G-III Apparel Reports Q2 Earnings Amid Transition to Owned Brands
On September 1, G-III Apparel (NASDAQ:GIII) completed its acquisition of Marc Jacobs as it transitions away from licensed brands Calvin Klein and Tommy Hilfiger. The company reported a second-quarter revenue decline of 10% year-over-year due to the winding down of these licenses but saw significant improvements in gross margin, which rose by 440 basis points to 45.2%. Non-GAAP earnings also exceeded guidance at $0.26 per share. G-III has already replaced about $700 million out of an expected $1.2 billion revenue loss from the PVH brand exits with higher-margin owned brands like Donna Karan and DKNY, which saw sales growth in double digits during the quarter. The company is also projecting strong future performance for Marc Jacobs as it expands into ready-to-wear. Despite these gains, G-III faces near-term challenges including a projected $460 million revenue hit from exiting licenses and expected earnings dilution due to its recent acquisition of Marc Jacobs. Additionally, European sales were impacted by lower traffic attributed to weather conditions and reduced tourism.
