G-III Apparel Group, Ltd. (GIII) Q4 2026 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call highlights strong brand growth, especially in Donna Karan and DKNY, and a solid liquidity position. However, there are concerns over declining net income, high tariff impacts, and vague guidance on certain brands like Converse. The strategic focus on owned brands and disciplined inventory management are positives, but the overall financial performance and guidance are weak. The market cap suggests moderate volatility, leading to a neutral prediction with a slight positive bias due to brand growth and liquidity strength.
Key Financial Performance
Net Sales (Q4 FY2026) $771 million, down 8% year-over-year. The decline was due to a $20 million impact from stopping shipments to Saks ahead of its bankruptcy filing.
Net Sales (Full Year FY2026) $2.96 billion, down from $3.18 billion in the previous year. The decrease was primarily driven by a $254 million decline in Calvin Klein and Tommy Hilfiger businesses due to exited licenses.
Gross Margins (Q4 FY2026) 37%, down from 39.5% in the previous year. The decline was attributed to the negative impact of tariffs, partially offset by a favorable mix shift towards more full-price sales.
Gross Margins (Full Year FY2026) 39.4%, down from 40.8% in the previous year. The decline was due to approximately $65 million of unmitigated impact from tariffs.
Non-GAAP Net Income (Q4 FY2026) $13 million or $0.30 per diluted share, compared to $58 million or $1.20 per diluted share in the previous year. The decline was due to a $17.5 million bad debt expense associated with the Saks bankruptcy, which negatively impacted earnings by $0.30 per share.
Non-GAAP Net Income (Full Year FY2026) $116 million or $2.61 per diluted share, compared to $204 million or $4.42 per diluted share in the previous year. The decline was due to the impact of exited licenses and the Saks bad debt expense.
Inventories (End of FY2026) $460 million, down 4% year-over-year. The decrease reflects a disciplined approach to inventory management and high single-digit unit decreases.
Cash and Liquidity (End of FY2026) $407 million in cash and over $900 million in total liquidity. This was achieved after returning over $50 million to shareholders through share repurchases and a new cash dividend.
Donna Karan Brand Growth (FY2026) Approximately 40% growth year-over-year, driven by strong profitability, healthy AURs, and sell-throughs. Digital sales on donnakaran.com grew close to 170%.
Karl Lagerfeld Brand Growth (FY2026) High single-digit growth year-over-year. North American sales grew high teens, and digital sales on karl.com grew over 20%.
DKNY Brand Growth (FY2026) Approximately $650 million in reported net sales, with a 40% increase in sales on dkny.com. Social engagement rose nearly 300% year-over-year.
Vilebrequin Brand Growth (FY2026) Low single-digit sales growth, driven by higher AURs and strong global brand awareness despite a challenging European backdrop.
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Operating Highlights
Donna Karan: Achieved approximately 40% growth in fiscal 2026, with strong profitability and healthy sell-throughs. Expanded distribution in North America and saw a 170% increase in sales on donnakaran.com. Launched Donna Karan Weekend and a new jewelry line.
Karl Lagerfeld: Delivered high single-digit growth, with strong marketing campaigns and expanded distribution. Karl Lagerfeld jeans line grew 30%, and the brand opened 15 new stores globally.
DKNY: Achieved $650 million in reported net sales, with a 40% increase in sales on dkny.com. Launched global campaigns and expanded lifestyle assortments.
Vilebrequin: Delivered low single-digit growth, driven by higher AURs and strong global brand awareness. Expanded hospitality operations and maintained premium positioning.
International Expansion: Focused on disciplined global expansion, with over 20% of fiscal 2026 net sales generated outside the U.S. Karl Lagerfeld expanded in Latin America, Mexico, and Asia Pacific. DKNY unlocked growth in Europe and China.
Category Expansion: Expanded lifestyle offerings through licensing, including Donna Karan Weekend and Karl Lagerfeld jeans. Signed new licensing agreements for French Connection and luxury brand residences.
Digital Growth: Sales on owned websites grew over 30%, with donnakaran.com leading at 170% growth. Enhanced digital content and consumer insights to drive engagement.
Cost Savings: Identified $25 million in cost savings across supply chain and organizational structure, to be achieved by fiscal 2028.
Portfolio Simplification: Transitioned out of Calvin Klein and Tommy Hilfiger businesses, focusing on owned brands like DKNY and Karl Lagerfeld, which now account for 60% of revenue.
Omnichannel Enhancement: Improved North American retail segment profitability and expanded digital presence across platforms like Amazon and Zalando.
