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.
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.
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.