Fashion conglomerate G-III (NASDAQ: GIII) reported Q2 CY2025 results beating Wall Street’s revenue expectations, but sales fell by 4.9% year on year to $613.3 million. On the other hand, next quarter’s revenue guidance of $1.01 million was less impressive, coming in 99.9% below analysts’ estimates. Its non-GAAP profit of $0.25 per share was significantly above analysts’ consensus estimates.

Is now the time to buy GIII? Find out in our full research report (it’s free).

StockStory’s Take

G-III’s second quarter results were met with a positive market reaction, reflecting outperformance versus Wall Street’s revenue and non-GAAP profit expectations. Management attributed the quarter’s results to resilient consumer demand for its core owned brands—DKNY, Donna Karan, Karl Lagerfeld, and Vilebrequin—offsetting declines from licensed brands. CEO Morris Goldfarb highlighted that “retailers responded to consumer demand for newness and fashion as we transition season,” while also noting that higher-than-expected tariff costs compressed margins in the period.

Looking ahead, G-III’s updated guidance reflects a more cautious stance as management navigates ongoing tariff impacts and the transition away from expiring Calvin Klein and Tommy Hilfiger licenses. Goldfarb cautioned that “retail partners are increasingly cautious on their inventory buys, in anticipation of tariff increases becoming more pronounced,” and noted that the company is absorbing some cost pressures to maintain competitiveness. Management expects margin normalization over time as the business mix shifts further toward higher-margin owned brands and as new product launches scale.

Key Insights from Management’s Remarks

Management identified several pivotal factors influencing the quarter, including the acceleration of owned brand growth, margin pressures from tariffs, and the strategic exit from key licenses.

• Owned brands drive momentum: G-III’s core brands—DKNY, Donna Karan, Karl Lagerfeld, and Vilebrequin—were central to sales performance, with Donna Karan and Karl Lagerfeld highlighted for strong lifestyle category growth and expanded retail distribution.
• Tariff impact on margins: Elevated tariffs, especially on inventory from Vietnam, India, and China, led to compressed gross margins. Management responded with a mix of selective sourcing shifts, vendor negotiations, and targeted price increases, though some costs were absorbed to retain market share.
• Strategic exit from PVH licenses: The planned wind-down of Calvin Klein and Tommy Hilfiger licenses drove a decrease in overall sales. Management sees this as an opportunity, anticipating that its owned brands and new licenses will fill the gap left by these transitions.
• Supply chain and cost initiatives: G-III is consolidating its warehouse network and investing in technology—including digital tools and AI automation—to improve operational efficiency and reduce costs. These moves are expected to generate savings and support future margin expansion.
• Product and category expansion: The company is broadening its owned brands into new categories such as accessories and casual wear, and is investing in digital channels and omni-channel marketing to drive brand engagement and customer loyalty.

Drivers of Future Performance

G-III’s outlook is shaped by the transition away from lower-margin licenses, ongoing tariff pressures, and the scaling of its owned brands.

• Tariff pressures persist: Management expects incremental tariff costs to remain a headwind, with most impact felt in the second half as new rates on Vietnam, India, and Indonesia shipments take effect. While efforts to mitigate costs are underway, G-III will continue to absorb some expenses to remain competitive.
• Owned brand mix shift: As Calvin Klein and Tommy Hilfiger licenses expire, G-III anticipates a greater proportion of sales will come from its higher-margin owned brands. Management believes this shift will support long-term gross margin recovery and provide more control over pricing and brand strategy.
• New product and license launches: The introduction of products like the Donna Karan Weekend collection, expanded Karl Lagerfeld assortments, and recent launches for Converse and BCBG are expected to drive incremental growth, particularly as these brands gain traction in new categories and markets.

Catalysts in Upcoming Quarters

In upcoming quarters, our analysts will focus on (1) the pace at which G-III’s owned brands replace lost sales from expiring licenses, (2) the company’s ability to offset tariff-driven margin pressures through pricing and cost initiatives, and (3) the success of new brand and product launches in driving incremental growth. Progress in digital and supply chain transformation will also be closely monitored as indicators of future profitability.

G-III currently trades at $26.09, down from $27.10 just before the earnings. At this price, is it a buy or sell? See for yourself in our full research report (it’s free).

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