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GI

G III APPAREL GROUP LTD /DE/ (GIII)·Q2 2026 Earnings Summary

Executive Summary

  • Q2 FY2026 net sales $613.3M and diluted EPS $0.25 both exceeded guidance; results were driven by owned brands (DKNY, Donna Karan, Karl Lagerfeld, Vilebrequin) and wholesale strength despite PVH license exits and tariff headwinds .
  • Gross margin contracted to 40.8% (from 42.8%) on higher-than-expected tariff costs and product mix; management is prioritizing margin over sales and expects margins to normalize and expand as owned brands mix rises and PVH exits complete .
  • FY2026 guidance cut meaningfully: net sales to ~$3.02B (from $3.14B), non-GAAP EPS to $2.55–$2.75 (vs. prior ~$4.15–$4.25); total incremental tariff cost now ~$155M with ~$75M unmitigated impact weighted to H2 .
  • Street vs actual: Q2 EPS $0.25 vs $0.09 consensus (beat); revenue $613.3M vs $571.2M consensus (beat). Q3 guide: sales ~$1.01B roughly in-line with consensus; EPS guide $1.43–$1.63 near Street ~$1.60, implying tighter execution needed on tariff mitigation and mix shift*.
    Values retrieved from S&P Global.

What Went Well and What Went Wrong

What Went Well

  • Owned brands momentum: “we exceeded expectations across both net sales and earnings… momentum driven by our go-forward portfolio, specifically our key owned brands DKNY, Donna Karan, Karl Lagerfeld and Vilebrequin” .
  • Wholesale strength and door expansion: DKNY outerwear sales nearly doubled; Karl Lagerfeld North America sales grew >30% with margin expansion; Donna Karan AURs >$500 on premium handbags .
  • Balance sheet and capital allocation: ended Q2 with net cash position of $286M and repurchased $24.6M (1,140,988 shares); total debt down to $15.5M .

What Went Wrong

  • Gross margin compression: consolidated GM down ~200+ bps YoY to 40.8% (40.8% vs 42.8% last year), with wholesale GM 38.9% (down from 41.2%) and retail GM 52.4% (down from 54.4%) on tariff costs and product mix .
  • Retail partner caution and PVH transition: reduced open-to-buys, especially Calvin Klein and Tommy Hilfiger, narrowing selling periods and contributing to lower sales and profitability vs prior year .
  • Footwear softness and sourcing transitions: softness in footwear and production relocation (e.g., out of China) created operational friction impacting sell-throughs and quality cadence .

Financial Results

Consolidated Results vs Prior Periods and Estimates

MetricQ2 2025Q1 2026Q2 2026Q2 2026 Consensus
Net Sales ($USD Millions)$644.8 $583.6 $613.3 $571.2*
GAAP Diluted EPS ($)$0.53 $0.17 $0.25 $0.09*
Non-GAAP Diluted EPS ($)$0.52 $0.19 $0.25 —
Gross Margin % (Consolidated)42.8% —40.8% —

Notes: Values with asterisks are retrieved from S&P Global.

Segment Breakdown (Q2 2026 vs Q2 2025)

SegmentNet Sales Q2 2025 ($M)Net Sales Q2 2026 ($M)GM% Q2 2025GM% Q2 2026
Wholesale$620 $590 41.2% 38.9%
Retail$37 $41 54.4% 52.4%

KPIs and Balance Sheet Highlights

KPIQ4 FY2025Q1 FY2026Q2 FY2026
Inventories ($M)$478.1 $456.5 $639.8
Cash & Equivalents ($M)$181.4 $257.8 $301.8
Total Debt ($M)$6.2 $18.7 $15.5
Net Cash Position ($M)——$286
Share Repurchases—807,437 shares; $19.7M 1,140,988 shares; $24.6M

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net Sales ($B)FY2026~$3.14 ~$3.02 Lowered
GAAP Net Income ($M)FY2026$192–197 $112–122 Lowered
GAAP Diluted EPS ($)FY2026$4.15–$4.25 $2.53–$2.73 Lowered
Non-GAAP EPS ($)FY2026$4.15–$4.25 $2.55–$2.75 Lowered
Adjusted EBITDA ($M)FY2026$310–315 $198–208 Lowered
Net Interest Expense ($M)FY2026~$9 ~$5 Lowered
Tax Rate (%)FY2026~28.5% ~29.9% Raised
Tariff Cost (Total) ($M)FY2026~$135 unmitigated est. at Q1 ~$155 total; ~$75 unmitigated in guidance Raised total; specified unmitigated
Net Sales ($B)Q3 FY2026n/a~$1.01 New
GAAP Diluted EPS ($)Q3 FY2026n/a$1.43–$1.63 New

