G-III Apparel Group, LTD. reported second-quarter results that topped expectations, driven by momentum at DKNY, Donna Karan, Karl Lagerfeld, and Vilebrequin. However, the apparel giant reduced its outlook for the year due to conservative ordering patterns by its wholesale partners and a worsening impact from tariffs.

Morris Goldfarb, G-III’s chairman and chief executive officer, said, “In the second quarter, we exceeded expectations across both net sales and earnings, driven by the strong momentum of our go-forward portfolio, led by DKNY, Donna Karan, Karl Lagerfeld, and Vilebrequin. These results highlight our ability to execute on our strategic priorities and leverage our powerful corporate platform to maximize the full potential of our globally recognized brands.”

Goldfarb concluded, “Looking ahead, we have updated fiscal 2026 guidance to reflect the current macro environment, a more cautious outlook from our retail partners, as well as the impact of tariffs on our top and bottom lines. We are actively mitigating tariff pressures through a combination of vendor participation, selective sourcing shifts, and targeted price increases. I am confident in our ability to successfully navigate the challenging environment and responsibly exit the expiring licenses. Our strong balance sheet and dynamic business model provide the flexibility to invest in our brands as well as pursue strategic opportunities to drive long-term growth and shareholder value.”

Results of Operations

Second Quarter Fiscal 2026
Net sales for the second quarter ended July 31, 2025, decreased 5 percent to $613.3 million compared to $644.8 million in the prior year’s quarter. G-III’s guidance had called for sales to reach approximately $570.0 million.

The decline reflects lost sales of the exited Calvin Klein jeans and sportswear license business. PVH, the parent of Calvin Klein and Tommy Hilfiger, said in early 2023 that it would unwind its licensing arrangements with G-III for Calvin Klein and Tommy Hilfiger women’s wholesale apparel in the U.S. by 2027.

Net income for the second quarter ended July 31, 2025, was $10.9 million, or $0.25 per diluted share, compared to $24.2 million, or $0.53 per diluted share, in the prior year’s quarter. Guidance had called for earnings in the range of 2 cents to 12 cents.

Non-GAAP net income per diluted share was $0.25 for the second quarter ended July 31, 2025, compared to $0.52 in the same period last year. Non-GAAP net income per diluted share excludes in the second quarter of fiscal 2026, $0.3 million in one-time severance expenses related to a closed warehouse and in the second quarter of fiscal 2025, a ($0.6) million gain on the forgiveness of certain liabilities related to the acquisition of the minority interest of our DKNY business in China that we did not already own. The effect of these exclusions had no impact on earnings per diluted share in the second quarter of this year and was equal to ($0.01) per diluted share in last year’s second quarter.

Balance Sheet as of Second Quarter Fiscal 2026
Inventories increased 5 percent to $639.8 million this year compared to $610.5 million last year.

Total debt decreased 96 percent to $15.5 million this year compared to $414.0 million last year. In August 2024, the company voluntarily redeemed the entire $400.0 million principal amount of its senior secured notes (the “Notes”) at a redemption price equal to 100 percent of the principal amount of the Notes plus accrued and unpaid interest. The payment was made with cash on hand and borrowings from the revolving credit facility.

Capital Allocation
Share repurchases of 1,140,988 for $24.6 million were made in the second quarter ended July 31, 2025.

Outlook
The company has provided guidance for fiscal 2026, which reflects the current macroeconomic environment, a more cautious outlook from its retail partners, as well as the impact of tariffs on both its top and bottom lines. Based on current tariff rates, the company anticipates a total incremental tariff cost of approximately $155 million, up from previous expectations of $135.0 million. This has been partially offset through vendor participation, strategic sourcing shifts and targeted price increases. The remaining unmitigated impact, as reflected in fiscal 2026 guidance, is estimated at $75 million, with the majority of the impact weighted to the second half of the year.

Additionally, the company provided its outlook for the third quarter, which ended on October 31, 2025, today, September 4.

Fiscal 2026

  • Net sales are expected to be approximately $3.02 billion. This compares to net sales of $3.18 billion for fiscal 2025.
  • Net income is expected to be between $112.0 million and $122.0 million, resulting in diluted earnings per share of between $2.53 and $2.73.
  • Non-GAAP net income for fiscal 2026 is expected to be between $113.0 million and $123.0 million, or diluted earnings per share between $2.55 and $2.75. This compares to non-GAAP net income of $203.6 million, or diluted earnings per share of $4.42 for fiscal 2025.
  • Adjusted EBITDA for fiscal 2026 is expected to be between $198.0 million and $208.0 million compared to adjusted EBITDA of $325.9 million in fiscal 2025.
  • Net interest expense is expected to be approximately $5.0 million.
  • Tax rate for fiscal 2026 is estimated to be 29.9 percent.

Under its prior guidance, sales for the year were expected to reach approximately $3.14 billion. Due to uncertainty surrounding tariffs and related macroeconomic conditions, G-III withdrew its initial net income, non-GAAP net income, and adjusted EBITDA guidance for fiscal 2026, issued on March 13, 2025, in June. Prior to the withdrawal, G-III had forecast net income between $192.0 million and $197.0 million, diluted EPS between $4.15 and $4.25, non-GAAP net income between $192.0 million and $197.0 million, non-GAAP EPS between $4.15 and $4.25, and adjusted EBITDA between $310.0 million and $315.0 million.

Third Quarter Fiscal 2026

  • Net sales for the third quarter of fiscal 2026 are expected to be approximately $1.01 billion. This compares to net sales of $1.09 billion in the third quarter of last year.
  • Net income for the third quarter of fiscal 2026 is expected to be between $62.0 million and $72.0 million, or diluted earnings per share between $1.43 and $1.63. This compares to net income of $114.8 million, or $2.55 per diluted share, in last year’s third quarter.

G-III owns ten brands, including DKNY, Karl Lagerfeld, Donna Karan, and Vilebrequin. The company licenses over 20 brands, including Calvin Klein, Tommy Hilfiger, Nautica, Halston, Converse, BCBG, and the national sports leagues.

 Image courtesy G-III Apparel / Tommy Hilfiger