G-III Apparel Group (NASDAQ:GIII) reported first-quarter fiscal 2027 results that exceeded its own expectations, as stronger gross margins and growth in its go-forward brand portfolio helped offset the planned loss of revenue tied to PVH brands.
Chairman and Chief Executive Officer Morris Goldfarb said the quarter reflected “continued momentum across our go-forward portfolio and disciplined management of the P&L.” Net sales were $536 million, ahead of the company’s guidance of approximately $530 million, but down from $584 million in the prior-year quarter. Chief Financial Officer Neal Nackman said growth in the company’s go-forward portfolio was offset by anticipated reductions in PVH license revenues.
Margins Improve as Owned Brands Gain Weight
Goldfarb said G-III delivered gross margin expansion for the first time since fiscal 2025, citing full-price selling, inventory management, a shift toward owned brands and tariff mitigation efforts. Non-GAAP gross margin increased 350 basis points from the prior year.
On a GAAP basis, first-quarter gross margin was 64.9%, compared with 42.2% a year earlier. Excluding the non-GAAP IEEPA tariff recovery benefit, adjusted gross margin was 45.7%. Nackman said gross margin benefited from pricing actions taken last year to mitigate tariffs, as well as the mix shift toward higher-margin owned brands.
G-III ended the quarter with $394 million in cash, up from $258 million a year earlier, and more than $800 million in available liquidity. Inventories were down 8% from the prior year. Nackman said inventories were “in excellent shape.”
Marc Jacobs Acquisition Central to Brand Strategy
A major focus of the call was G-III’s recently announced acquisition of the Marc Jacobs brand in partnership with WHP Global. Goldfarb called the transaction “a significant milestone” in the company’s shift from a primarily licensed portfolio toward a more balanced global fashion house with meaningful owned brands.
Under the structure described by Goldfarb, G-III will own 100% of the operating company and lead product development, sourcing, merchandising and global marketing. G-III and WHP Global will jointly own the Marc Jacobs intellectual property through a 50/50 joint venture. WHP Global will lead licensing expansion across categories and geographies.
Goldfarb said the transaction is expected to be dilutive in the first year and accretive thereafter. G-III expects to fund its approximately $500 million investment through cash and its revolving credit facility. The company expects the acquisition to close in the third quarter. Its updated fiscal 2027 outlook does not include any impact from the pending transaction.
Goldfarb said Marc Jacobs has a strong direct-to-consumer base, more than 100 company-operated stores worldwide and a growing wholesale and retail partner network. He said G-III sees opportunities to expand the brand in apparel, wholesale and international markets. Long term, Goldfarb said the business can generate $1 billion in annual revenues for G-III.
Donna Karan, DKNY and Other Owned Brands Show Momentum
Goldfarb said G-III’s owned brands are “becoming stronger, more profitable, and increasingly global.” Donna Karan delivered approximately 40% growth in the first quarter, supported by sell-throughs and strong average unit retails. Sales on donnakaran.com rose nearly 60%, and the company said fragrance and jewelry showed strength.
DKNY’s North American direct-to-consumer business grew meaningfully, with stores posting a double-digit comparable sales increase. Sales on dkny.com increased more than 40%, which Goldfarb attributed to higher conversion rates, targeted marketing and newness in the assortment. Internationally, the company opened a DKNY flagship store in Shanghai.
Karl Lagerfeld performed well in the quarter, led by strength in North America and growth in direct-to-consumer channels. Goldfarb said Europe remains challenging because of pressure on consumer sentiment, though Karl Lagerfeld Jeans delivered a high-single-digit increase. Vilebrequin also performed strongly, with broad-based growth across regions.
Across G-III’s own sites, direct-to-consumer sales increased close to 40% from last year. Goldfarb said handbags were a standout category across key owned brands, supported by design, marketing and promotional execution.
Licensed Portfolio Still Plays a Role
G-III’s licensed business continues to include contemporary fashion and sports lifestyle brands. Goldfarb said BCBG, launched last fall, is exceeding expectations, while French Connection, added in the first quarter, is off to a strong start. The company also announced a partnership with U.K. retailer Next, beginning with a license agreement for Joules apparel and accessories in the U.S. and Canada. Goldfarb said close to 350 doors were confirmed for a fall launch.
In sports and lifestyle, Goldfarb said the team sports business remains healthy. The company added a WNBA license, and Converse is selling across nearly 900 points of sale. Starter also shipped a limited-edition Pokémon jacket exclusively with Target, which Goldfarb said sold out in less than 10 minutes after launching in early May.
Outlook Raised for Earnings, EBITDA
G-III reiterated its full-year fiscal 2027 net sales forecast of approximately $2.71 billion, down 8% from the prior year. The company said that reflects approximately $470 million of lost sales from Calvin Klein and Tommy Hilfiger products, partially offset by high-single-digit growth expected from the go-forward portfolio.
The company raised its full-year non-GAAP earnings outlook to $2.15 to $2.25 per diluted share, up from prior guidance of $2.00 to $2.10. Non-GAAP net income is expected to be between $95 million and $99 million. Adjusted EBITDA is now expected to be between $178 million and $182 million, up from the prior range of $158 million to $162 million.
For the second quarter, G-III expects net sales of approximately $570 million, compared with $613 million in the prior-year quarter. It expects non-GAAP net income of $7 million to $11 million, or $0.15 to $0.25 per diluted share. The company also expects second-quarter gross margin expansion of approximately 450 basis points.
In response to analyst questions, Goldfarb said the company sees substantial room for growth across its owned brands through category expansion, international growth, licensing and direct-to-consumer development. Asked about the consumer backdrop and wholesale partners, he said North American sell-throughs remain generally positive, while Europe is “a little bit more cautious.”
Goldfarb said G-III remains focused on evolving its portfolio. “Our transformation is creating a stronger, more dynamic future for G-III,” he said.
About G-III Apparel Group (NASDAQ:GIII)
G-III Apparel Group, Ltd. is a global fashion company engaged in the design, sourcing, marketing and distribution of women’s and men’s apparel, outerwear, footwear, handbags and fashion accessories. Founded in 1956 and headquartered in New York City, the company has grown from an importer of ladies’ apparel into a diversified apparel business with a portfolio of owned and licensed brands.
The company’s product offerings span a broad spectrum of price points and styles, including formal and casual outerwear, sportswear, performance wear and contemporary fashion.
