GIII

G-III Apparel ($GIII) Executive Makes $492K Contrarian Buy After 28% Tariff-Driven Plunge... Bottom Signal?

06/18/2025 20:20

G-III Apparel Group ($GIII) has caught investors' attention as a company executive made a contrarian purchase amid a sharp stock decline triggered by tariff concerns. G-III Apparel is a New York-based apparel manufacturer that owns or licenses famous brands including DKNY, Karl Lagerfeld, Tommy Hilfiger, and Calvin Klein. Founded in 1956, the company has built a solid position in the U.S. apparel industry with annual revenues of $3.15 billion through wholesale and retail operations. It maintains licensing agreements with major sports leagues including NFL, NBA, and MLB, while actively pursuing global expansion through increased stakes in AWWG for European and Latin American markets. However, shocking news hit investors in June 2025. The company announced an additional $135 million in tariff-related costs and withdrew its fiscal 2026 guidance entirely. The stock plummeted 28% from $28.70 on June 2 to $20.54 on June 13. The Trump administration's tariff policies on Chinese goods have dealt a direct blow to the apparel industry, particularly G-III with its significant Chinese production exposure. At this critical juncture, a notable move was captured. On June 17, Officer Jeffrey Goldfarb purchased 23,076 shares at $21.33 per share, investing a total of $492,211. This occurred when the stock was hovering near yearly lows, suggesting an insider viewed the market's excessive concerns as an opportunity. Particularly intriguing is that this purchase was made by someone presumed to be the son of CEO Morris Goldfarb. While the CEO executed large-scale sales of approximately $5 million in September 2024, a family member has now made a contrarian purchase at the current tariff-shocked low levels. This suggests management maintains confidence in the company's long-term value despite short-term difficulties. Indeed, G-III's fundamentals remain solid aside from tariff risks. The company boasts excellent financial health with a debt-to-equity ratio of 17.14%, cash holdings of $257.78 million, and current ratio of 2.89. Valuation metrics show significant undervaluation compared to industry peers, with P/E ratio of 5.05 and P/B ratio of 0.55. Quarterly earnings per share also increased 33.7% year-over-year, indicating continued operational efficiency improvements. The company's response strategy to tariff issues is concrete. It's realigning supply chains away from China and planning selective price increases of 4-6% starting in August. Additionally, it's increasing AWWG stakes to nearly 20% to focus on revenue diversification through European and Latin American market expansion. Looking ahead, in an optimistic scenario, tariff policy easing or successful supply chain realignment could provide significant rebound potential from the current undervalued state. The $21 level where the insider purchased likely represents a floor. Conversely, prolonged tariff burdens or overlapping consumption slowdown could create additional downward pressure. Investors should watch the September earnings announcement for specific progress on tariff response strategies and whether 2026 guidance will be reintroduced. While current stock prices may have excessively reflected tariff risks, volatility is expected to continue in the near term.

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