Fashion conglomerate G-III (NASDAQ: GIII) exceeded Wall Street’s revenue expectations in Q1 CY2025. Its non-GAAP EPS of $0.19 per share was 51.1% above analysts’ consensus estimates.

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StockStory’s Take

G-III’s first quarter performance was defined by continued growth in its key owned brands, which management identified as the primary offset to lost sales from discontinued Calvin Klein jeans and sportswear licenses. CEO Morris Goldfarb highlighted the double-digit gains at DKNY, Karl Lagerfeld, and Donna Karan, noting that these brands “collectively grew double digits” and fueled overall results. The company attributed these gains to disciplined brand building, operational changes in its retail segment, and successful new product introductions. Management acknowledged macroeconomic uncertainty but emphasized that disciplined inventory management and sourcing diversification efforts helped mitigate some pressures. CFO Neal Nackman also stressed that tight control over advertising expenses and improved retail margins contributed positively to first quarter outcomes.

Looking ahead, G-III’s forward outlook is shaped by ongoing tariff uncertainty, selective price increases, and the scaling of new product launches. Management is focused on offsetting a potential $135 million tariff impact through a mix of sourcing changes, vendor negotiations, and strategic price adjustments across brands. Goldfarb stated, “We’re actively working to reduce the impact through a combination of strategies,” while also emphasizing that newer brands like Donna Karan and Karl Lagerfeld offer stronger pricing power. The company expects the bulk of tariff headwinds to materialize later in the year, with near-term emphasis on expanding international distribution and maintaining tight inventory controls. Nackman noted that G-III would “reaffirm top line guidance” but withdrew profit targets amid these uncertainties.

Key Insights from Management’s Remarks

Management attributed first quarter results to owned brand strength, operational efficiencies, and adapting to macroeconomic headwinds while focusing on long-term brand growth and cost containment.

• Owned brands drive growth: DKNY, Karl Lagerfeld, and Donna Karan delivered double-digit sales growth, offsetting declines from exited Calvin Klein and Tommy Hilfiger licenses. The Donna Karan relaunch, in particular, saw sales rise nearly 50% year-over-year, with strong demand for dresses and suit separates and expanded premium distribution.

• International expansion progress: Management highlighted early traction for DKNY and Karl Lagerfeld in European and Asian markets, including a notable pop-up activation in Seoul and new store openings, signaling active efforts to diversify revenue beyond North America.

• Inventory and operational discipline: Inventory was down 5% from the previous year, reflecting management’s focus on tighter inventory controls amid supply chain disruptions. The company also streamlined warehouse operations, exited four facilities, and reduced staff, aiming to unlock future cost savings.

• Tariff mitigation strategies: Facing $135 million in potential unmitigated tariffs, G-III is diversifying sourcing (reducing China exposure to under 20%), negotiating vendor discounts, and selectively raising prices on brands with higher perceived value.

• Retail segment turnaround: North American retail operations showed improvement, reducing losses by over half year-over-year and targeting breakeven performance, aided by store footprint reductions, remerchandising, and digital sales growth, especially for Donna Karan.

Drivers of Future Performance

G-III’s guidance reflects a cautious approach, with future performance hinging on tariff mitigation, pricing strategy, and successful new product launches.

• Tariff impact and mitigation: Management expects tariff headwinds to be most significant in the second half of the year. Efforts to mitigate these include shifting sourcing to non-China regions, negotiating with suppliers, and passing selective price increases to consumers, especially for brands with strong pricing power like Donna Karan and Karl Lagerfeld.

• New launches and distribution: The company plans to scale recent launches such as Nautica Jeans and prepare for the Converse and BCBG introductions in the fall. These launches are expected to broaden G-III’s market reach, particularly in new channels and international markets, though timing and consumer acceptance remain key uncertainties.

• Retail and inventory management: Continued emphasis on disciplined inventory management and cautious order planning will be necessary amid unpredictable consumer demand and supply chain disruptions. Management aims for the North American retail segment to achieve breakeven, with reduced exposure to losses from exited licenses and efficient inventory turnover.

Catalysts in Upcoming Quarters

Looking forward, the StockStory team will be closely monitoring (1) progress on tariff mitigation and sourcing diversification, (2) execution and consumer reception of upcoming product launches like Converse and BCBG, and (3) developments in international expansion, especially in Europe and Asia. We will also track inventory discipline and margin management as critical indicators of successful adaptation to ongoing external challenges.

G-III currently trades at a forward P/E ratio of 7.2×. At this valuation, is it a buy or sell post earnings? Find out in our full research report (it’s free).

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