G-III’s (NASDAQ:GIII) Q2: Beats On Revenue But Full-Year Sales Guidance Misses Expectations Significantly

September 04, 2025 at 07:08 AM EDT

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Fashion conglomerate G-III (NASDAQ: GIII) reported revenue ahead of Wall Street’s expectations in Q2 CY2025, but sales fell by 4.9% year on year to $613.3 million. On the other hand, next quarter’s revenue guidance of $1.01 million was less impressive, coming in 99.9% below analysts’ estimates. Its non-GAAP profit of $0.25 per share was significantly above analysts’ consensus estimates.

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G-III (GIII) Q2 CY2025 Highlights:

Revenue: $613.3 million vs analyst estimates of $571.1 million (4.9% year-on-year decline, 7.4% beat)
Adjusted EPS: $0.25 vs analyst estimates of $0.09 (significant beat)
Adjusted EBITDA: $23.27 million vs analyst estimates of $17.65 million (3.8% margin, 31.8% beat)
The company dropped its revenue guidance for the full year to $3.02 billion at the midpoint from $3.14 billion, a 3.8% decrease
Adjusted EPS guidance for the full year is $2.65 at the midpoint, missing analyst estimates by 8.6%
EBITDA guidance for the full year is $203 million at the midpoint, below analyst estimates of $212.1 million
Operating Margin: 2.7%, down from 6.4% in the same quarter last year
Market Capitalization: $1.17 billion

Morris Goldfarb, G-III’s Chairman and Chief Executive Officer, said, “In the second quarter, we exceeded expectations across both net sales and earnings, driven by the strong momentum of our go-forward portfolio, led by DKNY, Donna Karan, Karl Lagerfeld, and Vilebrequin. These results highlight our ability to execute on our strategic priorities and leverage our powerful corporate platform to maximize the full potential of our globally recognized brands.”

Company Overview

Founded as a small leather goods business, G-III (NASDAQ: GIII) is a fashion and apparel conglomerate with a diverse portfolio of brands.

Revenue Growth

A company’s long-term sales performance is one signal of its overall quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years. Unfortunately, G-III’s 3.9% annualized revenue growth over the last five years was sluggish. This was below our standard for the consumer discretionary sector and is a rough starting point for our analysis.

Long-term growth is the most important, but within consumer discretionary, product cycles are short and revenue can be hit-driven due to rapidly changing trends and consumer preferences. G-III’s performance shows it grew in the past but relinquished its gains over the last two years, as its revenue fell by 1.2% annually. G-III Year-On-Year Revenue Growth

This quarter, G-III’s revenue fell by 4.9% year on year to $613.3 million but beat Wall Street’s estimates by 7.4%. Company management is currently guiding for a 99.9% year-on-year decline in sales next quarter.

Looking further ahead, sell-side analysts expect revenue to remain flat over the next 12 months. This projection is underwhelming and suggests its newer products and services will not lead to better top-line performance yet.

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Operating Margin

Operating margin is a key measure of profitability. Think of it as net income - the bottom line - excluding the impact of taxes and interest on debt, which are less connected to business fundamentals.

G-III’s operating margin has shrunk over the last 12 months and averaged 8.9% over the last two years. The company’s profitability was mediocre for a consumer discretionary business and shows it couldn’t pass its higher operating expenses onto its customers.

G-III Trailing 12-Month Operating Margin (GAAP)

This quarter, G-III generated an operating margin profit margin of 2.7%, down 3.8 percentage points year on year. This contraction shows it was less efficient because its expenses increased relative to its revenue.

Earnings Per Share

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

G-III’s EPS grew at a spectacular 23.8% compounded annual growth rate over the last five years, higher than its 3.9% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.

In Q2, G-III reported adjusted EPS of $0.25, down from $0.52 in the same quarter last year. Despite falling year on year, this print easily cleared analysts’ estimates. Over the next 12 months, Wall Street expects G-III’s full-year EPS of $4.30 to shrink by 41.1%.

Key Takeaways from G-III’s Q2 Results

It was good to see G-III beat analysts’ EPS expectations this quarter. On the other hand, its full-year revenue guidance missed and its revenue guidance for next quarter fell short of Wall Street’s estimates. Overall, this was a softer quarter. The stock traded down 4.1% to $25.98 immediately after reporting.

G-III’s latest earnings report disappointed. One quarter doesn’t define a company’s quality, so let’s explore whether the stock is a buy at the current price. The latest quarter does matter, but not nearly as much as longer-term fundamentals and valuation, when deciding if the stock is a buy. We cover that in our actionable full research report which you can read here, it’s free.

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