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 FY2025, Q1 FY2026)Current Period (Q2 FY2026)Trend
AI/Technology initiativesStrategic priorities and brand growth, no explicit AI Advancing 3D design, AI automation to drive efficiencies Increasing tech enablement
Supply chain & tariffsFY2026 guide given; later withdrew profit guidance due to tariff uncertainty; unmitigated ~$135M Total tariff impact now ~$155M; ~$75M unmitigated weighted to H2; margin-first stance Tariff impact rising; mitigation ongoing
PVH license transitionsPlan to offset Calvin/Tommy with owned brands growth Reduced open-to-buys; responsible exit; PVH sales to ~$400M by FY2027 Execution-intensive transition
Product performanceDouble-digit owned brands growth (Q1) DKNY outerwear nearly doubled; Karl NA +30% sales; Donna Karan strong AURs Strength in owned brands
Regional trendsBroad growth; strong FY2025 finish North America wholesale acceleration; Europe/Asia building for Karl, Vilebrequin beach clubs expanding International momentum building
Pricing powerRecord FY2025 margins Targeted price increases with minimal resistance; art/value narrative; off-price needs comp pricing Carefully raising prices
Retail operationsOutlet losses reduction plan (implied)On track to nearly breakeven retail segment this year; NA retail comps up Improving retail profitability

Management Commentary

  • “Gross margins in the quarter were impacted by higher than expected tariff costs… We’re actively mitigating these pressures through vendor participation, selective sourcing shifts and targeted pricing… we anticipate gross margins will largely normalize and ultimately expand as we exit licenses [and] as the penetration of our owned brands increases” .
  • “We’re investing in systems… advancing digital tools such as three d design, AI automation… to help gain efficiencies” .
  • “Donna Karan… premium handbags commanding AURs upward of $500… Donnakaran.com is outperforming expectations… affluent neighborhoods… emerging as our top performing markets” .
  • “Karl Lagerfeld… North America sales grew over 30%… Internationally… broad based growth… margin expansion despite a challenging macro backdrop” .
  • “We remain in a strong financial position ending the quarter in a net cash position of $286 million after repurchasing $25 million in shares” .

Q&A Highlights

  • Margin dynamics: Q2 GM down ~200+ bps; roughly half tariffs, half mix; China tariffs at 30% (not 145%); mitigation should normalize margins as pricing adjusts and owned brands mix rises .
  • India tariff exposure: Foregone sales near $30M top line could impact Q4/year-end; strategy includes marketing in Europe or working with Indian partners .
  • Pricing power and elasticity: Minimal consumer resistance where brand equity is strong; off-price channel requires departmental comps before fully absorbing increases; selective increases implemented late Q2 with solid back-to-school performance .
  • PVH transitions: Deceleration tied to license exits and selling season disruptions; owned brands expected mid-single-digit growth in FY2026 vs prior double-digit run-rate .

Estimates Context

  • Q2 FY2026 actuals vs Street: EPS $0.25 vs $0.09 consensus; revenue $613.3M vs $571.2M consensus; both were significant beats*.
    Values retrieved from S&P Global.
  • Q3 FY2026 outlook vs Street: Company guides sales ~$1.01B and EPS $1.43–$1.63; Street at ~$$1.011B revenue and ~$1.60 EPS, i.e., revenue in-line and EPS near high end*.
    Values retrieved from S&P Global.

Estimates Comparison Tables

MetricQ2 2026 ActualQ2 2026 ConsensusSurprise
Revenue ($USD Millions)$613.3 $571.2*Beat
EPS ($)$0.25 $0.09*Beat
MetricQ3 2026 Company GuideQ3 2026 ConsensusRead-through
Revenue ($USD Millions)~$1,010 ~$1,011*In-line
EPS ($)$1.43–$1.63 ~$1.60*Near high end

Notes: Values with asterisks are retrieved from S&P Global.

Key Takeaways for Investors

  • Owned brands are the core growth engine; continued door expansion and premium AURs support margin recapture as PVH exits reduce lower-margin mix .
  • Tariff impact increased to ~$155M total with ~$75M unmitigated in FY2026; near-term margin pressure likely peaks in H2 before normalizing as pricing resets and sourcing shifts take hold .
  • Q2 was a clean beat vs guidance and Street; Q3 guide sits near consensus—execution on tariff mitigation and pricing will drive whether EPS lands at the high end .
  • Balance sheet strength (net cash, minimal debt) enables brand investment and opportunistic buybacks; $24.6M repurchased in Q2 .
  • Watch footwear softness and production transitions as incremental risk; management flagged category softness and sourcing complexities impacting timing and quality .
  • Strategic catalysts: Donna Karan Weekend rollout, Karl Lagerfeld global campaigns (Paris Fashion Week; Paris Hilton), DKNY activations (Hailey Bieber), Vilebrequin beach club expansion—supporting top-line resilience and brand equity .
  • Guidance reset lowers FY2026 expectations materially; with Street already embedding tariff headwinds, upside likely hinges on owned brands acceleration, pricing power, and retail partner normalization .

Additional Relevant Q2 FY2026 Press Releases

  • Donna Karan Cashmere Mist Mini Anti-Perspirant Stick launch (distribution at Nordstrom Rack, Amazon, Ulta Beauty at Target) indicates continued brand-led product expansion and accessible luxury positioning .