Dive Brief:
- G-III Apparel Group posted a first-quarter fiscal 2026 net sales decline of 4% to $583.6 million year over year, according to a Friday press release.
- Net income rose nearly 40% to $7.8 million compared to the same period last year. In addition, the company’s total debt decreased 96% to $18.7 million this year compared to $426.4 million last year after G-III redeemed $400 million in senior secured notes in August 2024.
- The company reaffirmed its fiscal 2026 net sales outlook of around $3.14 billion, down about 1.3% over the prior fiscal year. However, G-III withdrew its previously issued fiscal 2026 net income and adjusted EBITDA guidance due to “uncertainty around tariffs and related macroeconomic conditions,” per the release.
Dive Insight:
Despite solid Q1 results, G-III is expecting challenging financial headwinds ahead that could hurt its financial performance for the rest of the year.
Morris Goldfarb, G-III’s chairman and CEO, said in the release that the company’s Q1 performance was “fueled by double-digit growth of our key owned brands, DKNY, Karl Lagerfeld and Donna Karan” and added that the performance of those brands “largely offset the exit of the Calvin Klein jeans and sportswear businesses.” He added that the results “underscore the strong demand and desirability of our brand portfolio.”
But the company said in Friday’s release that its first-half fiscal 2026 sales are expected to be lower compared to the previous year, with acceleration expected in the second half of fiscal 2026.
In addition, G-III said tariff rates in place as of June 5 would result in an additional expense of about $135 million, primarily weighted toward the second half of the year. In order to offset these costs, the company said it planned to diversify its sourcing mix and vendor discounts, as well as initiate “selective price increases and … other cost saving initiatives.”
Second-quarter net sales are expected to decline about 12% to $570 million, compared to $645 million for the same period last year, impacted in part by supply chain challenges. The company expects net income for the second quarter of fiscal 2026 to plummet by nearly 75% to 96% to a range between $6 million and $1 million, down from $24.2 million for the second quarter last year.
In reaffirming the company’s 2026 net sales guidance, Goldfarb said G-III was “working diligently to mitigate the impact of tariffs.” He added that the company’s management team “has a proven track record of successfully navigating periods of uncertainty, and we view the ongoing disruptions as an opportunity to strengthen our competitive position and capture incremental market share.”
G-III owns 10 brands including DKNY, Karl Lagerfeld, Donna Karan, Vilebrequin, G.H. Bass and Wilsons Leather. The company additionally licenses more than 20 brands such as Calvin Klein, Tommy Hilfiger, Nautica, Champion and Converse.