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Risk or Challenges
Saks bankruptcy impact: The bankruptcy of Saks led to a $17.5 million bad debt expense and negatively impacted earnings by $0.30 per share. Additionally, it caused a $20 million reduction in sales as shipments were stopped ahead of the filing.
Tariff conditions: Evolving tariff conditions negatively impacted gross margins, with approximately $65 million of unmitigated tariff costs affecting fiscal 2026 results. This remains a challenge for future profitability.
Calvin Klein and Tommy Hilfiger license roll-off: The expiration of these licenses is expected to result in a $470 million reduction in fiscal 2027 sales, with further declines anticipated as the licenses fully roll off by fiscal 2028.
European market challenges: Softer consumer trends in Europe impacted the performance of brands like Karl Lagerfeld and Vilebrequin, posing a challenge to international growth.
Cost pressures and supply chain optimization: Higher unit costs and supply chain inefficiencies have been noted, although efforts are underway to optimize these areas and achieve $25 million in cost savings by fiscal 2028.
Retail segment profitability: The North American retail segment has been operating at a loss, though improvements are being made to return it to profitability by fiscal 2027.
Economic uncertainties: The company faces broader economic uncertainties, including fluctuating consumer demand and inflationary pressures, which could impact future performance.
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Guidance & Outlook
Revenue Expectations: For fiscal 2027, net sales are expected to be approximately $2.71 billion, reflecting an 8% decline from the prior year due to the roll-off of Calvin Klein and Tommy Hilfiger licenses. The go-forward portfolio is expected to grow high single digits.
Earnings Projections: Non-GAAP diluted earnings per share for fiscal 2027 are expected to be between $2 and $2.10, compared to $2.61 in fiscal 2026. Adjusted EBITDA is projected to be between $158 million and $162 million, down from $192 million in fiscal 2026.
Gross Margin: Gross margins are expected to improve by as much as 300 basis points for fiscal 2027, driven by tariff mitigation efforts and a shift toward higher-margin owned brands.
Cost Savings: The company has identified $25 million in cost savings across supply chain, organizational structure, and discretionary expenses, expected to be achieved on a run-rate basis by fiscal 2028.
Capital Expenditures: Capital expenditures for fiscal 2027 are expected to be approximately $40 million.
First Quarter Fiscal 2027: Net sales are expected to be approximately $530 million, with a net loss projected between $13 million and $18 million, or $0.30 to $0.40 per share. Gross margin percentage is expected to increase by approximately 150 basis points.
Marketing and SG&A Expenses: Higher marketing spend is anticipated in the first quarter of fiscal 2027 due to spring marketing initiatives. SG&A expenses are expected to deleverage for the full year as newer businesses scale and investments in growth continue.
Digital and Omnichannel Growth: The company plans to expand its digital presence and enhance omnichannel capabilities, with a focus on scaling profitably and delivering richer brand experiences.
International Expansion: The company is targeting growth in Europe, China, Asia Pacific, and India through new partnerships and licensing agreements.
Brand-Specific Growth: Donna Karan is expected to achieve strong growth in fiscal 2027, with a long-term goal of $1 billion in annual net sales. Karl Lagerfeld and DKNY are also expected to grow, with DKNY focusing on product newness, expanded assortments, and international growth.
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Shareholder Return Plan
Cash Dividend: The company initiated its first-ever dividend program in December of the previous year. Over $50 million was returned to shareholders through share repurchases and the new cash dividend.
Share Repurchase: The company returned over $50 million to shareholders through share repurchases and a new cash dividend. No specific details on the number of shares repurchased were provided.
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Key Q&A
Q:Can you provide visibility on your own brands for this year, particularly regarding inventory levels, order books, and marketing investments?
A:The company is comfortable with its own brands, which grew high single digits last year. They are garnering additional retail space, with one brand adding 400 points of sale and another 300. Inventory levels are being controlled to reduce off-price selling and protect premier brands. Growth is expected from international markets, with plans to expand Donna Karan globally. Marketing investments will be aggressive to support brand growth, with the marketing team achieving notable success in recent campaigns.
Q:Can you give an update on the Converse launch and its prospects for this year?
A:The company is building the Converse brand globally, with rights to expand beyond North America. While there is some uncertainty and softness in the brand, it does not currently affect the company. The brand's strategy is guided by Nike, and the company is opening new accounts daily. The success of the brand depends on Nike's support, as the company has limited control over its direction.
