Sign in

You're signed outSign in or to get full access.

GI

G III APPAREL GROUP LTD /DE/ (GIII)·Q1 2026 Earnings Summary

Executive Summary

  • Q1 FY2026 EPS beat: GAAP diluted EPS $0.17 and non-GAAP diluted EPS $0.19, both above the high end of company guidance; revenue of $583.6M declined 4% YoY as owned brands DKNY, Karl Lagerfeld, and Donna Karan offset exited Calvin Klein jeans and sportswear licenses .
  • Against Wall Street: EPS (Primary) consensus was ~$0.13 and revenue ~$580.4M; actual non-GAAP EPS $0.19 and revenue $583.6M were beats; GAAP EPS $0.17 also exceeded consensus* (Values retrieved from S&P Global).
  • Guidance pivot: FY2026 net sales reaffirmed at ~$3.14B, but EPS and adjusted EBITDA guidance withdrawn due to tariff uncertainty; unmitigated tariff cost estimated at ~$135M (weighted to 2H) .
  • Near-term setup: Q2 FY2026 guide calls for net sales ~$570M and EPS $0.02–$0.12, reflecting supply chain challenges, program timing shifts, and tariff impacts; gross margin expected comparable YoY .
  • Capital allocation and balance sheet catalysts: $19.7M buybacks (807,437 shares) in Q1; inventories down 5% YoY to $456.5M; total debt down 96% YoY to $18.7M after redeeming $400M notes .

What Went Well and What Went Wrong

What Went Well

  • EPS outperformance versus guidance, driven by double-digit growth in DKNY, Karl Lagerfeld, and Donna Karan, largely offsetting the Calvin Klein license exits .
  • Retail segment margin improvement (53.5% vs. 47% YoY) tied to merchandising execution and stronger Donna Karan digital AURs; retail segment expected to break even this year, adding ~$14M to operating income .
  • Strategic brand momentum: Donna Karan sales up nearly 50% YoY; DKNY jeans sales more than doubled; Karl Lagerfeld jeans up ~50%; multi-channel international expansion and high-profile campaigns (Kate Moss at Donna Karan; Lila Moss at DKNY) .

What Went Wrong

  • Revenue declined 4% YoY to $583.6M amid macro pressure and the exit of Calvin Klein jeans and sportswear; operating margin compressed to ~1.5% from Q4 levels .
  • Tariff shock: company withdrew FY2026 EPS and EBITDA guidance; unmitigated tariff cost of ~$135M expected, primarily 2H-weighted, driving Q2 EPS guide down to $0.02–$0.12 .
  • Q2 headwinds: supply chain disruptions (including prior 145% China tariff spike) and timing shifts (~$30M impact) plus Canadian retailer liquidation (Hudson’s Bay), dampening Q2 outlook before expected 2H acceleration .

Financial Results

Consolidated Performance vs Prior Quarters

MetricQ3 FY2025Q4 FY2025Q1 FY2026
Revenue ($M)$1,086.8 $839.5 $583.6
GAAP Diluted EPS ($)$2.55 $1.07 $0.17
Non-GAAP Diluted EPS ($)$2.59 $1.27 $0.19
Gross Profit ($M)$432.1 $331.6 $246.5
Gross Margin %39.8% (432.1/1,086.8) 39.5% (331.6/839.5) 42.2% (246.5/583.6)
Operating Income ($M)$166.3 $71.8 $8.5
Operating Margin %15.3% (166.3/1,086.8) 8.6% (71.8/839.5) 1.5% (8.5/583.6)
Net Income ($M)$114.8 $48.8 $7.8
Net Margin %10.6% (114.8/1,086.8) 5.8% (48.8/839.5) 1.3% (7.8/583.6)

Segment Breakdown (Q1 FY2026)

SegmentNet Sales ($M)Gross Margin %
Wholesale$563 40.4%
Retail$36 53.5%

Note: Segment figures reflect management commentary and may not sum to consolidated net sales due to other revenue items or eliminations .

KPIs and Balance Sheet

KPIQ1 FY2026YoY Change
Inventories ($M)$456.5 -5% vs $479.7
Total Debt ($M)$18.7 -96% vs $426.4
Cash & Equivalents ($M)$257.8 -49% vs $508.4
Share Repurchases807,437 shares; $19.7M N/A
Liquidity~$740M availability N/A
Brand GrowthDonna Karan ~+50%; DKNY jeans >+100%; Karl jeans ~+50% N/A

Q1 FY2026 vs Wall Street Consensus*

MetricConsensusActualSurprise
EPS (Primary) ($)0.126*0.19 (non-GAAP diluted) Bold beat*
GAAP Diluted EPS ($)0.126*0.17 Beat*
Revenue ($M)580.4*583.6 Beat*
EPS Estimates (#)4*——
Revenue Estimates (#)3*——

*Values retrieved from S&P Global.

