Shares of G-III Apparel (NASDAQ: GIII) took a hit today after the fashion licensing company reported disappointing fourth-quarter earnings. The stock was down 10% as of 11:29 a.m. ET.
In what has been a challenging environment for apparel stocks, G-III has managed to hold its ground in recent years. However, in the fourth quarter, the company saw a decline in revenue by 8.1% to $771.5 million, missing the consensus estimate of $792 million. This drop was partly attributed to the loss of licenses for Tommy Hilfiger and Calvin Klein from PVH, as the parent company seeks to bring its brands in-house.
Gross profit also decreased by 13% to $285.4 million, indicating that the company had to mark down its merchandise due to weak discretionary spending. Adjusted earnings per share fell from $1.27 to $0.30, which fell short of the consensus estimate of $0.59. This decline was also impacted by a $0.30 per share hit from bad debt expense related to the bankruptcy of Saks.
Despite these challenges, CEO Morris Goldfarb expressed confidence in the company’s performance, stating, “The strength and global recognition of our brands, together with a disciplined operating model and strong balance sheet, enabled us to deliver solid performance despite a challenging environment.”
Looking ahead to fiscal 2027, G-III anticipates revenue of $2.71 billion, down from $2.96 billion in the previous year. This projection includes the loss of $470 million in sales from the Calvin Klein and Tommy Hilfiger brands. Adjusted earnings per share for the upcoming fiscal year are expected to be in the range of $2.00-$2.10, a decrease from $2.61 in fiscal 2026 and below the analyst consensus of $2.93.
While the forecast may have contributed to the sell-off, the underlying business of G-III appears stable when excluding the impact of losing the PVH brands.
Before considering an investment in G-III Apparel Group, investors should note that the Motley Fool Stock Advisor team recently identified the 10 best stocks for investors to buy now, and G-III Apparel Group did not make the cut. The stocks recommended by the team have the potential to generate significant returns in the future, as seen with past recommendations such as Netflix and Nvidia.
Overall, while G-III Apparel may be facing challenges in the short term, the company’s strong brand recognition and operational efficiency could position it for long-term success in the ever-evolving fashion industry.
