On September 2, G-III Apparel (NASDAQ:GIII) reported second-quarter fiscal 2027 results one day after closing its acquisition of Marc Jacobs on September 1, a deal timed to land just as the company’s longtime licenses for Calvin Klein and Tommy Hilfiger finish winding down. Net sales fell 10% to $554.1 million from $613.3 million, in line with what management had already signaled as it exits the two PVH-owned brands. But gross margin jumped 440 basis points to 45.2%, and non-GAAP earnings of $0.26 per share beat the top of guidance.
The Margins Are Already Improving
The clearest sign that G-III’s shift toward owned brands is working shows up in the margin line. Gross margin rose to 45.2% from 40.8%, driven by pricing actions, more full-price selling, and a mix shift away from licensed labels. Full-price wholesale sales for the go-forward portfolio, everything outside Calvin Klein and Tommy Hilfiger, climbed more than 20% in the quarter, and that portfolio is growing high single digits on its own. Of the $1.2 billion in revenue G-III expects to lose from the PVH exits by year-end, management says $700 million has already been replaced, at a higher margin than what it’s replacing.
Donna Karan is doing much of that work. Sales rose more than 45% in the quarter, and the brand is preparing a global Fall 2026 campaign fronted by Kendall Jenner to reach younger shoppers. DKNY’s digital sales grew mid-20%, while its stores posted mid-single-digit comparable sales growth. Marc Jacobs adds another lever. G-III now owns 100% of the operating business and half of a licensing joint venture with WHP Global, and it’s projecting $360 million in Marc Jacobs sales for the rest of this fiscal year, with a long-term target of $1 billion as it pushes into ready-to-wear, a category the brand has barely touched, since handbags and accessories still make up about 90% of its revenue. Cash grew to $529.2 million from $301.8 million after G-III collected $134 million in tariff refunds and interest during the quarter.
The Hole Isn’t Filled Yet
The other side of that trade is a shrinking top line. Full fiscal 2027 net sales guidance stands at $2.71 billion, down about 8%, built around a $460 million hit from the exiting licenses that only partially gets offset by go-forward growth. The third quarter is where that hit lands hardest. G-III guided to net sales of about $870 million, down from $989 million a year earlier, and non-GAAP earnings of $1.35 to $1.45 per share, down sharply from $1.90 in the same quarter last year. Full-year adjusted EBITDA guidance of $174 million to $178 million also sits below last year’s $192.4 million.
Europe added its own drag. Management described traffic there as down dramatically, pointing to record warm temperatures and fewer Middle Eastern travelers visiting shopping hubs like London. The Marc Jacobs deal carries its own near-term cost too: management expects the acquisition to be dilutive to earnings through its first 12 months of ownership, meaning the rest of fiscal 2027 absorbs the expense before any benefit shows up. And the brand’s growth plan leans on a category it hasn’t built yet, since ready-to-wear is essentially untested while handbags and accessories still generate roughly 90% of Marc Jacobs’ revenue.
Wall Street Still Isn’t Convinced
Hedge fund ownership of G-III rose to 27 funds from 21 in the prior quarter, which reads as institutions adding to positions even as the license transition weighs on sales. Short interest tells a different story: 28.30% of the float is sold short, a level that signals heavy organized skepticism. The stock’s forward P/E of 9.36, as of September 9, looks cheap against that backdrop, suggesting the market is still pricing in real doubt about whether the go-forward brands can offset what’s being lost.
Two Bets, One Uncertain Outcome
G-III has already replaced more than half its lost license revenue with higher-margin brands it owns outright, and Marc Jacobs gives that strategy a much bigger stage to play out. Even so, the near-term numbers still show a company shrinking, weighed down by a dilutive acquisition and a soft European market on top of the license exodus. Whether the trade pays off depends on Donna Karan and DKNY sustaining their current growth rates while Marc Jacobs builds a ready-to-wear business from a standing start.
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