Why Is G-III Apparel (GIII) Down 8.6% Since Last Earnings Report?

Core Viewpoint - G-III Apparel Group's recent earnings report shows mixed results, with earnings exceeding estimates but sales falling short, leading to a decline in share price and questions about future performance [1][2][3]. Financial Performance - Adjusted earnings for Q3 fiscal 2025 were $2.59 per share, surpassing the Zacks Consensus Estimate of $2.26, but down 6.8% from $2.78 per share in the previous year [3][6]. - Net sales increased by 1.8% year over year to $1,086.8 million, missing the consensus estimate of $1,100 million [3][4]. - The wholesale segment's net sales reached $1.07 billion, up from $1.05 billion, driven by owned brands growth, despite declines in Calvin Klein and Tommy Hilfiger [4]. - Retail segment net sales were $42.3 million, compared to $32.7 million in the prior year, attributed to strong comparable sales growth despite store closures [5]. Margins and Expenses - Gross profit decreased by 0.3% year over year to $432.1 million, with gross margin contracting by 80 basis points to 39.8% [6]. - The wholesale segment's gross margin was 38.4%, down from 39.6% the previous year, while the retail segment's gross margin improved to 52.3% from 49.1% [7]. - SG&A expenses improved by 9.7% year over year to $259.2 million, but as a percentage of net sales, it increased by 180 basis points to 23.9% [8]. Financial Snapshot - G-III Apparel ended Q3 with cash and cash equivalents of $104.7 million and total debt of $224.2 million, with total stockholders' equity at $1.65 billion [9]. - Inventory declined by 10% year over year to $532.5 million at the end of the quarter [9]. Guidance and Outlook - For Q4 fiscal 2025, net sales are expected to grow approximately 6% year over year, with SG&A expenses anticipated to increase similarly [10]. - Full fiscal 2025 net sales are projected to reach approximately $3.15 billion, reflecting around 2% growth, driven by owned brands expansion [11]. - Adjusted net income is expected to be between $186 million and $191 million, with adjusted earnings per share anticipated between $4.10 and $4.20 [12]. - Adjusted EBITDA for fiscal 2025 is now expected to be between $309 million and $314 million [13]. - The company anticipates approximately $55 million in additional expenses related to new brand launches and operational enhancements [14]. Market Sentiment - Estimates for G-III Apparel have trended downward, with a consensus estimate shift of -14.16% [15]. - The company holds a Zacks Rank 1 (Strong Buy), indicating expectations for above-average returns in the coming months [17].