings.

Despite these setbacks, management emphasized ongoing investments in brand development, digital innovation, and international growth to support its owned brands. However, the combination of missed earnings, revenue declines, and disruptions from the retail partner bankruptcy dampened investor confidence. Consequently, G-III shares dropped 11.4% in the latest trading session.

G-III Apparel Group: Price, Consensus, and EPS Surprise

Highlights from GIII's Q4 Performance

Adjusted earnings per share came in at $0.30, missing the consensus estimate of $0.57 and marking a 76.4% drop from last year's $1.27 per share. Net sales fell 8.1% year-over-year to $771.5 million, below the expected $794 million. The suspension of shipments to Saks ahead of its bankruptcy reduced sales by about $20 million.

Wholesale segment sales totaled $737 million, missing forecasts and down 7.8% from the prior year, as growth in owned brands and ongoing licenses was offset by lower sales from Calvin Klein and Tommy Hilfiger. Retail segment sales reached $63 million, matching expectations and up 12.5% from last year, with strong growth in Karl Lagerfeld Paris, DKNY, and Donna Karan.

Margins and Expenses Overview

Gross profit for the quarter dropped 13.9% to $285.5 million, with gross margin at 37%, a 250-basis point decrease from last year. This decline was mainly due to tariffs, though a shift toward higher full-price sales provided some relief. Wholesale gross margin fell to 34.8%, down 330 basis points, while retail gross margin decreased to 46.3% from 48.3%, a 200-basis point drop.

Adjusted SG&A expenses rose 6.6% to $260 million, including a $17.5 million bad debt charge related to the Saks bankruptcy. As a percentage of net sales, SG&A increased 470 basis points to 33.7% year-over-year.

Financial Position: Cash, Debt, and Equity

At quarter-end, G-III Apparel held $406.7 million in cash and equivalents, with long-term debt at $11.7 million. Shareholders’ equity stood at $1.76 billion. Inventory grew 3.8% year-over-year to $460 million. During fiscal 2026, shareholders received $54 million in capital returns, including $49.8 million in share buybacks and $4.2 million in dividends.

Outlook for Q1 Fiscal 2027

G-III expects net sales of around $530 million for the first quarter of fiscal 2027, down from $583.6 million in the prior year—a projected 9.2% decrease. The company anticipates a net loss between $13 million and $18 million, or $0.30 to $0.40 per share, compared to last year’s net income of $7.8 million ($0.19 per share).

Gross margin is expected to improve by about 150 basis points year-over-year. SG&A expenses will likely rise due to increased marketing for spring campaigns, with the highest expense deleverage expected in Q1 and improvements forecasted for the rest of the year.

Fiscal 2027 Guidance

For the full fiscal year, G-III projects net sales of approximately $2.71 billion, an 8% decline from fiscal 2026. This drop is mainly due to about $470 million in lost sales from Calvin Klein and Tommy Hilfiger, partially offset by anticipated high single-digit growth in the remaining portfolio.

Net income is forecasted between $88 million and $92 million, with EPS ranging from $2.00 to $2.10. This represents a 30.6%-36.5% increase in net income and a 32.5%-39.1% rise in EPS compared to fiscal 2026. Adjusted net income is expected to fall 20.8%-24.3% to $88-$92 million, with adjusted EPS down 19.5%-23.4% to $2.00-$2.10. Adjusted EBITDA is projected at $158-$162 million, a 15.6%-17.7% decrease from last year.

GIII Stock Performance Over the Past Three Months

Image Source: Zacks Investment Research

G-III expects gross margin to improve by up to 300 basis points for the full year, aided by tariff mitigation and a greater focus on owned brands as PVH licenses expire. Sales declines are anticipated to be steeper in the first half, with recovery expected later as new brand licenses ramp up.

SG&A expenses are projected to remain elevated as investments continue in personnel, technology, and marketing, while revenue is impacted by the loss of Calvin Klein and Tommy Hilfiger sales. Cost-saving measures are expected to deliver about $25 million in annual savings by fiscal 2028.

Capital expenditures for fiscal 2027 are estimated at $40 million, with no share repurchases included in guidance. Despite lower earnings, G-III expects strong cash generation and healthy free cash flow to further bolster its financial position. Over the past three months, G-III shares have fallen 17.7%, compared to a 2.4% decline for the broader textile and apparel industry.

Top Stock Picks in the Apparel Sector

• FIGS Inc.: A direct-to-consumer healthcare apparel and lifestyle brand, currently rated Zacks Rank #1 (Strong Buy). FIGS has delivered an average earnings surprise of 187.5% over the past four quarters. The consensus estimate suggests sales growth of 11.4% for the current fiscal year.
• Deckers Outdoor Corporation: Specializes in innovative footwear and accessories, also holding a Zacks Rank #1. Consensus estimates point to earnings and sales growth of 8.5% and 8.9%, respectively, with a four-quarter average earnings surprise of 36.9%.
• Boot Barn Holdings, Inc.: Operates a retail chain focused on western and work-related apparel and accessories, currently rated Zacks Rank #2 (Buy). Consensus estimates indicate earnings and sales growth of 26% and 17.7%, respectively, with a four-quarter average earnings surprise of 4.9%.

Zacks Top 10 Stocks for 2026: Early Access

Act quickly to gain early access to Zacks’ Top 10 Stocks for 2026, curated by Director of Research Sheraz Mian. This portfolio has consistently outperformed, achieving a cumulative gain of +2,530.8% since 2012, far surpassing the S&P 500’s +570.3%.

Sheraz has reviewed thousands of companies and selected the ten best for buy-and-hold in 2026. Be among the first to discover these newly released stocks with significant growth potential.

For the latest stock recommendations from Zacks Investment Research, download the 7 Best Stocks for the Next 30 Days.

Free Stock Analysis Reports