GIII Q3 Deep Dive: Owned Brands and Direct-to-Consumer Offset Wholesale Headwinds

Fashion conglomerate G-III (NASDAQ:GIII) fell short of the markets revenue expectations in Q3 CY2025, with sales falling 9% year on year to $988.6 million. The company’s full-year revenue guidance of $2.98 billion at the midpoint came in 1.3% below analysts’ estimates. Its non-GAAP profit of $1.90 per share was 17.9% above analysts’ consensus estimates.

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StockStory’s Take

G-III’s third quarter results were marked by a 9% year-over-year sales decline, missing Wall Street’s revenue expectations but delivering stronger than expected non-GAAP profitability. The positive market reaction reflected management’s ability to drive margin resilience despite industry-wide tariff pressures and ongoing declines in the PVH-licensed Calvin Klein and Tommy Hilfiger businesses. CEO Morris Goldfarb credited the quarter’s outperformance to strong growth in owned brands like Donna Karan and Karl Lagerfeld, accelerated full-price selling, and disciplined inventory management. He highlighted, “Our teams replaced more than 70% of the lost sales volume through organic growth of our go-forward owned and licensed portfolio.”

Looking ahead, G-III’s updated outlook is shaped by ongoing tariff headwinds, continued phase-out of PVH licenses, and a sharpened focus on higher-margin owned brands. Management emphasized the potential for margin recovery as new pricing strategies and a shift to direct-to-consumer channels gain traction. CFO Neal Nackman noted, “Our intent will be to put [tariff costs] into price and achieve normal margins for us, which again should reflect higher margins on the owned businesses.” The company is also investing in expanding product categories and international reach, especially for brands like Donna Karan and Karl Lagerfeld, as it aims to offset the PVH volume step-down and build a more sustainable profit base.

Key Insights from Management’s Remarks

Management attributed third quarter profitability to a stronger mix of owned brands, margin discipline, and successful mitigation of tariff impacts, while highlighting progress in transforming the business model after losing PVH licenses.

• Owned brands momentum: Strong sales growth from Donna Karan and Karl Lagerfeld helped offset continued declines from the Calvin Klein and Tommy Hilfiger licenses. Donna Karan in particular posted double-digit sales increases in North America and launched new lines such as Donna Karan Weekend and Donna Karan Jewelry, broadening its appeal and category reach.
• Direct-to-consumer gains: Investments in digital and direct-to-consumer (DTC) channels resulted in over 20% traffic growth across owned e-commerce platforms, improved conversion rates, and higher average order values, especially for donnakaran.com. Repeat customers comprised nearly 20% of Donna Karan’s digital sales, an early indicator of brand loyalty.
• Tariff mitigation and pricing: Margin pressures from tariffs were partially offset by price increases and a strategic focus on full-price selling. Management avoided heavy discounting and maintained inventory discipline, resulting in better-than-expected gross margins and improved product mix.
• Wholesale channel resilience: Despite operating fewer stores, the retail segment posted sales growth driven by comparable store gains at North American DKNY and Karl Lagerfeld Paris locations and strong online performance from Donna Karan. Premium department store partners like Saks and Bloomingdale’s expanded their footprint for Donna Karan, reflecting retailer confidence in the brand.
• Portfolio transformation: The company continued to phase out lower-margin PVH licenses while ramping up new partnerships, such as Nautica, Halston, and BCBG. Management described an “agile” approach to redeploying talent and resources to accelerate growth in its owned and newly licensed brands, viewing the shift as a path to long-term margin improvement.

Drivers of Future Performance

Management expects future performance to be driven by the mix shift to owned brands, expanded direct-to-consumer channels, and ongoing cost and pricing adjustments in response to tariff and licensing headwinds.

• Shift to higher-margin brands: As PVH licenses decline, G-III plans to accelerate growth of its own brands, which command better pricing power and higher gross margins. Management believes that a focus on Donna Karan, DKNY, and Karl Lagerfeld will support both top-line and margin expansion as these brands penetrate new categories and geographies.
• Tariff cost pass-through and normalization: The company anticipates that the gross margin impact from tariffs will peak in the current year, with price increases and strategic sourcing expected to help margins recover in subsequent periods. Management views the ability to price appropriately and manage costs as critical to restoring profitability.
• Direct-to-consumer and international growth: Investments in DTC and international expansion are expected to diversify revenue and reduce reliance on wholesale. Management highlighted planned retail and digital expansion in Europe, the Middle East, and Asia, as well as new category launches and collaborations to drive incremental growth.

Catalysts in Upcoming Quarters

Looking forward, our team will watch for (1) the pace at which owned brands like Donna Karan and Karl Lagerfeld continue gaining share and expanding into new categories; (2) the company’s ability to mitigate margin pressures as tariff impacts roll off and pricing strategies are implemented; and (3) progress in scaling direct-to-consumer and international operations. The trajectory of new licenses and the success of category launches will also be key signposts.

G-III currently trades at $31.09, up from $29.67 just before the earnings. Is there an opportunity in the stock?The answer lies in our full research report (it’s free for active Edge members).

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