Why G-III Apparel Stock Was Falling Today
Key Points
G-III missed estimates on the top and bottom lines in Q4.
Revenue was impacted by the loss of the licenses for Tommy Hilfiger and Calvin Klein.
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Shares of G-III Apparel (NASDAQ: GIII) were moving lower today after the fashion licensing company reported disappointing results in its fourth-quarter earnings report.
As a result, the stock was down 10% as of 11:29 a.m. ET.
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What happened to G-III?
In a challenging environment for apparel stocks, G-III has held its ground in recent years, but in the fourth quarter, revenue fell 8.1% to $771.5 million, missing the consensus at $792 million. Some of that was related to the loss of licenses for Tommy Hilfiger and Calvin Klein from PVH as that company seeks to bring its brands in-house.
Gross profit was down 13% to $285.4 million, showing the company was forced to mark down its merchandise in a weak environment for discretionary spending, and its adjusted earnings per share fell from $1.27 to $0.30, which was below the consensus at $0.59, though that includes a $0.30 per share hit from bad debt expense related to the bankruptcy of Saks.
CEO Morris Goldfarb said, "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.
What's next for G-III?
Looking ahead to fiscal 2027, the company expects revenue of $2.71 billion, down from $2.96 billion last year, though that includes the loss of $470 million in sales from the Calvin Klein and Tommy Hilfiger brands.
On the bottom line, adjusted earnings per share are expected to be $2.00-$2.10, down from $2.61 in fiscal 2026 and well below the analyst consensus of $2.93.
Given that forecast, the sell-off seems understandable, but the business looks stable when you exclude the impact of the loss of the PVH brands.
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Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
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