Q:How are you prioritizing acquisitions versus new licensing opportunities, given the strength in the balance sheet and the shift towards own brands?
A:The company is pursuing both acquisitions and licensing opportunities simultaneously. The balance sheet and talent pool support both strategies. They have licensed strong brands when acquisition opportunities were not available and are managing these effectively.
Q:Which category expansions, such as fragrance, eyewear, home, or hospitality, are furthest along in becoming meaningful revenue contributors?
A:For Karl Lagerfeld, hospitality has been a key driver in the last 18 months, alongside Vilebrequin. For DKNY, the focus is on consumer-driven products, with global licenses signed in Latin America, China, and India. DKNY is not expanding into hospitality but remains strong on the consumer side.
Q:Can you provide details on the size and growth outlook of the Donna Karan business?
A:The company does not disclose the size of the Donna Karan business but stated it is further along in 18 months than Calvin Klein was at a similar stage. The brand is scalable, with global rights allowing for international expansion. High single-digit growth is anticipated for key owned brands and the overall portfolio, including licensed brands.
Q:What are the drivers behind the expected SG&A dollar growth, and is the math on the 300 basis point gross margin expansion correct?
A:The math on the 300 basis point gross margin expansion is correct, with SG&A dollars expected to grow by 2%-3%. The growth is driven by maintaining the talent pool, investments in infrastructure and technology, and upgrading systems. Cost-saving initiatives are planned for fiscal '28 but are not included in the fiscal '27 plan.
Q:Review of Unclear Management Responses
A:Management avoided providing specific details on the size of the Donna Karan business, stating only that it is further along than Calvin Klein was at a similar stage. Additionally, the response regarding the Converse brand's prospects was vague, emphasizing dependence on Nike's strategy without clear direction or specifics on growth expectations.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
DKNY
III sale
Klein business
Lagerfeld
Paris
Saks bankruptcy
Saks debt
assortment distribution
bankruptcy filing
brand Non
brand builder
brand license
brand moment
cash flow
cash liquidity
cost saving
cost structure
debt expense
deleverage
digit PVH
discipline
distribution account
dividend
expense Saks
focus
heat
hospitality
increase store
infrastructure technology
license margin
loss
marketing spend
outlook
price sale
relevance
repurchase cash
share repurchase
spring marketing
term potential
GIII Transcript
G-III Apparel Group, Ltd. (GIII) Q4 2026 Earnings Call Transcript
Unknown3-12
The earnings call highlights strong brand growth, especially in Donna Karan and DKNY, and a solid liquidity position. However, there are concerns over declining net income, high tariff impacts, and vague guidance on certain brands like Converse. The strategic focus on owned brands and disciplined inventory management are positives, but the overall financial performance and guidance are weak. The market cap suggests moderate volatility, leading to a neutral prediction with a slight positive bias due to brand growth and liquidity strength.
G-III Apparel Group, Ltd. (GIII) Q3 2026 Earnings Call Transcript
Unknown12-9
The earnings call presents mixed signals: strong retail and digital sales growth, particularly in owned brands like Donna Karan and Karl Lagerfeld, contrasts with challenges in the wholesale segment due to expired licenses and tariff impacts. The Q&A reveals management's cautious optimism and strategic focus on owned brands, but also highlights uncertainties in guidance and gross margin recovery. Despite positive trends in certain areas, the lack of specific guidance and tariff pressures suggest a balanced outlook, leading to a neutral sentiment prediction for the stock price.
G-III Apparel Group, Ltd. (GIII) Q2 2026 Earnings Call Transcript
Unknown9-4
The earnings call summary reveals several negative indicators: declining gross margins, reduced non-GAAP net income, and increased inventory levels due to tariffs. Although there are positive aspects such as growth in owned brands and a net cash position, the Q&A section highlights management's unclear guidance and challenges with tariffs and brand transitions. The market cap suggests a more pronounced reaction, leading to a likely negative stock price movement of -2% to -8% over the next two weeks.
G-III Apparel Group, Ltd. (GIII) Q1 2026 Earnings Call Transcript
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Despite some positive aspects like improved liquidity and shareholder returns, the company's earnings call highlights several challenges, including supply chain disruptions, regulatory issues, and competitive pressures. The negative impact of exiting a major license business, coupled with weak guidance and uncertain tariff impacts, outweighs the positives. The cautious optimism in consumer spending and the lack of clarity on tariff mitigation further contribute to a negative outlook, likely resulting in a stock price decrease of -2% to -8% over the next two weeks.
GIII Report
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