G-III Apparel Group (NASDAQ:GIII) reported second-quarter fiscal 2027 earnings above its guidance range, supported by gross-margin expansion and expense management, while reaffirming its annual sales outlook and raising its adjusted earnings forecast. The company also completed its acquisition of Marc Jacobs, which management described as a transformational step in its shift toward a portfolio led by owned brands.
For the quarter ended July 31, 2026, G-III reported net sales of $555 million, down 10% from $613 million a year earlier. The decline primarily reflected the anticipated reduction in Calvin Klein and Tommy Hilfiger sales as G-III exits those licenses. Wholesale sales fell to $531 million from $589 million, while retail sales were $40 million, compared with $41 million in the prior-year period.
Margin Expansion Supports Earnings
Second-quarter gross margin increased 440 basis points year over year to 45.2%, from 40.8%. Chief Financial Officer Neal Nackman attributed the improvement to selective price increases and a continued shift toward higher-margin owned brands. Wholesale gross margin rose to 43.3% from 38.9%, while retail gross margin declined to 50.6% from 52.4% amid increased promotional activity.
GAAP net income totaled $20.2 million, or $0.46 per diluted share, compared with $10.9 million, or $0.25 per diluted share, a year earlier. Non-GAAP net income was $11.5 million, or $0.26 per diluted share, compared with $11.2 million, or $0.25 per diluted share, in the prior-year quarter. The company’s non-GAAP earnings result exceeded its prior guidance range of $0.15 to $0.25 per diluted share.
SG&A expenses were $231 million, compared with $227 million in the prior-year period after excluding $4 million in Marc Jacobs acquisition-related expenses. Nackman said the company experienced expense deleverage as it invested in people, technology and marketing, partly offset by warehouse efficiencies tied to capacity optimization.
G-III ended the quarter with $529 million in cash and approximately $1 billion in available liquidity. Its cash balance included about $134 million in tariff refunds and interest received during the quarter. Inventory declined approximately 13% year over year.
Marc Jacobs Acquisition Completed
G-III completed the Marc Jacobs acquisition following the end of the quarter. The company owns the Marc Jacobs operating business, including retail, wholesale and e-commerce operations, and will oversee product development, sourcing, distribution and marketing. G-III also owns 50% of the Marc Jacobs intellectual property through a joint venture with WHP Global, which will lead global licensing strategy.
Goldfarb said Marc Jacobs currently derives roughly 90% of its revenue from handbags, small leather goods and accessories. G-III sees an opportunity to build out ready-to-wear and other lifestyle categories, while also expanding wholesale distribution and international operations. Marc Jacobs generates approximately two-thirds of its revenue through direct-to-consumer operations and has more than 100 company-operated stores, the majority of which are in the outlet channel, according to Goldfarb.
Management expects the Marc Jacobs operating business to generate approximately $360 million in global sales this year, excluding licensing revenue from the intellectual-property joint venture. G-III expects the transaction to be slightly dilutive for the remainder of fiscal 2027 and dilutive over the first 12 months of ownership, before becoming accretive thereafter. Over the longer term, Goldfarb said the company believes Marc Jacobs can generate $1 billion in annual revenue for G-III.
The company did not include Marc Jacobs in its fiscal 2027 outlook because of the timing of the transaction close. Management expects to update guidance to incorporate the brand when it reports third-quarter results in December.
Owned Brands and Europe
G-III highlighted continued growth across several owned brands. Donna Karan sales increased more than 45% during the quarter, aided by full-price selling, digital demand and strength in dresses, handbags and footwear. DKNY’s website recorded mid-20% year-over-year growth, driven by higher conversion and average unit retail, while DKNY stores posted a mid-single-digit comparable-sales increase.
Karl Lagerfeld posted strong North American growth, led by wholesale, though European sales remained pressured by consumer conditions. Vilebrequin reported positive sales growth, including resilient performance in Europe, the Caribbean and Asia, and margin above the company’s target.
Goldfarb said European traffic has fallen amid economic challenges, promotional activity, reduced travel from the Middle East and unusually warm weather. He said management remains comfortable with its European organization and product offering despite the regional pressures.
The company’s sports and lifestyle licensed platform also delivered growth, with Levi’s identified as a quarterly highlight. G-III said it plans to launch Joules, a British lifestyle brand owned by Next, in approximately 400 North American doors during the fall.
Outlook Raised for Earnings
G-III reiterated its fiscal 2027 net-sales forecast of approximately $2.71 billion, representing an expected decline of about 8% from the prior year. The outlook includes approximately $460 million of lost Calvin Klein and Tommy Hilfiger sales, partly offset by expected high-single-digit growth in the go-forward portfolio.
The company raised its full-year non-GAAP net-income forecast to $97 million to $101 million, or $2.20 to $2.30 per diluted share. It now expects adjusted EBITDA of $174 million to $178 million and gross-margin improvement of close to 400 basis points for the year.
For the third quarter, G-III expects net sales of approximately $870 million, compared with $989 million in the prior-year quarter, as the company continues to transition away from the PVH licenses. It forecasts third-quarter non-GAAP earnings of $1.34 to $1.45 per diluted share.
Nackman said the company’s guidance assumes tariffs for the remainder of the year remain at current rates. Management said it has completed roughly 90% of its wholesale order book for the year, which it cited as a source of confidence in its outlook.
About G-III Apparel Group (NASDAQ:GIII)
G-III Apparel Group, Ltd. is a global fashion company engaged in the design, sourcing, marketing and distribution of women’s and men’s apparel, outerwear, footwear, handbags and fashion accessories. Founded in 1956 and headquartered in New York City, the company has grown from an importer of ladies’ apparel into a diversified apparel business with a portfolio of owned and licensed brands.
The company’s product offerings span a broad spectrum of price points and styles, including formal and casual outerwear, sportswear, performance wear and contemporary fashion.
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