DKNY Owner G-III Warns of Tariff Impact on Profit, Withdraws Outlook

G-III Apparel Group (GIII) shares fell 15% after the company warned that tariffs would increase expenses by approximately $135 million this year, primarily impacting the second half, and withdrew its fiscal 2026 outlook for net income, non-GAAP net income, and adjusted EBITDA; this announcement overshadowed the company's first-quarter earnings and revenue exceeding forecasts, with adjusted earnings per share of $0.19 on net sales of $583.6 million.

Analysis

G-III Apparel Group (GIII) experienced a significant 15% share price decline following its warning that U.S. tariffs are projected to increase expenses by approximately $135 million in the current fiscal year, with the impact predominantly expected in the second half. This substantial cost pressure led the company to withdraw its fiscal 2026 guidance for net income, non-GAAP net income, and adjusted EBITDA, which it had issued in March, signaling considerable uncertainty in its future profitability. The negative outlook overshadowed G-III's first-quarter fiscal 2026 performance, where adjusted earnings per share reached $0.19 on net sales of $583.6 million; while sales declined 4% year-over-year, both metrics surpassed analysts' consensus forecasts. Despite the profit guidance withdrawal, CEO Morris Goldfarb affirmed the full-year sales expectation of $3.14 billion and expressed confidence in the management's ability to navigate these challenges and potentially strengthen its market position. However, the stock's more than 25% decline year-to-date underscores investor apprehension regarding the financial repercussions of the tariffs.

Key Decisions for Investors

• Investors should exercise caution due to the withdrawn profit guidance and the significant anticipated impact of tariffs on G-III's expenses.
• Monitor closely for any company announcements regarding tariff mitigation strategies and revised financial outlooks before making investment decisions.
• The contrast between better-than-expected Q1 results and the severe forward-looking headwinds warrants a careful risk-reward assessment, especially considering the stock's substantial recent underperformance.