G-III’s (GIII) $1.2B Bet On Life After Calvin Klein

On September 2, G-III Apparel reported a 10% drop in net sales to $554.1 million for the second quarter of fiscal 2027, as it exited the Calvin Klein and Tommy Hilfiger brands. Gross margin surged 440 basis points to 45.2%, driven by better pricing, increased full-price sales, and a shift away from licensed labels. Full-price wholesale sales for the remaining portfolio climbed over 20%, and G-III expects to lose $1.2 billion from the PVH exits, with $700 million already replaced by higher-margin brands.

Donna Karan sales rose more than 45%, while DKNY's digital sales grew mid-20%. Marc Jacobs, now 100% owned by G-III, is projected to generate $360 million in sales for the remainder of the fiscal year, with a long-term goal of $1 billion. Cash grew to $529.2 million, but full fiscal 2027 net sales guidance is $2.71 billion, down about 8%, with a dilutive acquisition expected.

Europe's decline in traffic due to warm temperatures and fewer Middle Eastern travelers was a drag on performance. Hedge fund ownership of G-III increased, and short interest was high, indicating skepticism about the company's growth prospects. Despite the challenges, G-III believes Donna Karan and DKNY will sustain their growth rates while Marc Jacobs builds a ready-to-wear business.