G-III Apparel plunges 11% on Q4 miss, eyes owned-brand strategy
Apparel manufacturer shifts from licensed brands to DKNY and Karl Lagerfeld amid $470M revenue gap
G-III Apparel Group shares tumbled 11.4% on Thursday after the clothing manufacturer reported quarterly results that fell well short of analyst expectations, while projecting a significant revenue decline as it exits major licensing deals.
The New York-based company reported fourth-quarter adjusted earnings per share of $0.30, missing the consensus estimate of $0.58 by nearly half. Revenue for the quarter ended January 31 declined 8.1% year-over-year to $771.5 million, failing to meet analyst forecasts.
The steep sell-off erased roughly $3.38 per share, bringing the stock to $26.19 and marking its worst single-day performance since early 2025. Trading volume spiked to approximately 2 million shares, more than four times the daily average.
"The company's performance was impacted by a challenging consumer environment and lost volume from PVH-licensed brands," according to MarketBeat's earnings analysis. PVH Corp owns Calvin Klein and Tommy Hilfiger, whose licensing agreements with G-III are expiring.
The quarter's results were particularly hampered by the bankruptcy of Saks Fifth Avenue. G-III stopped shipments to the retailer ahead of its filing, resulting in approximately $20 million in lost sales, and recorded a $17.5 million bad debt expense related to the retailer's collapse.
Despite the disappointing fourth quarter, management issued guidance for fiscal 2027 that reflects a strategic pivot toward owned brands. The company forecasts earnings per share of $2.00 to $2.10 for the upcoming year, with net sales projected at approximately $2.71 billion. This represents a decline from fiscal 2026 sales of $2.96 billion, largely due to the $470 million revenue gap from expiring Calvin Klein and Tommy Hilfiger licenses.
The guidance fell short of Wall Street expectations, as analysts had been projecting earnings of $2.99 per share, according to MarketBeat data.
G-III is now accelerating its transition toward a portfolio dominated by owned brands, including DKNY, Donna Karan, Karl Lagerfeld, and Vilebrequin. The company expects high single-digit growth from this go-forward portfolio to help offset the loss of licensed brands. Management has emphasized focus on gross margin expansion and cost structure optimization as part of the strategic shift.
"G-III Apparel Group emphasized its strategic adjustments, focusing on gross margin expansion, cost structure optimization, and leveraging its owned brands like DKNY, Donna Karan, Karl Lagerfeld, and Vilebrequin," MarketBeat reported from the earnings call.
The company ended fiscal 2026 with a strong liquidity position of over $900 million, providing financial flexibility as it executes its strategic transition. With a current market capitalization of $1.25 billion and analyst price targets averaging $33.25, the stock trades at approximately 0.4 times trailing sales.
The strategic transformation represents a significant bet by management on the long-term value of owned brands versus licensed partnerships. While the transition will create near-term revenue pressure—evidenced by the $470 million sales gap from lost licenses—the company believes higher margins and greater control over brand positioning will drive sustainable growth beyond 2027.
Investors will be watching closely for signs that the owned-brand portfolio can deliver the growth management has promised, particularly as consumer spending patterns remain uncertain in the current economic environment.