Guidance Changes

MetricPeriodPrevious Guidance (3/13/25)Current Guidance (6/6/25)Change
Net Sales ($B)FY2026~$3.14 ~$3.14 Maintained
GAAP EPS ($)FY2026$4.15–$4.25 Withdrawn Lowered (withdrawn)
Adjusted EBITDA ($M)FY2026$310–$315 Withdrawn Lowered (withdrawn)
Tax Rate (%)FY2026~28.5% Not reiterated Unspecified
Net Interest ($M)FY2026~9 Not reiterated Unspecified
Net Sales ($M)Q2 FY2026—~$570 New
GAAP Net Income ($M)Q2 FY2026—$1–$6 New
Diluted EPS ($)Q2 FY2026—$0.02–$0.12 New
Gross MarginQ2 FY2026—Comparable YoY New
Tariff Impact ($M)FY2026—~135 (unmitigated; 2H-weighted) New disclosure

Earnings Call Themes & Trends

TopicPrevious Mentions (Q-2: Q3 FY2025; Q-1: Q4 FY2025)Current Period (Q1 FY2026)Trend
Tariffs & MacroChallenging consumer backdrop; supply chain disruptions; unseasonable weather ~$135M unmitigated tariff impact disclosed; FY EPS/EBITDA guidance withdrawn; mitigation via sourcing, vendor discounts, selective pricing Intensifying headwind, active mitigation
Owned Brands MomentumOver 30% growth in DKNY, Karl, Donna Karan, Vilebrequin Double-digit growth across DKNY, Karl, Donna Karan; Donna Karan ~+50% sales; DKNY jeans >+100%; Karl jeans ~+50% Strengthening
Pricing PowerNot explicitSelective price increases; strong AURs in Donna Karan; retailer cooperation; limited off-price exposure for Karl Emerging positive
Sourcing DiversificationNot explicitChina <20% of production by year-end; 40+ countries; ongoing vendor negotiations Improving resilience
Retail Segment TurnaroundNot explicitRetail gross margin up to 53.5%; segment expected to break even, adding ~$14M to operating income Material improvement
International ExpansionNot explicitEurope traction via AWWG; Hamburg store opening; Seoul pop-up beat expectations; expanding door counts Building
Marketing/Branding—High-impact campaigns (Kate Moss, Lila Moss); earned media value >$27M for Donna Karan Elevated brand equity

Management Commentary

  • “We delivered solid first quarter results with earnings outperformance that exceeded the high end of our guidance…driven by double digit growth of our key owned brands, DKNY, Karl Lagerfeld and Donna Karan” .
  • “Based on incremental tariffs, we estimate the potential unmitigated tariff impact for fiscal twenty twenty six to be approximately $135,000,000…we’re actively working to reduce the impact through sourcing diversification, vendor negotiations, selective retail price increases…” .
  • “China will represent less than 20% of our production by year end, down from nearly 90% several years ago” .
  • “Our North American retail segment is expected to break even this year, further enhancing our operating income by $14,000,000” .
  • “We remain in a very strong financial position with approximately $740,000,000 of liquidity” .

Q&A Highlights

  • Pricing strategy: Management emphasized targeted price increases where consumer acceptance is high, highlighting strong AURs and limited off-price exposure for Karl; retailers cooperating on pricing adjustments .
  • Sonya Rykiel postponement: Launch canceled due to tariff-driven production challenges and margin risk; team disbanded and costs written down to avoid larger losses in FY2026 .
  • Q2 cadence and timing shifts: About half of the Q2 downdraft is supply-chain related (~$30M), with program shifts spread into Q3 and Q4; Canadian retailer liquidation (Hudson’s Bay) also impacted Q2 .
  • Tariff mitigation path: Ongoing negotiations with retailers for selective price lifts on fall lines sold pre-tariffs; spring lines will embed higher costs; vendor pricing compromises and sourcing realignment underway .
  • Inventory/promotions: Inventory lean and managed prudently; not seeing significant promotion pressure; demand healthy across brands including exiting PVH licenses .

Estimates Context

  • Q1 FY2026 EPS and revenue both beat consensus: EPS consensus ~$0.13 vs non-GAAP diluted EPS $0.19 and GAAP diluted EPS $0.17; revenue consensus ~$580.4M vs actual $583.6M* .
  • Implications: Street models likely to adjust for tariff-related uncertainty (withdrawn FY EPS/EBITDA guide) while recognizing owned-brand momentum and margin resilience in retail; expect estimate dispersion to widen near term as mitigation efficacy and 2H cadence become clearer .

*Values retrieved from S&P Global.

Key Takeaways for Investors

  • Near-term volatility: EPS/EBITDA guide withdrawal and tariff headwinds will weigh on Q2, but management expects 2H acceleration with program shifts and new launches; monitor execution on pricing and sourcing offsets .
  • Brand-led durability: Double-digit owned brand growth (Donna Karan, DKNY, Karl) supports margin mix and pricing power; high-profile campaigns and international expansion deepen moats .
  • Balance sheet strength: Debt reduced 96% YoY; liquidity ~$740M provides flexibility for licenses and acquisitions, supporting strategic optionality .
  • Retail turnaround: Improving retail gross margins and expected break-even reduce drag on consolidated profitability; watch for sustained digital strength and store footprint optimization .
  • Estimate path: Expect Street to trim near-term EPS given Q2 guide and tariff timing, but maintain FY revenue; upside hinges on offset effectiveness and 2H launches .
  • Risk watch: Tariff policy trajectory, supply-chain stability, and consumer elasticity to price increases remain key variables; segment exposure to Canada and timing shifts add execution risk .
  • Trading lens: Post-beat setup with lowered near-term guide can create dispersion; catalysts include tariff developments, Q3/Q4 order book updates, and progress on pricing/vendor negotiations .