There’s more to the story than merely losing Calvin Klein and Tommy Hilfiger.
July 17, 2025
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▶One of my ongoing themes is that just because a stock blows up, or takes a steep dive, doesn’t mean it can’t dive further...
Enter G-III Apparel Group $GIII, which owns and licenses around 30 popular fashion brands, including Donna Karan, DKNY, and for a brief time longer, PVH’s Calvin Klein and Tommy Hilfiger. G-III recently lost nearly a third of its value over the course of one week in June after disclosing an unexpectedly high tariff impact and withdrawing guidance, citing tariff concerns.
A convenient excuse? Or, given the tariff situation, real? The attempt to find an answer is part of the story, some of which is already well known; some of which, isn’t.
It’s the “isn’t” that grabbed my attention – and it’s something my friend, former short-seller and sometimes collaborator Katherine Spurlock dug up. Best of all, for those who might have missed it, like so many of these it has been hiding in plain sight...
If you’re new here, I’ve collaborated with Katherine in the past... notably on Savers Value Village $SVV and Signet $SIG.
Katherine first started talking to me about G-III well before its recent rout. But the story she is telling is as fresh as the day she first mentioned it – since it’s only loosely connected to the tariff-tied reason the stock took a hit.
The Bull Case
Before we go further, here’s an abbreviated AI-generated bull case from my pals at Tenzing MEMO....
Brand Strength: Owns and licenses over 30 brands, including DKNY, Donna Karan, Karl Lagerfeld, and Vilebrequin. Owned brands now make up over half of sales, driving higher margins and control.
Donna Karan Relaunch: The 2024 relaunch was the most successful in company history, with Donna Karan sales up nearly 50% year-over-year and strong profitability. Management sees $1B+ long-term sales potential.
New Licenses & Diversification: New long-term licenses (Nautica, Halston, Champion, Converse, BCBG) and a growing team sports business help offset expiring Calvin Klein and Tommy Hilfiger licenses.
Supply Chain Flexibility: Decades of sourcing experience, with China exposure down to 33%, helps manage tariff and geopolitical risks.
Financial Strength: $258M cash, minimal net debt, no borrowings on a $700M revolver, and consistent free cash flow support buybacks and growth investments.
Management: Seasoned leadership with a track record of navigating industry cycles and delivering on brand pivots.
Valuation: Trades at ~5x earnings and 3x EV/EBITDA—well below peers—despite strong brands and execution.
What’s more, G-III is generally perceived to be a family-run business, with CEO Morris Goldfarb owning a 10% stake. In this recent interview, he detailed the company’s background, how it originally went public in the 1980s via a SPAC – riding the coattails of the Top Gun bomber jacket... and how he then turned it into a broad-based manufacturer and marketer of fashion brands. He also discussed the rise and fall of the company’s PVH relationship, which started in 2005.
In effect, under a new CEO, PVH announced in 2022 that it would let its Calvin Klein and Tommy Hilfiger licenses with G-III expire on a staggered basis from 2025 through 2027. That’s an enormous hit, considering that two years ago PVH’s licensed products generated nearly half of PVH’s sales; last year, they were 38% on their way to zero.
The Bear Case
That’s all well-known... and it’s where our story really begins...
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