G-III Apparel Group (NASDAQ: GIII) reported second-quarter fiscal 2027 adjusted earnings per share of $0.26, surpassing the analyst consensus estimate of $0.19. Despite the earnings beat, shares fell 9.79% after the company issued a weaker-than-expected third-quarter outlook, projecting sales and earnings below estimates due to the exit from Calvin Klein and Tommy Hilfiger licenses.

Top-line growth remained under pressure as quarterly sales of $554 million missed the analyst consensus estimate of $568.413 million by 2.52%. This figure marks a 9.65% decline compared to sales of $613.266 million in the corresponding period of the previous fiscal year. The revenue miss primarily reflected the continued exit from Calvin Klein and Tommy Hilfiger licenses, which have cost the company nearly $1.2 billion in revenue since PVH Corp. announced the return of those licenses in fiscal 2023.

What the Numbers Show

The divergence between the significant earnings beat and the substantial revenue miss highlights favorable mix effects that insulated profitability despite lower volume. While sales contracted nearly 10%, net profit per share expanded slightly, suggesting operational efficiencies offset the top-line headwinds. Gross margin expanded by 440 basis points year-over-year to 45.2%, driven by pricing strategies, more full-price sales, and a shift towards higher-margin owned brands. Wholesale gross margin improved to 43.3% from 38.9%, while retail gross margin fell to 50.6% from 52.4% due to increased promotional activity.

Strategic Updates and Guidance

G-III Apparel Group completed the acquisition of Marc Jacobs, expected to generate about $360 million in global sales this year, excluding licensing revenue. The brand could eventually reach $1 billion in annual revenue. The acquisition is expected to be slightly dilutive in fiscal 2027 but accretive after the first 12 months. G-III plans to include Marc Jacobs in its formal outlook when it reports third-quarter results in December.

Management reaffirmed fiscal 2027 net sales guidance of approximately $2.71 billion, excluding Marc Jacobs' impact. However, the company raised its non-GAAP earnings per diluted share guidance to $2.20 to $2.30, reflecting upside in second-quarter earnings. For fiscal 2027, G-III also raised its GAAP earnings outlook to $4.10 to $4.20 per share from $3.85 to $3.95.

The balance sheet remains strong with $529 million in cash and approximately $1 billion in available liquidity. This position was supported by the receipt of roughly $134 million in tariff refunds and interest during the quarter. Inventories are down approximately 13% compared to the prior year. The company also returned more than $12 million to shareholders through share repurchases and dividends.

Brand Performance

Owned brands showed significant growth momentum. Donna Karan sales increased more than 45% in the second quarter, driven by healthy full-price selling and digital performance. DKNY built momentum with mid-20% growth on DKNY.com and solid comp store sales. Karl Lagerfeld and Vilebrequin also delivered growth despite difficult conditions in Europe.

Challenges persisted in the European market due to macroeconomic softness and reduced traffic. Results from Calvin Klein and Tommy Hilfiger licenses were lower than planned as the company exits these agreements. Excluding these licenses, the go-forward portfolio grew at a high single-digit rate. Wholesale sales in full-price channels for the go-forward portfolio were up more than 20%. G-III expects its go-forward portfolio to replace about $700 million of the lost license sales by the end of fiscal 2027.

Third-Quarter Outlook

For the third quarter, G-III expects adjusted earnings of $1.35 to $1.45 per share, below the $1.75 estimate. The company projected sales of about $870 million, also below the $899.40 million estimate. The exit from Calvin Klein and Tommy Hilfiger licenses will eliminate about $460 million in fiscal 2027 sales, weighing most heavily on third-quarter revenue.

G-III Apparel Group (NASDAQ: GIII) has issued third-quarter financial guidance that falls short of analyst expectations for both earnings and revenue.

The apparel retailer projected adjusted earnings per share in the range of $1.35 to $1.45, missing the consensus estimate of $1.75. Additionally, the company expects sales of $870.000 million, underperforming the estimated $899.404 million.

Guidance Details

The company specified the following metrics for the quarter, contrasting its outlook with market expectations:

This projection serves as the primary financial indicator disclosed for the current reporting cycle, replacing previous GAAP-focused guidance with adjusted figures and explicit comparison points against consensus estimates.

What the Numbers Show

The guidance indicates a significant divergence between management's outlook and market sentiment. The upper end of the adjusted EPS range ($1.45) is approximately 17% lower than the analyst estimate of $1.75, suggesting potential headwinds in profitability or margin compression not fully anticipated by the street. Similarly, the sales miss of roughly $29.4 million implies softer demand or pricing pressure than expected.